Introduction

In terms of section 65J of the Magistrates Court Act 32 of 1944 (the Act) a creditor has a right to bring an application to court to enforce a debtor to pay his debt by obtaining an emoluments attachment order (EAO). When an EAO is granted, the debtor’s employer has a duty to deduct from the debtor’s salary or wages the amount specified in the EAO and pay it over to the creditor.

Implications of Section 65J

When an EAO is granted it is often issued without any proper financial inquiry into the debtor’s financial position. There is no statutory limit on the amount which may be deducted from the earnings of a debtor, nor is there a limit on the number of EAOs which may be granted against a debtor.

Whether or not this method of debt collection is constitutionally valid in the light of our bill of rights is an issue recently grappled with by the High Court in a judgment which could have serious ramifications in the debt collection industry.

University of Stellenbosch Legal Aid Clinic and Others v Minister of Justice And Correctional Services and Others (16703/14) [2015] ZAWCHC 99 (8 July 2015)

The debtors in this case were all low income earners and had EAOs granted against them, in some cases half of the debtors' salaries were deducted and some had more than one EAO against their name.

In this case the debtors were asked to sign a written consent to the judgment against their names, and were therefore deemed to have given consent to the issuing of an EAO. This was a tactic followed by creditors to obtain the EAOs from courts that fell outside the debtors’ jurisdiction and therefore not giving effect to the debtors’ right to access to courts.

Section 65A of the Act provides that following an enquiry by a magistrate into a debtor’s financial position, the court may make an order as it deems just and equitable. In this case the EAOs where issued by the clerk of the court without doing any evaluation on the debtors’ ability to afford the deductions from their salaries and there were no judicial oversight during this process.

The Court took into account International Law and found that most countries place a cap on the amount of an employee’s earnings that may be garnished after assessing the debtor’s financial needs to survive on a daily basis.

The Court found that the reduction of a low earning debtor’s salary has a direct impact on his right to housing, health and family life and a substantial reduction of the income has the potential of reducing human dignity. The ability of people to support themselves and their families is central to the right to human dignity and any court order which deprives a person of the means of support or impairs the ability of people to access their socio-economic rights constitutes a limitation of their right to dignity.

The Court held that sections 65J(2)(a), 65J(2)(b)(i) and 65J(2)(b)(ii) of the Act limits the debtors’ right to access to justice and that it is unconstitutional that EAOs were issued by the clerk of the court without any judicial oversight. The Court also held that section 45 of the Act was not in line with the National Credit Act as no credit provider can encourage a debtor to sign a document that will consent to judgment outside his jurisdiction.

Impact of the judgment on current EAOs

This judgment makes it clear that the courts have adopted the view that, when a creditor wants to obtain an order against a debtor’s income, judicial oversight and the debtor’s constitutional rights are of paramount importance, therefore a judge or a magistrate has to grant this order and it can no longer be issued by the clerk of the court.

According to the judgment, any EAO that was granted against a debtor that falls outside his jurisdiction or was granted by a clerk of the court can be rescinded on application. The debtors’ constitutional rights must be recognised and creditors can no longer infringe these rights by not following the right procedure in debt collecting.