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Article by listed attorney: Fawzia Khan

The commercial credit industry in South Africa is a staggering R1.4 trillion from which about R168 billion is made up of unsecured debts. These stats were used by the Constitutional Court when delivering its judgment in the University of Stellenbosch Legal Aid Clinic and the Minister of Justice case, which saw a change in the wording of Section 65J of the Magistrates Court Act. This provision relates to the granting of emoluments attachment orders (EAO’s) where a debt is deducted from a debtor’s salary and the employer is obliged to pay the debt to the judgment creditor.

In 2015 the Legal Aid Clinic approached the High Court to have Section 65J of the Magistrates Court Act declared invalid and unconstitutional. This was based on the abuse by unscrupulous credit providers who often went to a court far away from where the debtor lived or worked in order to have the court grant these  attachment orders. Often the first time the debtor became aware of the attachment order was when his salary was deducted. That coupled with the severe hardship caused to many low-income earners who were forced to pay exorbitant interest to the credit provider thus making their economic conditions extremely dire were the catalysts for the application.

The High Court declared that since attachment orders were issued without judicial oversight, Section 65J(2) of the Magistrates Court Act was invalid and inconsistent with our constitution. Judicial oversight is where a magistrate is allowed to take into account all the facts to determine whether or not good cause exits for the issuing of a warrant of execution on property or granting of an EAO against a debtor. Previously the clerk of the court granted the EAO.

Dissatisfied with the ruling, the Minister of Justice took the matter on appeal to the Constitutional Court. However the Constitutional Court dismissed the appeal. In September 2016, it changed the wording of Section 65J by saying that there must be judicial oversight when attachment order as granted, which means that it now prevents unscrupulous creditors from having emolument orders granted against the debtor in an underhand manner and without the knowledge and consent.

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