Cycle: People often take out loans and fail to repay the money. Garnishee orders are then issued
In 2001 Kobus* took a loan of R4 900 from a Paarl-based microlender. For about a year he paid R400 a month to service the debt.
Kobus is a 52-year-old seasonal worker and is currently unemployed. The last salary he earned — in February 2013 — was R1 200.
In 2012 a man unknown to Kobus arrived at his workplace and told him to sign documents related to the 2001 loan. Kobus, who left school in grade seven, signed the documents under pressure, without understanding what they meant.
He would later discover that he had unwittingly agreed to an emoluments attachment order (EAO), which meant the creditor would deduct R1 100 from him monthly — almost his entire salary — to pay back a debt that had reached R28?000, thanks to a 15.5% interest rate and the creditor’s legal fees.
Kobus did not receive a copy of the original credit agreement and still does not know how much he owes.
With most of his salary being deducted every month by a company claiming to represent the original microlender, without his informed consent, Kobus approached the University of Stellenbosch Legal Aid Clinic (LAC) for help.
The LAC, represented by Webber Wentzel’s pro bono division, as well as Kobus and 14 other people with similar experiences approached the high court in November for relief. The applicants’ case, which is still being heard, began on February 16.
The applicants want to challenge the constitutionality of sections of the Magistrate’s Court Act (MCA) that allow attachment orders, like the one issued against Kobus, to be issued by a clerk of the court without judicial oversight. The South African Human Rights Commission, represented by the Legal Resources Centre, joined the application as amicus curiae.
The applicants say they were only made aware of the attachment orders once their lawyers retrieved their court files. At no point were the applicants, all indigent workers or unemployed, asked whether they could afford the amount to be taken off their salary, they say. According to the Act, Kobus can challenge the attachment order in court, but only after it has been issued.
These applicants say there was no inquiry, at any point, into what they could afford to pay on their debts before their salaries were attached.
In court papers, lawyers for the applicants say the legal challenge has been brought to protect the “human rights of marginalised members of our society”. They argue that the lack of judicial oversight leaves the process open to abuse. The “severe consequences” of this abuse includes violating the debtors’ right to dignity, access to the courts and access to housing, food, healthcare and education. “Importantly, the individuals against whom such orders are issued are already heavily indebted and are among the most vulnerable members of society.”
The applicants also want declaratory relief relating to the practice of “forum shopping”, which is when microlenders obtain attachment orders in courts that have no jurisdictional link to the debtors. The respondents argue that section 45 of the Act allows creditors to sue in any jurisdiction, so long as the debtor has given written permission.
In many instances, the cases were moved to the Kimberley magistrate’s court where none of the applicants have any ties.
Their lawyers say that the section, read with other legislation, does not allow a creditor to sue in any jurisdiction other than the one in which the debtor lives or works.
The reasoning behind allowing a clerk of the court, and not a magistrate, to issue an attachment order appears to be an attempt to lessen the burden on the courts, which cannot cope with the number of creditors approaching the courts for relief.
One of the respondents, Flemix & Associates, which does debt collection for 45 credit providers, says there is oversight by magistrates in the present system.
Lawyers cite two Constitutional Court findings relating to the Act and emoluments. The first was a finding that another section of the Act, dealing with the attachment of property, was unconstitutional because it allowed attachments to occur without judicial oversight. Another ruling, by Justice Johan Froneman, said a debtor’s recourse, “once the horse has bolted, is a poor substitute for the initial judicial evaluation”.
Lawyers for the applicants say that the EAO does not comply with standards set by international law either and the state has a duty to protect workers against such abuses.
* Not his real name