University of Stellenbosch Legal Aid Clinic and Others v Minister of Justice and Correctional Services and Others

• Jurisdiction: South Africa
• Citation: 2015 (5) SA 221 (WCC)

University of Stellenbosch Legal Aid Clinic and Others v Minister of Justice and Correctional Services and Others
2015 (5) SA 221 (WCC)

2015 (5) SA p221

Citation	2015 (5) SA 221 (WCC)
Case No	16703/14
Court	Western Cape Division, Cape Town
Judge	Desai J
Heard	July 8, 2015
Judgment	July 8, 2015
Counsel	A Katz (with S Magardie) for the first to sixteenth applicants.; DO Potgieter SC (with L Dzai) for the first respondent.; No appearance for the second, third and twelfth respondents.; DE van Loggerenberg SC (with J Malan) for the eighteenth respondent.; J Brickhill (with E Webber) for the amicus curiae.

Flynote : Sleutelwoorde E

Execution — Attachment of salary — Constitutionality of process — Provisions unconstitutional and invalid to extent that failing to provide for judicial oversight over issuing of attachment order against judgment debtor — F Magistrates' Courts Act 32 of 1944, ss 65J.

Magistrates' court — Civil proceedings — Jurisdiction — Consent — Where credit agreements regulated by NCA — Judgment debtor not permitted to consent to jurisdiction in place other than where resident or employed — Magistrates' Courts Act 32 of 1944, s 45; National Credit Act 34 of 2005, s 90 and s 91. G

Headnote : Kopnota

First applicant, a public-interest organisation, assisted 15 of its low-income clients (applicant debtors two to sixteen) in bringing an application to set aside salary-attachment orders issued in terms of s 65J(2)(a) of the H Magistrates' Courts Act 32 of 1944 (MCA) in favour of various micro-lenders (respondents four to eleven and thirteen to sixteen). The latter had been represented by Flemix & Associates Inc (respondent seventeen), a firm of attorneys and their external debt collector. Since the debtors had consented to the orders, there had been no enquiry as to affordability or whether the orders were 'just and equitable' as provided for in s 65A. Most I of the orders had also obtained on written consent (s 45 of the MCA) in jurisdictions located far from where they lived and worked. The applicants challenged the constitutionality of s 65J(2)(a) and ss 65J(2)(b)(i) and (ii) on grounds that it made no provision for judicial oversight. They also contested the lawfulness of s 45. Flemix contended that since a debtor was entitled to approach a court to have an execution order varied or set aside, there was nothing inherently wrong with the process. J

2015 (5) SA p222

A Held

For debtors such as the applicants, who worked in low-paid and vulnerable occupations, their salaries were invariably their only asset and means of survival. A reduction therein had the potential for reducing human dignity. Any court order or legislation, which deprived them of their means of support or ability to access their socioeconomic rights accordingly constituted B a limitation of their right to dignity. (Paragraph [41] at 228I – 229B.)

Further, that, since the Flemix respondents were obtaining judgments and attachment orders against the applicants in courts far away from their homes and places of work, and in places which they could not hope to reach, the right of the debtors to approach the courts was seriously jeopardised, if not effectively denied. The use of s 45 to bypass the courts in C areas in which the debtors or their employers resided was a patent case of forum-shopping. (Paragraphs [51], [53] and [57] at 230D – E, 230G – I and 231D – E.)

The state had to protect its citizens against human-rights abuses by business enterprises by providing victims with a remedy. The attachment-order system established by the MCA failed to do this by allowing orders to be issued D without the involvement of a judicial officer or the opportunity for representations. The right to have the order reviewed was not an effective remedy if s 45 were interpreted to allow indigent debtors to consent to jurisdiction of other courts. (Paragraphs [74] and [76] at 233E – F and 233I.)

Where debtors were vulnerable and overindebted, and at real risk of abuse by unscrupulous creditors, there was a strong argument for judicial oversight E in the issue of the orders. This was also in accordance with general principles that there should be judicial oversight where an applicant sought an order to execute or seize the property of another. Accordingly when attachment orders were issued, judicial oversight was to be mandatory and occur when the execution order was issued. (Paragraphs [76], [81] and [84] at 233I, 234F – G and 234I – J.)

F As to s 45 of the MCA, properly interpreted, the broader approach to jurisdiction of s 45 could not be reconciled with the more restrictive approach in s 65J and s 90 and s 91 of the National Credit Act 34 of 2005 (NCA), especially in the light of the consumer-protection rationale underlying the NCA. It followed that when a debtor admitted liability for a debt and consented to an attachment order, s 45 did not permit the debtor to consent to the G jurisdiction of a court outside of the district where the debtor worked or resided. (Paragraphs [91] – [93] at 235J – 236D.)

The court accordingly declared that the attachment orders were invalid and unlawful; that s 65J(2)(a) and s 65J(2)(b) were unconstitutional and invalid to the extent that they failed to provide for judicial oversight; and that s 45 did not permit a debtor to consent in writing to the jurisdiction of a H magistrates' court other than that in which that debtor was resident or was employed. The court also directed that a copy of the proceedings be forwarded to the relevant Law Society to determine whether Flemix and its representative were in beach of their ethical duties, particularly with regard to forum-shopping, to secure salary-attachment orders. (Paragraph [94] at 236E – 237B.)

Cases Considered

Annotations I

Case law

Chief Lesapo v North West Agricultural Bank and Another 2000 (1) SA 409 (CC) (1999 (12) BCLR 1420; [1999] ZACC 16): dictum in J para [16] applied

2015 (5) SA p223

Chirwa v Transnet Ltd and Others 2008 (4) SA 367 (CC) ((2008) 29 ILJ 73; A 2008 (3) BCLR 251; [2008] 2 BLLR 97; [2007] ZACC 23): compared

Gundwana v Steko Development and Others 2011 (3) SA 608 (CC) (2011 (8) BCLR 792; [2011] ZACC 14): applied

Jaftha v Schoeman and Others; Van Rooyen v Stoltz and Others 2005 (2) SA 140 (CC) (2005 (1) BCLR 78; [2004] ZACC 25): applied

Minister of Home Affairs and Others v Watchenuka and Another 2004 (4) SA 326 (SCA) (2004 (2) BCLR 120; B [2003] ZASCA 142): dicta in paras [27] – [32] applied

S v J [2010] ZASCA 139: dictum in para [38] applied.

Statutes Considered

Statutes

The Magistrates' Courts Act 32 of 1944, s 45, s 65J(2)(a), s 65J(2)(b)(i) C and s 65J(2)(b)(ii): see Juta's Statutes of South Africa 2014/15 vol 1 at 2-28 and 2-36

The National Credit Act 34 of 2005, ss 90 and 91: see Juta's Statutes of South Africa 2014/15 vol 2 at 1-523 and 1-524.

Case Information

A Katz (with S Magardie) for the first to sixteenth applicants. D

DO Potgieter SC (with L Dzai) for the first respondent.

No appearance for the second, third and twelfth respondents.

DE van Loggerenberg SC (with J Malan) for the eighteenth respondent.

J Brickhill (with E Webber) for the amicus curiae.

Application for the setting-aside of attachment orders and declaration E that certain sections of the Magistrates' Courts Act 32 of 1944 are unconstitutional and invalid.

Order

1.

The emolument-attachment orders issued against the second to sixteenth applicants in favour of the fourth to sixteenth respondents, and set out in annexure A to the notice of motion, are declared to be F unlawful, invalid and of no force and effect.

2.

It is declared that:

2.1

The words 'the judgment debtor has consented thereto in writing' in s 65J(2)(a) of the Magistrates' Courts Act 32 of 1944 (the Magistrates' Courts Act) and; G

2.2

s 65J(2)(b)(i) and s 65J(2)(b)(ii) of the Magistrates' Courts Act are inconsistent with the Constitution and invalid to the extent that they fail to provide for judicial oversight over the issuing of an emolument attachment order against a judgment debtor.

3.

It is declared that in proceedings brought by a creditor for the H enforcement of any credit agreement to which the National Credit Act 34 of 2005 (NCA) applies, s 45 of the Magistrates' Courts Act does not permit a debtor to consent in writing to the jurisdiction of a magistrates' court other than that in which that debtor resides or is employed.

4.

The first to third respondents, the HRC, the Law Society and the I advice offices are urged to take whatever steps they deem necessary to alert debtors as to their rights in terms of this judgment.

5.

The eighteenth respondent's application to strike out is dismissed with costs.

6.

The seventeenth and eighteenth respondents' counter-applications are dismissed with costs. J

2015 (5) SA p224

7.

A Fourth to eighteenth respondents (excluding the twelfth respondent) are ordered to pay the applicants' costs, including the costs of two counsel, jointly and severally.

8.

A copy of these proceedings is to be forwarded by the first applicant to the Law Society of the Northern Provinces for it to determine whether Ms AE Jordaan and Flemix & Associates Inc have breached B their ethical duties, particularly with regard to forum-shopping to secure emolument attachment orders.

Judgment

Desai J:

C [1] The facts underpinning this application relate to the debt-collection procedure employed by the microlending industry and give rise to significant disquiet, if not alarm.

[2] The emolument attachment order (EAO) contemplated in s 65J of the Magistrates' Courts Act 32 of 1944 (the MCA) permits the attachment of D a debtor's earnings and obliges his or her employer (the garnishee) to pay out of such earnings specific instalments...