Court rules on the Constitutionality of emolument attachment orders

Judgment was handed down by Judge Desai, last  Wednesday, in the Western Cape High Court, in favour of a group of consumers, joined and represented by the University of Stellenbosch’s Legal Aid Clinic, where deductions from those consumers’ salaries were found to be invalid and unlawful.

These orders, known as emolument attachment orders (“EAO”), and regulated under the Magistrates Court Act  32 of 1944 (“the Act”), allows for the attachment of a judgment debtor’s salary or wages, obliging his or her employer to pay to the judgment creditor, instalments out of his or her earnings, to make good on the debt due, including all legal costs incurred.

The provisions in the Act, dealing with EAOs, authorise the Court to may make such an order as it deems “just and equitable”. In this instance, the clerk of the court issued these orders without any evaluation of the debtors economic circumstances, whether they were able to afford these deductions, and whether such an order would be just and equitable in the circumstances.

Judge Desai noted in his judgment that,

“It is common cause that most of the orders were obtained from courts located a great distance from where the debtors resided and worked. The debtors’ rights to access the courts and enjoy the protection of the law were clearly compromised in these instances.

The right of access to courts is fundamental to the rule of law in a constitutional state…respondents are obtaining judgments and EAOs against the applicants in courts far from their homes and in places they could not reach. The right to access the courts was seriously jeopardised, if not effectively denied.

It seems to be firmly established in international law that states have a duty to protect their citizens against the abuse of human rights by business enterprises in their territory. Where such abuses do occur, states have a duty to provide victims with an effective remedy”

Judge Desai thus found that the relevant sections of the Act, dealing with EAOs are constitutionally invalid.

“Section 65J(2)(b)(i) and section 65J(2)(b)(ii) of the MCA are in the circumstances constitutionally invalid to the extent that they allow for EAOs to be issued by a clerk of the court without judicial oversight. This is so both with regard to international law and to the current jurisprudence of the Constitutional Court. “

He further declared that section 45 of the Act, which provides parties with the option to consent to the juris
diction of the Magistrates Courts, cannot apply to agreements that fall within the scope of the National Credit Act, and cannot give creditors the discretion to obtain judgment and EAOs far away from where the debtor resides or works. This provision is often found in standard agreements.

“It is declared 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.”

To view this judgment, go to http://www.saflii.org/za/cases/ZAWCHC/2015/99.html

“I think this sends a strong message to those who continue to engage in extractive financial practices that impoverish the poor, exploit their lack of financial literacy, and make money on the backs of the poor.” –  Elroy Paulus and http://mg.co.za/article/2015-07-09-victory-for-consumers-as-court-rules-against-salary-deductions