Mapula Thebe – Editor

In trying to curtail the abuse of the debt recovery procedure system, the Department of Justice and Constitutional Development released a statement to say that it is finalising the Magistrates’ Courts Amendment Bill. This comes after a recent judgment in University of Stellenbosch Legal Aid Clinic and Others v Minister of Justice And Correctional Services and Others (WCC) (unreported case no 16703/14, 8-7-2015) (Desai J) where Desai J ruled that the current system of emoluments attachment orders (EAOs) is unlawful, invalid and inconsistent with the Constitution as it does not provide for judicial oversight.

The Bill will soon be available on the department’s website for further consultation before it is submitted to Parliament for consideration and enactment.

The University of Stellenbosch Legal Aid Clinic brought a court application, on behalf of 15 applicants, to have certain provisions of the Magistrate’s Courts Act 32 of 1944 (the Act), which deal with EAOs, declared unconstitutional and invalid because they do not provide for judicial oversight over the authorisation and issuing of EAOs. The applicants also sought clarity on whether s 45 of the Act permits a debtor to consent to the jurisdiction of a court other than the one in which the debtor resides or is employed in respect of the enforcement of a credit agreement to which the National Credit Act 34 of 2005 applies.

It is clear from the judgment that proper procedure, in terms of s 81 National Credit Act, was not followed in issuing credit to the 15 debtors, which is why they defaulted in their payments. The judgment also highlights the incorrect measures taken by the micro-lending industry to collect debt. In the judgment, Desai J states that ‘in respect of the present applicants, the clerk of the court issued EAOs attaching their earnings without any evaluation of their ability to afford the deductions to be made from their salaries and without deciding whether or not the issuing of an EAO itself would be just and equitable. The whole process of obtaining the EAOs was driven by the creditors without any judicial oversight whatsoever.’

The judgment will now go to the Constitutional Court for confirmation. In its press statement, the Justice Department said: ‘Until such time that the Constitutional Court gives final judgment on the matter, creditors and their attorneys countrywide are urged to take this judgment seriously and ensure that judgments and EAO’s are obtained with due regard to the sentiments expressed in the Stellenbosch matter and to have those which have not been legally obtained, rescinded.’

The respondents have applied for leave to appeal the judgment and have approached the Constitutional Court with a separate application.

This article was first published in De Rebus in 2015 (Aug) DR 3.