EAOs aka Garnishee Orders Ruled Unconstitutional
Yesterday, July 8, 2015 marked a groundbreaking victory for South African consumers, as High Court Judge, Siraj Desrai ruled in favour of 15 consumers represented by the Stellenbosch Legal Aid Clinic (LAC), in the high-profile court battle over Emolument Attachments Orders (EAOs).
Judge Desrai ruled EAOs as ‘unconstitutional’ and ‘an assault on human dignity’, saying that the ability to earn an income and provide for oneself and one’s family is integral to the right to human dignity. Accordingly, he threw out the EAOs and ordered the culpable collection firm, Flemix & Associates to foot the hefty legal bill of the High Court case.
How Do EAOs Work?
When a consumer repeatedly fails to pay off their debts, creditors and debt collectors serve a summons on them ordering them to attend court, for the purpose of obtaining a judgment against them. Thereafter, the creditor or collector may collect the debt using an EAO, which is served on the consumer’s employer, essentially taking away a portion of their salary every month. EAOs are also referred to as garnishee orders.
Recently, the sheer volume of active orders in our country brought EAOs to the attention of outraged South Africans, furthermore, leading to the discovery of rampant illegal and exploitative EAO antics being employed by debt collection firms, acting on behalf of microlenders.
Preying on the poor, financially illiterate and uneducated, these corrupt companies have no trouble coercing flustered, uninformed consumers into signing a consent to judgement, whereby the consumer unknowingly agrees to excessive deductions from their hard-earned monthly salaries. Some unscrupulous lenders even hide the consent to judgment in plain sight, amidst the piles of paperwork they require consumers to sign upfront, as part of the loan ‘application’ process.
Another of their ruthlessly underhanded tricks entails obtaining an order from a court that is located an unreasonably far distance away from where the consumer resides or makes a living. In this way, they capitalise on the physical constraints low-income consumers face, whose non-working hours and travel resources are non-existent.
Consequently, when the court date arrives, collectors depend on them being unable attend, thus, the consumer misses out on the opportunity to object or have an unfair ruling overturned.
Beating a Corrupt System
After suffering abject poverty due to Flemix & Associates greedily snatching the lion’s share of their money each month, struggle and suspicion impelled 15 aggrieved consumers to approach the Stellenbosch LAC for assistance. Recognising a cause close to their hearts, Summit Financial Partners (Pty) and farmer, Wendy Applebaum joined forces with LAC, to take on the slippery, avoidant Flemix & Associates.
The media instantly lit on this game-changing court case, as the ‘Little Guy’ valiantly confronted the deeply flawed ‘System’, and the constitutionality of EAO procedures, under the Magistrates Court Act (MCA) came under fire.
A Game-Changing Ruling
For once, the hype over a high-profile court case has proven justified, when July 8, 2015 saw the underdog win out in the end, and garnishee orders ruled unconstitutional. The courageous 15 consumers, comprising hard-working, low-earning farmworkers, cleaners and security guards, got their fairy-tale ending, when the Judge ordered the caustic EAOs to be set aside and ruled to have no force.
Crystallising this victory, Judge Desai went on to rule parts of the MCA as unconstitutional. Moreover, Judge Desai ordered the Department of Justice to send copies of the court case documents and ruling to the Law Society of the Northern Province (LSNP).
Judge Desai’s intention is for the LSNP to investigate the actions of Flemix and Ms Alanza Flemix-Jordaan, to see if they breached any of its ethical standards in their aggressive pursuit of EAOs. In addition, Judge Desai’s aim is for the antic of setting hearing dates at courts that are positioned well out of a consumer’s jurisdiction, to undergo scrutiny.
Ordinarily, EAO applications are stamped by clerks of the court, inherently creating a conflict of interest. Judge Desai ruled this as robbing consumers of the protection afforded by the judicial oversight of a Magistrate. Without a Magistrate overseeing the matter, the consumer’s financial circumstances aren’t taken into account, subsequently violating their consumer rights under the South African Constitution.
A round of applause for those 15 brave consumers, LAC, Ms Applebaum and Judge Desai!