Appeal expected in landmark pay-attachment case

09 July 2015 - 12:29 By Wendy Knowler
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Wendy Knowler is 'In Your Corner' as The Times consumer champion. You can ask her advice on email: consumer@knowler.co.za or via Twitter: @wendyknowler
Wendy Knowler is 'In Your Corner' as The Times consumer champion. You can ask her advice on email: consumer@knowler.co.za or via Twitter: @wendyknowler
Image: Photo: Wendy Knowler

“An incredible victory for the poor,” is how businessman Wendy Appelbaum described the Western Cape High Court’s declaring of 15 low earning Stellenbosch workers’ emoluments attachment orders (EAOs) as “unlawful, invalid and of no force and effect”.

Judge Siraj Desai expressed his outrage at the way the EAOs - popularly but incorrectly referred to as “garnishee orders” - were obtained, resulting in huge portions of the farmworkers, cleaners, and security guards’ meagre salaries being deducted and sent to legal firm Flemix, collecting debts on behalf of microlender Bridge Debt.

Appelbaum began her quest for justice more than two years ago when she discovered that some of her farmworkers were battling to make ends meet because of their EAOs.  The court application was brought by the University of Stellenbosch and the Legal Aid Clinic.

In many of the applicants’ cases, Desai said,  the clerk of the court issued the EAOs, attaching their earnings without any evaluation of their ability to survive on their remaining salaries.

And he accused the micro lender of deliberately using courts very far from the worker’s homes or workplaces, meaning it was almost impossible for them to attend court, compromising their right to protection by the law.

A clerk of the court issued three EAOs against Angeline Arrison - one of the 15 - on the same day, attaching almost her entire salary.

The judgement is a victory not only for those 15, but potentially for many others with EAOs - including many of Flemix’s  other 150 000 active EAO cases - given that Desai has declared two key sections of the Magistrates Court Act to be unconstitutional.

A debtor can no longer be asked to consent in writing to a judgement against them for outstanding debt, because this means they forfeit “judicial oversight”. So no more compliant clerks of the court stamping hundreds of EAOs a day without the magistrate considering the financial impact on the debtor.

Desai also declared that in respect of any credit agreement falling under the National Credit Act, the debtor can’t consent to the jurisdiction of a magistrates court other than that where he or she lives or works.

“So everyone who has a garnishee order which is off jurisdiction or without judicial oversight now becomes illegal automatically,” Appelbaum told Cape Talk yesterday afternoon.

Desai urged the Ministers of Justice and Trade and Industry, and National Credit Regulator and Human Rights Commission to “alert debtors to their rights in terms of this judgement”.

Association for Debt Recovery Agents (ADRA) CEO Marius Jonker said it was “reckless and dangerous” to tell people with EAOs to stop paying now, as some media reports had done.

“This Stellenbosch matter applies only to debt that resulted from credit agreements falling under the National Credit Act (excluding debt arising from educational institutions, municipal accounts, taxes, professional fees and the like); it applies only to EAOs granted in ‘wrong’ jurisdiction courts, and only to those granted by clerks of the court instead of magistrates,” he said.
“Plus it’s only binding in the Western Cape,” Jonker said, "and the judgment will no doubt be appealed, in which case the effect of the judgment will be suspended pending the outcome of the appeal."

The indebtedness of those whose EAOs are now invalid, will not fall away, Jonker warned, so the credit providers could well decide to recover the debt by attaching their assets. 

Asked about the practical implications of this landmark judgement on those who are currently having their salaries “attached” every month in accordance with now illegal EAOs, a top labour attorney who asked not to be named said it was not true that the judgment couldn’t be considered binding outside the Western Cape.

“It is now a precedent,” he said. Employees with EAOs - relating to National Credit Act contracts, obtained outside of jurisdiction and stamped only by a clerk of the court -  should approach their employers and ask that their deductions stop. 

“If that doesn’t happen they have a few choices - they can approach the CCMA, make an urgent application at the Labour Court, or, they could go on strike, arguing that their employers are acting in flagrant disregard of this judgment. 

“But it would need to be a collective action.”

It will be very interesting to see how employers react to the judgment, said Ian Wason, CEO of South Africa’s largest debt counsellor, DebtBusters. “Will they suspend the payments of EAOs en masse until they are all reviewed, or proven to be correct?”

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