“The ability of people to earn an income and support themselves and their families is central to the right to human dignity” (Extract from judgment below)

“Garnishee” orders (more properly “Emoluments Attachment Orders” or EAOs) are often used by creditors to attach a debtor’s earnings.  The debtor’s employer is served with a court order to deduct specified amounts from the debtor’s salary or wages.  The employer pays those deductions over to the creditor until the debt and legal costs are settled in full.

Misuse!  The facts that alarmed the High Court Supporters of this process argue that, fairly obtained and implemented, garnishee orders are not only an efficient and cost effective method of debt recovery, but less traumatic for debtors than executions against property.    The problem however lies in the potential for misuse, as shown in the recent high-profile High Court case brought on behalf of a group of low wage earners.  After defaulting on loan repayments, they had each been persuaded to sign consents to judgment with an undertaking to pay off the debt in instalments, consent to the issue of a garnishee order, and consent to the jurisdiction of a court in another district.  The debtors denied that the documents were properly explained to them or that they signed them voluntarily. Garnishee orders were duly issued, leaving the debtors in many cases with completely unaffordable deductions.  For example, over half of one employee’s salary was attached.  Another employee had almost her whole salary attached in terms of three orders granted against her on the same day.  Orders invalidated – the practical result The problem lies in the Magistrate’s Court Act which governs the issue of garnishee orders.  It imposes no limit on the number of orders that may be granted against a debtor, nor any limit on the amount that may be deducted.  Moreover, these orders can be issued by clerks of court giving rise, in at least some district courts,  to a “rubber stamping” exercise based solely on whether a debt judgment has been obtained or not.  Debtors can also consent to the jurisdiction of a court far away from where they live and work, effectively depriving them of their right of access to the courts. These provisions, held the Court, are unconstitutional, and the garnishee orders in question are therefore unlawful and invalid.   The practical result (pending a likely appeal, subject to referral to the Constitutional Court for confirmation, and subject to amendments to the Act reportedly being prepared as a matter of urgency by the Department of Justice and Constitutional Development), is that, in the Western Cape at least –

1.     Garnishee orders may no longer be issued by clerks of court.  They must be issued under “judicial oversight”, in other words by a magistrate – no doubt after a full enquiry into the affordability to the debtor of the deductions sought.

2.     In cases where the National Credit Act applies (which will be most cases like this) only the court where the debtor lives or works will have jurisdiction – making it much easier for the debtor to appear in court and be heard.

Employers, Creditors and Debtors: Your action plan  So what happens now?  Garnishee orders that comply with the above new criteria are still valid and enforceable.  But with media reports suggesting that as many as 2 million existing garnishee orders may now be invalid, all role players – including employers, creditors and debtors – need to check any existing orders urgently.   What you don’t want to do is risk breaching a valid court order, so unless and until a garnishee order is actually set aside by a court (or you have the creditor’s written agreement to stop deductions as an interim measure), treat it as at least provisionally valid unless your lawyer gives you specific advice to the contrary.   Don’t rely on the various reports and opinions you will read in the media – a lot of them are confusing and some are completely misleading.  Take full advice in any doubt!

Garnishee orders – Are 2 million of them now invalid? An action plan for employers, creditors and debtors