LSSA condemns unscrupulous garnishee practices

April 1st, 2013
x
Bookmark

By Barbara Whittle

Last month the Law Society of South Africa (LSSA) echoed the concern expressed by Finance Minister Pravin Gordhan in his budget speech at the end of February regarding the abuse of emoluments attachment orders that leave workers without money to live on after they have serviced their debts every month.

In a press release, LSSA co-chairpersons Jan Stemmett and Krish Govender condemned the ‘unscrupulous abuse, exploitation and maladministration’ of the garnishee order system by collection practitioners.

However, the LSSA stressed that criticism in the media against the provincial law societies for failing to address the problem and allowing the problem to worsen was seriously misplaced.

‘The responsibility to review the credit industry and the relevant legislation lies with the legislature. Current legislation needs to be amended to allow garnishee orders to be issued only with proper judicial oversight. The courts must interrogate debtors, applicants and their attorneys before granting emolument attachment orders. The system is open to abuse because the law is weak,’ said Mr Govender and Mr Stemmett.

The co-chairpersons stressed that collection attorneys work within the regulatory framework provided by the current legislation. The statutory provincial law societies do not hesitate to investigate complaints from the public regarding attorneys alleged to be involved in the exploitation of the system, and any attorney found to have abused the processes could face severe sanctions.

The LSSA is one of the stakeholders actively participating in the joint task team chaired by Credit Ombud, Manie van Schalkwyk, which is developing a code of conduct in relation to debt recovery. The LSSA is represented on the task team by Cape Town attorney Graham Bellairs, who is chairperson of the LSSA Magistrate’s Court Committee, and Jacques Tarica from the Johannesburg Attorneys Association.

The Department of Justice and Constitutional Development published draft legislation to address this issue in February, and had called for comments on the draft amendments by 26 March.

In the press release by the co-chairpersons, the LSSA recognised the severe impact of the abuse of emoluments attachment orders, particular in the low-income earning sector of society. It pointed out that a number of factors contribute to this problem, including –

  • the recklessness with which credit is granted in certain instances;
  • the unscrupulous methods adopted by some debt recovery practitioners in securing signatures to written consents to the granting of garnishee orders for amounts that leave little to no income for the debtor employees;
  • lack of knowledge and training of the clerks of the courts to pick up abuse and refuse to grant such orders; and
  • legislation that allows for the obtaining of garnishee orders without judicial oversight, as well as punitive interest rates and the recovery of excessive legal costs and collection commission.

Compiled by Barbara Whittle, communication manager, Law Society of South Africa, barbara@lssa.org.za

This article was first published in De Rebus in 2013 (April) DR 13.