Constitutional Court to rule on forced wage deductions
ALMOST 2-million emolument attachment orders could be affected by a Constitutional Court judgment due to be delivered on Tuesday.
The ground-breaking case was originally heard in the High Court in Cape Town in February 2015, and it challenges the constitutionality of the process of granting emolument attachment orders in the context of unsecured lending.
The case was brought to court by the University of Stellenbosch’s Legal Aid Clinic and others against the minister of justice and correctional services and others.
In March 2015, the Constitutional Court heard an appeal against the high court’s judgment during which the highest court was urged to declare sections of the Magistrates’ Act unconstitutional. The Legal Aid Clinic also urged the Constitutional Court to set aside all emolument attachment orders issued in the wrong jurisdiction or signed off by a clerk of the court instead of a magistrate.
Clark Gardner, CEO of Summit Financial Partners, estimates that there are as many as 2.5-million emolument attachment orders in existence, and about 1.9-million of them could fall foul of a Constitutional Court ruling if it finds in favour of the Legal Aid Clinic.
The case goes to the heart of the unsecured lending industry, which has relied heavily on access to emolument attachment orders to enforce the payment of loans that were often made recklessly.
Although unsecured lending has tapered off in the wake of the slowdown in economic activity, supporters of the Legal Aid Clinic’s move say changes must be made before the inevitable pick-up in unsecured lending activity. There is also the possibility that Tuesday’s judgment will apply to emolument attachment orders that have already been issued.
In response to the persistent demands for change, the portfolio committee on justice and correctional services is looking at proposed amendments to the Courts of Law Act that are aimed at preventing much of the abuse around garnishee orders.
In his July 2015 ruling in the case, Judge Siraj Desai declared that all 15 of the emolument attachment orders in the case had been issued unlawfully, invalidly and were of no force and effect.
Desai slated debt-collecting law firm Flemix and Associates for shopping around for magistrate’s courts that would sign off on emolument attachment orders regardless of how far this was done from the residence or place of work of the debtor.
This made it almost impossible for debtors to challenge the terms of the order.
The judge also hit out against the practice of using clerks to issue emolument attachment orders rather than magistrates, which meant there was no judicial oversight of the process.