Emoluments attachment orders (EAOs), colloquially known as “garnishee orders” – have been abused by unscrupulous credit providers for years. As a result, countless debtors have been denied many of their constitutional rights, including their right to access justice, and have found themselves in debt bondage because of the many EAOs against them.

But a decision by the Constitutional Court this week will put a stop to the abuses, because it confirms key orders contained in an important High Court judgment that addresses problems with the law governing the issuing of EAOs, the Magistrates Court Act (MCA). This week’s Constitutional Court judgment also changes sections of the MCA that were unconstitutional, Odette Geldenhuys, a
senior associate at law firm Webber Wentzel and the attorney for the applicants in the matter, says.

The Constitutional Court judgment follows an application from the Western Cape High Court to confirm an order of constitutional invalidity – in other words, the highest court in the country was asked to confirm a judgment that declared aspects of a law to be “constitutionally invalid”.

The Western Cape judgment was handed down by Judge Siraj Desai in July last year following an application by the University of Stellenbosch Legal Aid Clinic (Uslac) brought in the public interest. Uslac’s clients are mostly impoverished farm and general workers, many of whom are battling to survive because of EAOs.

Judge Desai’s judgment, which was widely hailed as a victory for the poor, found that the EAOs against Uslac’s clients were obtained unlawfully and that sections of the MCA were inconsistent with the constitution and hence invalid.

Instead of confirming his order of constitutional invalidity, which would have necessitated having Parliament amend the MCA, the Constitutional Court made changes to the relevant sections of the Act, and confirmed other orders made by Judge Desai.

“The effect of the order is that, with immediate effect, no EAO may be issued by a clerk of the court; it can only be granted by a magistrate if the magistrate is satisfied that it is just and equitable that the EAO be issued and that the amount is appropriate,” Geldenhuys says.

Furthermore, an EAO cannot be issued by a magistrate in a far-off jurisdiction; it can be issued only by a magistrate in the jurisdiction where the debtor lives or works.

Each of these effects of the judgment – which applies to EAOs issued from now on (not retrospectively) – protects you in the following ways if a creditor seeks to obtain an EAO against you:

 

1. Judicial oversight

An EAO can be issued by a magistrate only. It cannot be issued by a clerk of the court, which is what commonly happens. The Constitutional Court judgment says that this case is a prime example of why judicial oversight (the scrutiny of a magistrate or judge) over the execution process is required.

An EAO is “clearly burdensome”, the judgment says. “It severely constricts the autonomy of the debtor to decide how [he or] she will pay off the debt. It is also inflexible, as it does not adapt to the debtor’s changing circumstances from week to week. It goes directly off a debtor’s wages – and these wages will often form the means for the debtor’s day-to-day survival. These are all important considerations to be borne in mind when deciding whether an EAO should be granted. What is more, a debtor’s personal circumstances may well have changed in the interim between when a judgment debt is entered and ordered to be paid in instalments and when an EAO is sought. It is, therefore, crucial that these considerations are taken into account at the time the EAO is sought.”

 

2. Jurisdiction

An EAO must be issued in the same jurisdiction as the judgment debtor; in other words, where the debtor lives or works. This is to ensure that the debtor is able to place his or her circumstances before the court, and in so doing can exercise his or her right to access justice.

You can no longer agree to a credit provider applying to a magistrate in a jurisdiction other than where you live or work for an EAO to be issued against you. If you are forced to give such consent, it will automatically be invalid.

 

3. Appropriate

The EAO must be of an amount that is “appropriate”, the Constitutional Court judgment says. One of Uslac’s clients earned R2 420 a month and had an EAO of R1 194, leaving him with a net income of R1 263.

The judgment says a court that determines a request for the issuing of an EAO should be guided by certain factors: it must take into account the nature of the debtor’s income and the amount the debtor needs for upkeep and to support dependants. “The validity of an EAO depends on whether the debtor has sufficient residual income to support herself and her dependants. Thus such an order may only apply to funds that are in excess of the amount she needs for the maintenance of herself and her dependants.”

Geldenhuys says the judgment strikes a fine balance between the rights of debtors and the rights of creditors. “The judgment says that the EAO granted by the court must be ‘just and equitable’ and the amount must be ‘appropriate’.

“The choice of words here is very important. ‘Just and equitable’ requires the magistrate to consider the situation of both the credit provider and the debtor in deciding whether to grant an EAO. Requiring that the amount to be paid in terms of the EAO be ‘appropriate’ signals that the amount must not only be affordable for the debtor, it must also be fitting in relation to the outstanding debt.”

A magistrate in the Western Cape says that although he does not expect the judgment to stem the use of EAOs, it will take longer to issue these orders because of the application process and, consequently, they will be more costly for the creditor, and eventually for the debtor.

“Attorneys will have to put in more work when bringing these applications. Before bringing the application, they will have to have a good sense of the debtor’s income and expenses so that they know what the debtor can afford to pay in instalments,” he says.

 

DEFINITIONS

• An emoluments attachment order, often called a “garnishee order”, is a court order to attach a debtor’s salary and deduct from it instalments that are paid by the debtor’s employer to the debtor’s creditor in settlement of a judgment debt.

Execution is a process of enforcing a court order. Depending on the nature of the order granted, execution may be against the person or the property of the judgment debtor.