16 Jul 2015

A Victory For Consumers Plagued By “Garnishees”

Debt, Judgments No Comments

Fifteen salary attachment orders (commonly known as “garnishees”) issued on behalf of unsecured lender, were on Wednesday declared “unlawful, invalid and of no force and effect” in the Western Cape High Court by Judge Siraj Desai.

Desai also declared certain sections of the Magistrates’ Court Act (MCA), which governs the issuing of these orders, to be unconstitutional, granting a substantial victory to consumers.

EAOs, which are imposed on a debtor’s salary by a creditor to recover outstanding money, have been widely abused by unscrupulous unsecured lenders and debt collectors.

Alongside declaring that the specific EAOs concerned must come to an end, Desai also declared that certain sections of the MCA are unconstitutional.

The judge concluded, a clerk of court cannot simply rubberstamp an EAO where a debtor has consented to the judgement debt if a magistrate has not also considered the financial implications of the EAO on the debtor.

In addition, Desai ordered that in terms of credit agreements under the National Credit Act, the MCA does not permit a debtor to consent in writing to the jurisdiction of a magistrates’ court other than one where that debtor lives or is employed.

“The Flemix respondents are obtaining judgements and EAOs against the applicants in courts far removed from their homes and places of work and in places which they could not hope to reach, the right to approach the courts was seriously jeopardised, if not effectively denied,” Desai said in his judgement.

That all 15 of the attachment orders concerned in the case were “irregularly if not unlawfully obtained”, suggested that “thousands if not tens of thousands” of Flemix’s other active cases – some 150 000 – are based on unlawfully obtained attachment orders, Desai added.

The judge urged the Ministers of Justice and Trade and Industry, as well as the National Credit Regulator and Human Rights Commission to “alert debtors as to their rights in terms of this judgment”.

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