About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Constitutional Court
SAFLII
>>
Databases
>>
South Africa: Constitutional Court
>>
2016
>>
[2016] ZACC 32
|
|
University of Stellenbosch Legal Aid Clinic and Others v Minister of Justice and Correctional Services and Others; Association of Debt Recovery Agents NPC v University of Stellenbosch Legal Aid Clinic and Others; Mavava Trading 279 (Pty) Ltd and Others v University of Stellenbosch Legal Aid Clinic and Others (CCT127/15) [2016] ZACC 32; 2016 (6) SA 596 (CC); (2016) 37 ILJ 2730 (CC); 2016 (12) BCLR 1535 (CC) (13 September 2016)
Links to summary
Heads of arguments
CONSTITUTIONAL
COURT OF SOUTH AFRICA
Case CCT 127/15
In the matter
between:
UNIVERSITY OF
STELLENBOSCH LEGAL AID CLINIC
First Applicant
VUSUMZI GEORGE
XEKETHWANA
Second Applicant
MONIA LYDIA
ADAMS
Third Applicant
ANGELINE
ARRISON
Fourth Applicant
LISINDIA DORELL
BAILEY
Fifth Applicant
FUNDISWA VIRGINIA
BIKITSHA
Sixth Applicant
MERLE
BRUINTJIES
Seventh Applicant
JOHANNES PETRUS DE
KLERK
Eighth Applicant
SHIRLY
FORTUIN
Ninth Applicant
JEFFREY
HAARHOFF
Tenth Applicant
JOHANNES
HENDRICKS
Eleventh Applicant
DOREEN ELAINE
JONKER
Twelfth Applicant
BULELANI
MEHLOMAKHULU
Thirteenth Applicant
SIPHOKAZI
SIWAYI
Fourteenth Applicant
NTOMBOZUKO
TONYELA
Fifteenth Applicant
DAWID VAN
WYK
Sixteenth Applicant
and
MINISTER OF JUSTICE AND
CORRECTIONAL
SERVICES
First Respondent
MINISTER OF TRADE
AND INDUSTRY
Second Respondent
NATIONAL CREDIT
REGULATOR
Third Respondent
MAVAVA TRADING 279
(PTY) LIMITED
Fourth Respondent
ONECOR (PTY)
LIMITED
Fifth Respondent
AMPLISOL (PTY)
LIMITED
Sixth Respondent
TRIPLE ADVANCED
INVESTMENTS 40 (PTY)
LIMITED
Seventh Respondent
BRIDGE DEBT (PTY)
LIMITED
Eighth Respondent
LAS MANOS
INVESTMENTS 174 (PTY) LIMITED
Ninth Respondent
POLKADOTS
PROPERTIES 172 (PTY) LIMITED
Tenth Respondent
MONEY BOX
INVESTMENTS 232 (PTY) LIMITED
Eleventh Respondent
MARAVEDI CREDIT
SOLUTIONS (PTY) LIMITED
Twelfth Respondent
ICOM (PTY)
LIMITED
Thirteenth Respondent
VILLA DES ROSES
168 (PTY) LIMITED
Fourteenth Respondent
MONEY BOX
INVESTMENTS 251 (PTY) LIMITED
Fifteenth Respondent
TRIPLE ADVANCE
INVESTMENTS 99 (PTY)
LIMITED
Sixteenth Respondent
FLEMIX & ASSOCIATES
INCORPORATED
ATTORNEYS
Seventeenth Respondent
ASSOCIATION OF
DEBT RECOVERY AGENTS NPC
Eighteenth Respondent
SOUTH AFRICAN HUMAN
RIGHTS
COMMISSION
Amicus Curiae
And in the matter
between:
ASSOCIATION OF
DEBT RECOVERY AGENTS NPC
Applicant
and
UNIVERSITY OF
STELLENBOSCH LEGAL AID
CLINIC
First Respondent
VUSUMZI GEORGE
XEKETHWANA
Second Respondent
MONIA LYDIA
ADAMS
Third Respondent
ANGELINE
ARRISON
Fourth Respondent
LISINDA DORRELL
BAILEY
Fifth Respondent
FUNDISWA VIRGINIA
BIKITSHA
Sixth Respondent
MERLE
BRUINTJIES
Seventh Respondent
JOHANNES PETRUS DE
KLERK
Eighth Respondent
SHIRLY
FORTUIN
Ninth Respondent
JEFFREY
HAARHOFF
Tenth Respondent
JOHANNES
HENDRICKS
Eleventh Respondent
DOREEN ELAINE
JONKER
Twelfth Respondent
BULELANI
MEHLOMAKHULU
Thirteenth Respondent
SIPHOKAZI
SIWAYI
Fourteenth Respondent
NTOMBOZUKO
TONYELA
Fifteenth Respondent
DAWID VAN
WYK
Sixteenth Respondent
MINISTER OF JUSTICE AND
CORRECTIONAL
SERVICES
Seventeenth Respondent
MINISTER OF TRADE
AND INDUSTRY
Eighteenth Respondent
NATIONAL CREDIT
REGULATOR
Nineteenth Respondent
MAVAVA TRADING 279
(PTY) LIMITED
Twentieth Respondent
ONECOR (PTY)
LIMITED
Twenty-first Respondent
AMPLISOL (PTY)
LIMITED
Twenty-second Respondent
TRIPLE ADVANCED
INVESTMENTS 40
(PTY)
LIMITED
Twenty-third Respondent
BRIDGE DEBT (PTY)
LIMITED
Twenty-fourth Respondent
LAS MANOS INVESTMENTS
174 (PTY)
LIMITED
Twenty-fifth Respondent
POLKADOTS PROPERTIES 172
(PTY)
LIMITED
Twenty-sixth Respondent
MONEY BOX INVESTMENTS
232 (PTY)
LIMITED
Twenty-seventh Respondent
MARAVEDI CREDIT
SOLUTIONS (PTY)
LIMITED
Twenty-eighth Respondent
ICOM (PTY)
LTD
Twenty-ninth Respondent
VILLA DES ROSES
168 (PTY) LIMITED
Thirtieth Respondent
MONEY BOX
INVESTMENTS 251 (PTY) LIMITED
Thirty-first Respondent
TRIPLE ADVANCED
INVESTMENTS 99
(PTY)
LIMITED
Thirty-second Respondent
FLEMIX & ASSOCIATES
INCORPORATED
ATTORNEYS
Thirty-third Respondent
And in the matter
between:
MAVAVA TRADING 279
(PTY) LIMITED
First Applicant
ONECOR (PTY)
LIMITED
Second Applicant
AMPLISOL (PTY)
LIMITED
Third Applicant
TRIPLE ADVANCED
INVESTMENTS 40 (PTY)
LIMITED
Fourth Applicant
BRIDGE DEBT (PTY)
LIMITED
Fifth Applicant
LAS MANOS INVESTMENTS
174 (PTY)
LIMITED
Sixth Applicant
POLKADOTS PROPERTIES 172
(PTY)
LIMITED
Seventh Applicant
MONEY BOX INVESTMENTS
232 (PTY)
LIMITED
Eighth Applicant
ICOM (PTY)
LIMITED
Ninth Applicant
VILLA DES ROSES
168 (PTY) LIMITED
Tenth Applicant
MONEY BOX INVESTMENTS
251 (PTY)
LIMITED
Eleventh Applicant
TRIPLE ADVANCED
INVESTMENTS 99
(PTY)
LIMITED
Twelfth Applicant
FLEMIX & ASSOCIATES
INCORPORATED
ATTORNEYS
Thirteenth Applicant
and
UNIVERSITY OF
STELLENBOSCH LEGAL
AID
CLINIC
First Respondent
VUSUMZI GEORGE
XEKETHWANA
Second Respondent
MONIA LYDIA
ADAMS
Third Respondent
ANGELINE
ARRISON
Fourth Respondent
LISINDA DORRELL
BAILEY
Fifth Respondent
FUNDISWA VIRGINIA
BIKITSHA
Sixth Respondent
MERLE
BRUINTJIES
Seventh Respondent
JOHANNES PETRUS DE
KLERK
Eighth Respondent
SHIRLY
FORTUIN
Ninth Respondent
JEFFREY
HAARHOFF
Tenth Respondent
JOHANNES
HENDRICKS
Eleventh Respondent
DOREEN ELAINE
JONKER
Twelfth Respondent
BULELANI
MEHLOMAKHULU
Thirteenth Respondent
SIPHOKAZI
SIWAYI
Fourteenth Respondent
NTOMBOZUKO
TONYELA
Fifteenth Respondent
DAWID VAN
WYK
Sixteenth Respondent
MARAVEDI CREDIT
SOLUTIONS (PTY)
LIMITED
Seventeenth Respondent
MINISTER OF JUSTICE AND
CORRECTIONAL
SERVICES
Eighteenth Respondent
MINISTER OF TRADE
AND INDUSTRY
Nineteenth Respondent
NATIONAL CREDIT
REGULATOR
Twentieth Respondent
ASSOCIATION OF DEBT
RECOVERY
AGENTS
NPC
Twenty-first Respondent
Neutral
citation:
University of Stellenbosch Legal Aid Clinic and
Others v Minister of Justice and Correctional Services and Others;
Association of
Debt Recovery Agents NPC v University of Stellenbosch
Legal Aid Clinic and Others; Mavava Trading 279 (Pty) Ltd and Others
v University
of Stellenbosch Legal Aid Clinic and Others
[2016]
ZACC 32
Coram:
Mogoeng CJ, Moseneke DCJ, Bosielo AJ, Cameron J,
Froneman J, Jafta J, Khampepe J, Madlanga J, Mhlantla J,
Nkabinde J and Zondo
J
Judgments:
Jafta J (first judgment - minority): [1] to [127]
Cameron J (second judgment - majority): [128] to
[161]
Zondo J (third judgment - majority): [162] to
[213]
Heard
on:
3 March 2016
Decided
on:
13 September 2016
Summary:
Magistrates’ Courts Act, 1944
—
constitutionality of
section 65J(2)(a)
and (b) — section
unconstitutional — emoluments attachment orders — failure
to provide judicial oversight —
issue of emoluments attachment
orders without court authorisation inconsistent with the Constitution
— reading in —
notional severance —
appropriate remedy
ORDER
On appeal from the Western
Cape Division of the High Court, and, on application for confirmation
of the order of constitutional
invalidity granted by the Western Cape
Division of the High Court:
1.
The appeals are dismissed with costs.
2.
The order of constitutional invalidity made
by the Western Cape Division of the High Court is not confirmed.
3.
The use of the word “or” after
the word “writing” and the omission of the word “and”
in the
place of the word “or”, and the omission of the
words “after satisfying itself that it is just and equitable
that an emoluments attachment order be issued and that the amount is
appropriate” after the word “authorised”
in
section 65J(2)(a)
of the
Magistrates’ Courts Act, 1944
are
inconsistent with the Constitution and invalid.
4.
The use of the word “will”
after the words “an emoluments attachment order” and the
omission of the word
“may” in the place of the word
“will” in
section 65J(2)(a)
of the
Magistrates’
Courts Act, 1944
are inconsistent with the Constitution and invalid.
5.
The
omission of:
(a)
a semi-colon in the place of the full-stop at the end of section
65J(2)(b)(ii) of the Magistrates’
Courts Act, 1944;
(b)
the word “and” at the end of
section 65J(2)(b)(ii)
of the
Magistrates’ Courts Act, 1944
; and
(c)
sub-paragraph (iii) under
section 65J(2)(b)
of the
Magistrates’
Courts Act, 1944
reading:
“
been
granted an order of court authorising that an emoluments attachment
order be issued after satisfying itself that it is just
and equitable
that the order be issued and that
the
amount is appropriate.”
is
inconsistent with the Constitution and invalid.
6.
Section 65J(2)
of the
Magistrates’
Courts Act, 1944
shall be read as though:
(a)
the word “or” after the word “writing” in
paragraph (a) is replaced
with the word “and”;
(b)
the words: “after satisfying itself that it is just and
equitable that an emoluments
attachment order be issued and that
the amount is appropriate.” appear after the
word “authorised” in paragraph (a);
(c)
the word “will” after the words “an emoluments
attachment order”
in paragraph (b)(i) is replaced with the word
“may”;
(d)
the full-stop at the end of paragraph (b)(ii) is replaced with a
semi-colon and the word
“and” appears after the
semi-colon;
(e)
the provision:
“
(iii)
been granted an order of court authorising that an emoluments
attachment order be issued after
satisfying itself that it is just
and equitable that the order be issued and that
the
amount is appropriate.”
appears
as paragraph (b)(iii) after paragraph (b)(ii).
7.
The orders in 2, 3, 4, 5, 6 and 8 operate
with effect from the handing down of this judgment.
8.
It is declared that
section 65J(2)(a)
and
(b) of the
Magistrates’ Courts Act, 1944
reads as follows:
“
65J.
Emoluments attachment orders
. . .
(2)
An emoluments attachment order shall not be issued—
(a)
unless the judgment debtor has consented thereto in writing
or
and
the court has so authorised
after satisfying itself
that it is just and equitable that an emoluments attachment order be
issued and that the amount is appropriate
, whether on application
to the court or otherwise, and such authorisation has not been
suspended; or
(b)
unless the judgment creditor or his or her attorney has first—
(i)
sent a registered letter to the judgment debtor at his or her last
known address advising
him or her of the amount of the judgment debt
and costs as yet unpaid and warning him or her that an emoluments
attachment order
will
may
be issued if the
said amount is not paid within ten days of the date on which that
registered letter was posted; and
(ii)
filed with the clerk of the court an affidavit or an affirmation by
the judgment creditor or
a certificate by his or her attorney setting
forth the amount of the judgment debt at the date of the order laying
down the specific
instalments, the costs, if any, which have
accumulated since that date, the payments received since that date
and the balance owing
and declaring that the provisions of
subparagraph (i) have been complied with on the date specified
therein
.
;
and
(iii)
been granted an order of court authorising
that
an emoluments attachment order be issued after satisfying itself that
it is just and equitable that the order be issued and
that the amount is appropriate.
”
9.
The respondents who opposed confirmation of
the order of constitutional invalidity made by the Western Cape
Division of the High
Court are ordered to pay the applicants’
costs jointly and severally, the one paying the other to be absolved,
including
the costs of three counsel.
JUDGMENT
JAFTA J:
[1]
This matter involves an application for
confirmation of an order of invalidity made by the Western Cape
Division of the High Court
and an appeal against certain parts of
that order. The High Court declared that certain specified
words in section 65J(2)
of the Magistrates’ Courts Act
[1]
(Act) were inconsistent with the Constitution and invalid to the
extent that they fail to provide for judicial oversight over the
issuing of an emoluments attachment order against a judgment debtor.
A further declaration was granted to the effect that
section 45 of
the 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.
[2]
The declaration of invalidity was submitted
to this Court for confirmation as required by the Constitution and
relevant legislation.
[2]
Section 172(2) of the Constitution stipulates that an order of
constitutional invalidity of an Act of Parliament made
by the High
Court has no force and effect unless it is confirmed by this Court.
Furthermore, the section also authorises
a party with a sufficient
interest to appeal against such order. In other cases, an
appeal to this Court may be pursued only
with its leave.
Parties
[3]
The first applicant is the University of
Stellenbosch Legal Aid Clinic (Law Clinic), a law clinic
established by the University
of Stellenbosch and registered with the
Cape Law Society, in terms of the Attorney’s Act.
[3]
The Law Clinic provides free legal services to indigent persons.
Its clients are mainly labourers on farms in the Cape
Winelands area
and low wage earners in Stellenbosch and Paarl. Its areas of
interest are debt relief, farm evictions and
family matters.
Recently the Law Clinic has expended a significant portion of its
resources on cases involving debt relief
and exploitative lending
practices. Currently the Law Clinic assists more than 200
people a month with advice in respect
of orders issued to attach
their wages to pay judgment debts, obtained by credit providers.
[4]
The second to sixteenth applicants are
individual clients of the Law Clinic. Twelve of them reside in
Stellenbosch, two in
Paarl and one in Macassar. They all had
emoluments attachment orders issued against them by clerks of the
court employed
in various Magistrates’ offices, many of which
are located far away from where the applicants reside and work.
[5]
The respondents who participated in these
proceedings are first, the Minister of Justice and Correctional
Services who is charged
with the responsibility of administering the
impugned Act. The other respondents are Flemix and Associates
Incorporated Attorneys
that represent a number of small credit
providers. These credit providers were cited individually in
the High Court.
I will refer to them collectively as the Flemix
respondents. The Association of Debt Recovery Agents NPC
(Association) was
joined as a respondent in the High Court. The
Association represents debt collectors and contributes no less than
three directors
to the Board of Directors of the Council for Debt
Collectors. It is a member of the Credit Industry Forum which
advises the
Minister of Trade and Industry on certain matters
relating to the debt collection industry. It also advances
members’
interests at relevant statutory and non-statutory
bodies and actively participates in the process of drafting
legislation that
impacts on the interests of the members. Its
members vary from debt collectors, law firms specialising in debt
recovery,
credit providers and other service providers in debt
collection industry.
Legislative
Background
[6]
For a better understanding of the issues,
it is necessary first to set out the statutory framework and its
background. Like
in many developing countries, the commercial
credit industry in South Africa is huge. The affidavit filed by
the Flemix respondents
shows that as at June 2013, this industry
supported 20 million credit consumers out of a population of 52
million. At the
time the total debtors’ book was
estimated at R1.47 trillion, of which R168 billion comprised
unsecured debts.
[7]
However, during the apartheid era,
commercial credit was mainly available to the white minority.
Credit provision and debt
collection were taken as purely commercial
legal matters subject to the sanctity of contracts with the corollary
that a failure
to repay a loan constituted a breach of contract.
This breach entitled the credit provider to enforce the contract
through
litigation. An order obtained from that litigation
would authorise the credit provider coercively to attach and sell the
debtor’s assets to satisfy the judgment debt.
[8]
Then, advancing credit to debtors was
dependent mainly on the whims of the credit provider who could impose
whatever conditions
it wished for within the bounds of the
statute.
[4]
But the relevant statutes did not govern the court process in terms
of which credit agreements were enforced. These
matters were
regulated by ordinary rules of procedure. The number of cases
relating to debt collection grew in the seventies
and exceeded the
capacity of the courts to adjudicate them in the normal way.
This was compounded by the fact that litigation
was expensive and
credit providers passed the risk to debtors by including in the
agreement a term that imposed liability on the
debtor to pay the
creditor’s costs on the highest permissible scale.
[5]
[9]
In the majority of the cases that reached
the courts, debtors had no legal defences to the creditors’
claims. Financial
hard times would be the reason for their
default in repaying their loans. The bulk of these matters went
through courts undefended
but at a huge cost to the debtor.
[10]
In an amendment that came into force in
January 1979, Parliament amended the
Magistrates’ Courts Act to
provide for an expedient method of debt collection. Debtors
were empowered to consent to judgment and pay in instalments.
[6]
Of the five sections of the chapter introduced by the amendment, only
three are important for present purposes. The
first is
section
55
, which defines “debt” as a liquidated sum of money.
This definition notably delineates the scope of debts to be
enforced
in terms of the chapter which is devoted to debt recovery.
[11]
The second provision is
section 57.
This section provides for the first type of procedure for the
payments of debt in instalments without the involvement of
the
courts. The section empowers debtors to admit liability in
writing at the time they receive a letter of demand from the
creditors. The admission must be accompanied by an offer to pay
the debt in instalments, together with costs and collection
fees.
The debtor must also agree that in the event of her failure to pay,
the creditor shall without notice to her, be entitled
to apply for
judgment in respect of the balance.
[12]
If the creditor accepts the offer, it must
notify the debtor in writing. For as long as the debtor pays
the agreed instalment,
no litigation would ensue. In the event
of breach, the creditor may submit a written request for judgment to
the clerk of
the court who shall enter judgment in favour of the
creditor and order the debtor to pay the judgment debt in specified
instalments.
The creditor must then notify the debtor about the
judgment which is treated as a default judgment.
[13]
The other important provision is
section
58.
It mandates the debtor to consent to judgment and an order
for payment of the judgment debt in instalments. Upon receipt
of a letter of demand or summons, the debtor may consent in writing
to judgment in favour of the creditor and also agree to an
order of
court for payment in specified instalments. On the written
request of the creditor, the clerk of the court shall
enter judgment
in favour of the creditor and order the debtor to pay the judgment
debt in instalments. In both instances,
judgment is granted by
the clerk of the court.
[14]
If the debtor in either procedure pays the
instalments diligently, after the order by the clerk of the court,
the matter is put
to rest. But if the debtor defaults,
execution of judgment at the instance of the creditor becomes
necessary. It is
however convenient first to outline the
relevant provisions of the National Credit Act
[7]
and examine the impact on the procedure set out above, before
considering provisions on execution.
National Credit Act
[15]
The democratic dispensation rendered
legislation that governed the credit markets ill-suited to the
economy and open to the entire
population. The black population
was afforded the opportunity to participate in the financial credit
market, both as creditors
and consumers of credit. The
democratic government realised that the credit market was the
lifeblood of economic development.
This is because credit
enabled consumers to acquire assets like houses, cars and furniture
which they could not afford without
credit finance. Many
over-extended themselves in debt they could not repay.
Unscrupulous and reckless credit providers
also entered the market
and offered small loans without any form of security, in contrast to
banks. In return they charged
exorbitant interest which raised
the amount owing rapidly within a short span of time, with disastrous
consequences for debtors
who perpetually remain in the hole of debt.
[16]
Parliament intervened by passing the
National Credit Act and by so doing overhauled the previous credit
legislation. This
legislation came into effect in three
phases. The objects of the National Credit Act are to—
“
promote
and advance the social and economic welfare of South Africans,
promote a fair, transparent, competitive, sustainable, responsible,
efficient, effective and accessible credit market and industry, and
to protect consumers.”
[8]
[17]
The National Credit Act seeks to protect
consumers by a number of means including the promotion of responsible
borrowing that avoids
over-indebtedness; prevention of reckless
credit granting by credit providers; encouragement of consumers to
fulfil their financial
obligations; and provision of a consistent and
accessible system of consensual resolution of disputes arising from
credit agreements.
[18]
But the National Credit Act does not only
protect and advance the interests of debtors. It also promotes
the interests of
credit providers. For it may only achieve the
goal of a “fair, transparent, competitive, sustainable,
responsible,
efficient, effective and accessible credit market”,
if the Act strikes the right balance in advancing the rights of
consumers
on the one hand and credit providers’ interests, on
the other.
[19]
The National Credit Act has introduced a
reformed framework that regulates the credit market from the moment
money is lent up to
the point of initiating legal proceedings to
enforce the terms of the credit agreement. The institution of
litigation is
governed by Part C of Chapter 6. Where a debtor
has defaulted in repaying a debt, Part C obliges the credit provider
first
to pursue a consensual resolution of the dispute before
instituting legal proceedings. Section 129(1) demands that
notice
be given to the consumer, drawing her attention to the default
and proposing that if the consumer so wishes, she may refer the
matter to a debt counsellor with the intent that the parties may
resolve the dispute and agree on a plan to bring payments up to
date.
[9]
[20]
A major reform introduced by Part C is to
freeze the credit provider’s contractual and common law
rights. At common
law the credit provider is entitled to
approach the courts immediately upon the debtor’s default.
In effect Part C
suspends the exercise of the right of access to
courts by the credit provider until the consensual resolution process
has run its
course or the debtor fails to take part in that process.
[21]
In
Sebola
,
this Court affirmed the suspension of the rights to approach courts
in these terms:
“
Section
129(1)(a) requires a credit provider, before commencing any legal
proceedings to enforce a credit agreement, to draw the
default to the
notice of the consumer in writing. It has been described as a
‘gateway’ provision, or a ‘new
pre-litigation layer
to the enforcement process’. Although section 129(1)(a)
says the credit provider ‘may’
draw the consumer’s
default to his or her notice, section 129(1)(b)(i) precludes the
commencement of legal proceedings
unless notice is first given.
So, in effect, the notice is compulsory.”
[10]
[22]
Both sections 129(1)(b) and 130(1) preclude
the credit provider from instituting litigation before satisfying
their requirements.
The National Credit Act considers
compliance with those requirements to be so pivotal to debt
collection that it even suspends
the exercise of judicial power by
the courts to adjudicate disputes arising from credit agreements.
In this regard section
130(3)(a) provides:
“
Despite
any provision of law or contract to the contrary, any proceedings
commenced in a court in respect of a credit agreement
to which this
Act applies, the court may determine the matter
only
if the court is satisfied that
—
(a)
in the case of proceedings to which
sections 127, 129 or 131 apply, the procedures required by those
sections have been complied
with.”
[23]
What emerges from the text of this section
is the fact that it supersedes “any provision of law or
contract to the contrary”
and obliges a court to adjudicate a
dispute arising from a credit agreement “only if the court is
satisfied” that the
procedures required by sections 127, 129
and 131 have been complied with. If not, the power to
adjudicate remains suspended
until there is compliance with the steps
set out in the court order that adjourns the proceedings.
[24]
Section 130(4) governs the situation where
a credit provider has instituted the proceedings without complying
with the procedure
in section 129. Again in peremptory language
this section mandates the court to adjourn the hearing before it and
“make
an appropriate order setting out the steps the credit
provider must complete before the matter may be resumed”.
[11]
[25]
The scheme that emerges from a close
examination of section 130(3) and (4) is that in
all
proceedings to which the National Credit Act applies, the court is
required first at the commencement of the hearing to enquire
into
whether there was compliance with section 129. For it may
adjudicate the case only if so satisfied. Notably it
must be
the court and the court alone that is satisfied that there was
compliance. Furthermore, it must only be the court
that
determines the case and grants judgment. The court’s
satisfaction that there was compliance constitutes a jurisdictional
fact which must exist before the court may continue with the
hearing. For the court to be satisfied, the relevant section
requires facts which show that there was compliance to be placed
before the court.
[26]
In the eyes of the National Credit Act, the
existence of this jurisdictional fact is a prelude to the
continuation of the hearing
and determination of the matter by the
court. Absent the jurisdictional fact, the court must adjourn
the proceedings and
direct that certain steps be followed. The
section leaves it to the discretion of the court to determine steps
that are appropriate
to a particular case. Once the matter is
adjourned, the hearing may only resume if the credit provider has
taken all steps
specified in the court order.
[27]
Of relevance to the present matter is the
impact of sections 129 and 130 of the National Credit Act on the
procedures set out in
sections 57
and
58
of the
Magistrates’ Courts
Act. The
latter sections empower a clerk of the court to
adjudicate and grant judgment in favour of the credit provider in
certain defined
circumstances. This is inconsistent with
section 129
read with
section 130.
In terms of
sections 129
read with 130 it is only the courts which decide a matter to which
the National Credit Act applies. This conflict must be
resolved
with reference to section 172 of the National Credit Act.
[12]
[28]
Section 172 states that if there is a
conflict between section 57 and 58 on the one hand and section 129 of
the National Credit
Act on the other hand, the provisions of section
129 shall prevail to the extent of the conflict. Although
section 130 is
not listed on the schedule referred to in section 172,
it is incorporated by reference in section 129. Indeed in
Sebola
this Court held that the two sections must be read together. There
Cameron J said:
“
First,
it is impossible to establish what a credit provider is obliged and
permitted to do without reading both provisions.
Thus, while
section 129(1)(b) appears to prohibit the commencement of legal
proceedings altogether (‘may not commence’),
section 130
makes it clear that where action is instituted without prior notice,
the action is not void. Far from it.
The proceedings have
life, but a court ‘must’ adjourn the matter, and make an
appropriate order requiring the credit
provider to complete specified
steps before resuming the matter.
The
bar on proceedings is thus not absolute, but only dilatory. The
absence of notice leads to a pause, not to nullity. But
to deduce
this, it is necessary to read section 129 in the light of section
130. Section 129 prescribes
what
a
credit provider must prove (notice as contemplated) before judgment
can be obtained, while section 130 sets out
how
this can be proved (by delivery).”
[13]
[29]
Bearing in mind that the scope of both
sections 57
and
58
of the
Magistrates’ Courts Act is
restricted
to enforcing payment of debts, it follows that these sections do not
apply to debts covered by the National Credit Act
in respect of which
payment may only be enforced in terms of section 129 and 130.
Therefore the High Court in
Myambo
[14]
erred in holding that
section 58
of the
Magistrates’ Courts Act
continues
to apply to matters falling within the ambit of the
National Credit Act.
[30]
Moreover, the procedure set out in sections
57 and 58 is incompatible with the litigation requirements of
sections 129 and 130 of
the National Credit Act. By obliging
the creditor and consumer first to engage in pre-litigation solutions
and suspending
the court’s power to adjudicate disputes until
there is compliance with legislative requirements, these provisions
reinforce
the protection of the consumers. At the same time
they deprive the creditor of its contractual and common law rights to
enforce
the agreement by means of litigation, until certain steps
have been taken.
[31]
In contrast sections 57 and 58 are part of
the pre-Constitution legislation that afforded less protection to
debtors. To hold
that these sections continue to apply to
matters that fall within the purview of the National Credit Act would
destroy the edifice
carefully constructed by sections 129 and 130 to
protect consumers. This is because they sanction a different
procedure,
free of the strictures imposed by sections 129 and 130.
The clerk of the court would be at liberty to determine matters,
regardless of whether there has been compliance with these two
sections.
[32]
In light of section 34 of the
Constitution,
[15]
it is doubtful that sections 57 and 58 are constitutionally
compliant. The Constitution guarantees everyone the right of
a
fair hearing and resolution of disputes by application of law.
This might be exercised before a court, or an independent
and
impartial tribunal or forum. A clerk of the court whom these
provisions empower to decide cases is neither a court or
independent
tribunal or forum. However, in these proceedings, there is no
challenge directed at sections 57 and 58.
Their relevance
arises in the context of executing orders granted by the clerk of the
court through a procedure of attaching the
debtor’s salary.
This brings us to the outline of the law on execution.
Execution
[33]
In
Chief
Lesapo
, this Court defined the
relationship between a judicial process and execution. Mokgoro
J declared:
“
An
important purpose of section 34 is to guarantee the protection of the
judicial process to persons who have disputes that can
be resolved by
law. Execution is a means of enforcing a judgment or order of
court and is incidental to the judicial process.
It is
regulated by statute
and the Rules of Court
and is subject to the supervision of the court which has an inherent
jurisdiction
to stay the execution if the
interests of justice so require.”
[16]
[34]
While there is a connection between the
judicial process and execution, these are separate processes, which
occur consecutively.
There can be no execution without a
judicial process as a prelude. The judicial process ends with a
delivery of judgment
or the granting of an order defining the
parties’ rights. Execution may only commence after the
judicial process has
ended. For execution is a process of
enforcing a court order. Depending on the nature of the order
granted, execution
may be against the person or the property of the
judgment debtor.
[35]
Here we are concerned with execution
against property consequently this outline will be limited to that
form of execution. This
form of execution applies where a
judgment sounding in money is granted, that is an order that requires
the judgment debtor to
pay a sum of money. Execution against
property may further be divided into the general and the special
forms. But both
are undertaken only if the judgment debtor
fails to pay the debt after the granting of the order. In that
event for a general
form to occur, three steps must be taken.
First, a writ of execution must be issued. The writ constitutes
authority
for the messenger of the court to enforce the court order.
Second, the attachment of the debtor’s property by the
messenger.
Third, the sale of the attached property by public
auction and payments of the proceeds to the judgment creditor.
[36]
However, the messengers of the court must
first proceed against the debtor’s movable property.
[17]
But if the debtor has no movables, then with leave from the court
execution against immovable property may be effected.
[18]
In the event of the debtor who has no movable and immovable assets, a
special kind of execution becomes necessary.
This special
execution must be authorised by the court.
[37]
The special execution includes an order
that the judgment debt be paid in instalments. This form of
execution may be ordered
at the instance of the judgment debtor.
[19]
But the order for payment of the judgment debt in instalments may be
made only with the consent of the judgment creditor.
This kind
of order may also be issued at the instance of the creditor. If
a judgment for the payment of money remained unsatisfied
for a period
of 10 days, the judgment creditor may issue notice calling upon the
judgment debtor to appear before the court for
an inquiry into her
financial position.
[20]
At the inquiry, the debtor is permitted to lead evidence on her
financial position and ability to pay the judgment debt.
[21]
In determining the debtor’s ability to pay the judgment debt in
instalments the court must take into consideration
a number of
factors. These include the nature of her income, the amount she
needs for her essential expenses and those of
her dependants, and her
financial commitments under existing contracts.
[22]
[38]
If at the inquiry the court is satisfied
that the debtor is able to pay the judgment debt in instalments, it
may order her to pay
specified instalments.
[23]
In addition if the debtor is employed by a person who resides or
carries on a business within the court’s area of jurisdiction,
the court may also authorise the issuing of an emoluments attachment
order in terms of section 65J(1).
[24]
[39]
An emoluments attachment order issued in
terms of section 65J obliges the debtor’s employer to pay from
time to time specified
emoluments out of the debtor’s salary,
to the judgment creditor.
[25]
The employer must make the periodical payments until the relevant
judgment debt and costs are paid in full.
[40]
This case concerns the constitutional
validity of
section 65J(2)
of the
Magistrates’ Courts Act and
the scope of
section 45.
These issues must be assessed in the
context of the legal framework outlined here. The validity of
the impugned provisions
must be tested against the right guaranteed
by section 34 of the Constitution.
[41]
It is now convenient to set out the facts.
But before doing so it is proper to make an observation that the
record shows that
the law regulating the granting of emoluments
attachment orders was misapplied and abused by the credit providers.
This caused
enormous hardship to individuals against whom those
orders were issued.
Facts
[42]
The individual applicants are general
workers who earn low wages and reside in Stellenbosch, Paarl and
Macassar in the Western Cape.
They approached a company known
as SA Multiloan in Stellenbosch for small loans. Having signed
forms at the company’s
offices, they obtained the loans they
asked for. Later when they fell into arrears the credit
provider through its representatives,
demanded that they sign further
documents which resulted in default judgments and emoluments
attachment orders being obtained by
credit providers, from clerks of
magistrates’ courts, located far away from where the applicants
live and work. In
some instances, their signatures that enabled
the credit provider to obtain orders were forged.
[43]
In most cases it was only when deductions
were effected from their wages by their employers that the applicants
became aware of
the legal route taken by the credit provider.
The monthly deductions from their wages were too high, leaving the
applicants
with little to support or maintain themselves and their
families. Consequently, the individual applicants who could not
afford
legal representation owing to their low income, sought legal
assistance from the Law Clinic which instituted these proceedings to
vindicate their rights. But before setting out the litigation
process in the High Court, it is necessary to refer to details
of
what took place. In this regard, a sample reference to only one
individual applicant would suffice.
[44]
That applicant is Mr Vusumzi George
Xekethwana, a farm worker who works and lives in Stellenbosch.
He earns R2 420 per
month from which deductions of R1 194
are made, leaving him with the net pay of R1 263. The
deductions include
a garnishee of R600. He is the sole
breadwinner in his family, comprising his wife, five children and one
grandchild.
[45]
In 2011 he needed a loan when he came
across a pamphlet that advertised that SA Multiloan offered micro
loans. He went to
its offices in Stellenbosch where he applied
for a loan. He was served by a woman called Bridget who asked
him to furnish
her with a payslip and three months’ bank
statements. She completed a form and the loan amount was later
deposited
into his bank account. It turned out later the form
completed by Bridget reflected wrongly that Mr Xekethwana had a
single
expense. The form said he spent R50 per month on food.
This form was purportedly completed as an assessment in terms
of
section 81(2) of the National Credit Act.
[26]
He was not given a copy of the loan agreement.
[46]
As he wanted to buy a cellphone he again
approached SA Multiloan for credit. He was again helped by
Bridget who completed
the application form. This application
too was successful and he purchased a Blackberry smartphone.
For a few months
payment for the two loans was deducted from his bank
account. At some point the Blackberry was stolen and he
reported the
theft to SA Multiloan, requesting a replacement phone.
SA Multiloan declined his request unfairly in his own view.
Dissatisfied, he closed the bank account and opened a new account at
Capitec Bank. This meant that payment for the loans could
not
be made.
[47]
During 2012, an unknown man arrived at his
place of work and demanded that he should sign some document.
When he refused the
man became angry and left. It turned out
later that his signature was forged on documents which the credit
provider had used
to obtain default judgments and an emoluments
attachment order against Mr Xekethwana. This came to light
when his employer
demanded documents pertaining to the emoluments
attachment orders from Flemix Attorneys who sought to enforce the
orders.
It was gleaned from the documents that the credit
providers were Mavava Trading 279 (Pty) Ltd and Quecos (Pty) Ltd, and
not SA
Multiloan with which Mr Xekethwana had dealt.
Instead the documents showed that SA Multiloan was a loan originator
whose
business was to facilitate loans for a fee between consumers
and credit providers.
[48]
It appeared that SA Multiloan did not only
fail to comply with section 81(2) of the National Credit Act but also
furnished misleading
information to the credit providers who
themselves failed to conduct a financial assessment before concluding
credit agreements
with Mr Xekethwana. Section 81 prohibits
credit providers from entering into credit agreements without first
undertaking
a financial assessment on existing financial means and
obligations of a prospective consumer. The assessment must also
include
a check on the credit history of the consumer and a
determination of the consumer’s understanding of his rights,
risks and
costs involved in the proposed credit agreement.
[49]
The failure to conduct an assessment
results in the credit agreement being reckless and unenforceable.
If, in any proceedings,
it appears to a court that a credit agreement
being considered is reckless, the court is obliged to declare that it
was a reckless
agreement and suspend the agreement’s force and
effect.
[27]
Here this did not happen, owing to fraudulent documents that were
submitted to the clerks of the court, for purposes of granting
a
default judgment purportedly by consent and an emoluments attachment
order, purportedly by consent.
[50]
The first of the fraudulent documents used
against Mr Xekethwana is a document titled “Demand in
terms of the Provisions
of Section 58 of the Act 32 of 1944”.
[28]
It is a letter dated 21 August 2012, addressed to Mr Xekethwana
by Coombe & Associates, representing Mavava Trading
279 (Pty)
Ltd. It records that Mr Xekethwana was in arrears and that
notice in terms of section 129 of the National Credit
Act had
been given to him and that the balance owing in terms of the
agreement was R4 623.58. The letter also purports
to
confirm that a financial assessment was conducted in terms of section
81(2) before the agreement was concluded and that the
agreement was
not reckless as contemplated in section 80(1) of the Act.
[51]
The letter continues to advise Mr
Xekethwana that he should pay the outstanding amount with interest at
the rate of 60% per year
from the date of the letter. Should he
fail to pay, it proceeds, summons would be issued against him in a
magistrate’s
court. The litigation process, it continues,
could be shortened if he acknowledged the indebtedness and undertook
to pay
it in instalments and that that undertaking would be made an
order of court. If he defaults, the credit provider would seek
a default judgment against him without notice, except the one
required by section 129 of the National Credit Act. In that
event, the credit provider will obtain an emoluments attachment order
against his salary for monthly payments of the debt in instalments
until the debt has been settled in full. The letter further
states that the credit provider is required, for his consent,
to
deliver it to him personally before he could consent. Indeed
the letter purportedly shows that it was hand delivered and
that Mr
Xekethwana signed for it.
[52]
The second document consists of a notice in
terms of section 129 of the National Credit Act.
[29]
It is from the same firm of attorneys and is addressed to
Mr Xekethwana. It informs him about the default and
demands payment within 10 business days, failing which he may
negotiate arrangements to pay the arrears within that period or refer
the agreement to a debt counsellor for the resolution of any dispute
under the agreement. This letter too repeats that a
credit
assessment was done and that the agreement was not reckless.
[53]
The third document is a notice of consent
to judgment, offer to pay the debt in instalments and consent to an
emoluments attachment
order, purportedly given by Mr Xekethwana.
It states that he agreed to pay the monthly instalments of R807,
escalating
at the rate of 10% per year. It also says that he
was consenting to judgment being entered against him and an
emoluments
attachment order being issued. It was purportedly
signed by the credit provider and Mr Xekethwana at Stellenbosch on
4 September
2012 and in the presence of two witnesses.
[54]
The fourth document is a consent to
jurisdiction purportedly given by Mr Xekethwana and the credit
provider. It records
that the parties had agreed that the
magistrates’ court for the district of Beaufort West will have
jurisdiction in the matter
between them and for payment of R4 623
together with interest at the rate of 60% and legal costs on attorney
and client scale.
[55]
Armed with these fraudulent documents, the
credit provider applied to the clerk of the court at the magistrate’s
office in
Beaufort West for judgment and an emoluments attachment
order. The clerk of the court granted the requests on
22 October
2012. Although the emoluments attachment order
was granted by the clerk of the court it crucially states:
“
Whereas
it has been made to appear to the above-mentioned Court that
emoluments are at present or in future owing or accruing to
the
judgment debtor by or from the garnishee and that after satisfaction
of the following order sufficient means will
be
left to the judgment debtor to maintain himself or herself and those
dependent upon him or her.”
[56]
This assertion is plainly untrue. It
was never made apparent to the court that after the payment of the
judgment debt from
Mr Xekethwana’s salary, sufficient means
would be left for him to maintain himself and his family. This
was not proved
even to the clerk of the court herself. But more
significantly this assertion shows that the credit provider
understood the
provisions regulating the granting of emoluments
attachment orders correctly. The relevant section requires the
court and
not a clerk of the court, to grant emoluments attachment
orders, after satisfying itself that the judgment debtor will have
sufficient
money to maintain himself and his family. The
statement that such orders are issued by the court is repeated in the
answering
affidavit filed on behalf of the credit provider.
This affidavit was deposed to by the credit provider’s
attorney.
Yet the order was sought and obtained from the clerk
of the court.
[57]
Unhappy with the emoluments attachment
orders granted against them, some of the applicants asked the credit
provider to reduce the
amounts so that they could be left with enough
money to support themselves and their families. But the credit
provider refused.
It is this recalcitrance of the credit
provider which led to this litigation. The individual
applicants instructed the Law
Clinic to institute proceedings, to
challenge the orders taken against them.
Litigation
[58]
In September 2014, the Law Clinic
instituted these proceedings in the High Court. In the
main it sought an order declaring
the emoluments attachment orders
obtained from the clerks of the court against the individual
applicants to be invalid and of no
force and effect. The Law
Clinic asserted that these orders were unlawful by reason that they
were based on fraudulent documents
and were issued by clerks of the
court who had no power to grant them. It also sought an order
declaring that
section 45
of the
Magistrates’ Courts Act
does
not empower a judgment debtor to consent to jurisdiction of a
magistrates’ court of the area other than that in which the
judgment debtor resides or works. While the Flemix respondents
and the Association sought a declaration to the effect that
the
section does empower debtors to give such consent.
[59]
The Law Clinic also challenged the
constitutional validity of
section 65J(2)
of the
Magistrates’
Courts Act and
sought a declaration that the phrase “the
judgment debtor has consented thereto in writing” is
inconsistent with the
Constitution and invalid to the extent that it
fails to provide for judicial oversight when an emoluments attachment
order is granted
against a judgment debtor.
[60]
Based on the undisputed evidence of the
individual applicants, the High Court granted an order that
declared unlawful the emoluments
attachment orders and set them
aside. No appeal was sought against this order.
[61]
With regard to the declaration relating to
section 45, the High Court considered the interface between that
section and sections
90 and 91 of the National Credit Act.
Section 90 provides that a provision in the credit agreement that
expresses consent
of the consumer to jurisdiction of a court located
outside the area where the consumer lives or works is unlawful.
Section
91 stipulates that a credit provider may not require or
induce a supplementary agreement that contains an unlawful provision.
[62]
The High Court also compared section 45 to
section 65J
of the
Magistrates’ Courts Act. Section
65J
declares that an emoluments attachment order may be issued from a
court of the district in which the judgment debtors’
employer
resides, carries on business or is employed. The Court
concluded that the narrow provisions of
section 65J
cannot be
reconciled with the broader provisions of
section 45.
Applying the principle that says if a specific provision in a statute
contradicts a general provision, the former trumps
the latter, the
High Court declared that a judgment debtor may not grant consent to
jurisdiction of a court other than that of
the area where the debtor
lives or works.
[63]
Regarding the invalidity claim the High
Court, relying on
Chief Lesapo
,
[30]
Jaftha
[31]
and
Gundwana
,
[32]
held:
“
The
Constitutional Court has emphasised the general principle that there
must be judicial oversight where an applicant seeks an
order to
execute against or seize control of the property of another person.
This principle has been reiterated in a number of
Constitutional
Court judgments.”
[33]
[64]
The High Court concluded that, on the
reasoning in
Gundwana
,
“judicial oversight over the issue of an emoluments attachment
order must be mandatory” and declared:
“
The
process of issuing an [emoluments attachment order] requires an
evaluation of the amount of
money to be
attached per month as compared to the amount needed by the
debtor to support herself and her family. On the
reasoning in
Gundwana
,
judicial
oversight over the issue of an
[emoluments attachment order] must be mandatory (rather than being
subject
to the discretion of the clerk of
the court) and must occur when the execution
order
is issued (not subsequently, when an attempt might be made to have
the
execution order varied or set aside).
Section
65J(2)(b)(i)
and
section 65J(2)(b)(ii)
of the MCA are in the
circumstances constitutionally invalid to the extent that they allow
for [emoluments attachment orders] to
be issued by a clerk of the
court
without judicial oversight. This is
so both with regard to international law and to the current
jurisprudence of the Constitutional
Court.
”
[34]
[65]
Consequently, the High Court issued this
order:
“
2.1
The words “the judgment debtor had consented thereto in
writing” in section 65J(2)(a)
of the Magistrates’
Act 32 of 1944 (“the Magistrates’ Court Act”) and;
2.2
Section 65J(2)(b)(i) and section 65J(2)(b)(ii) of the Magistrates’
Court Act,
are inconsistent with the Constitution of the Republic of
South Africa Act, 1996 (“the Constitution”) and invalid
to
the extent that they fail to provide for judicial oversight over
the issuing of an emoluments attachment order against a judgment
debtor.”
[35]
[66]
Whereafter, the order of invalidity was
submitted to this Court for confirmation.
[67]
The South African Human Rights Commission
(Commission), which was established in terms of chapter nine of the
Constitution was admitted
as an amicus curiae. The Commission
was allowed to submit written argument and advance oral submissions
at the hearing.
Issues
[68]
There are two main issues arising in this
matter. The first is whether the order of invalidity issued by
the High Court should
be confirmed. The second and relating to
the appeal is whether the declaration made by that Court should be
overturned and
replaced by a declaration to the effect that a
judgment debtor may, for purposes of granting an emoluments
attachment order, consent
to jurisdiction of a magistrates’
court other than the court of the area where the debtor resides or
works.
Confirmation
[69]
This Court will confirm the declaration of
invalidity of section 65J(2) if it is satisfied that the order was
properly made.
This is despite the fact that the parties,
including the Minister of Justice, have argued the matter on the
footing that the impugned
provision was invalid. For such
concession does not bind this Court which must still satisfy itself
that the impugned provision
is indeed invalid by reason that it is
inconsistent with the Constitution. This Court may not render a
judgment based on
an incorrect application of the law just because
all parties agreed to it.
[36]
[70]
The Court may be satisfied that the order
falls to be confirmed only if it has been established that the
impugned provision unjustifiably
limits rights entrenched in the Bill
of Rights. This is because the applicants put forward some of
those rights as the benchmark
against which the validity of section
65J(2) must be tested. Although a number of rights were relied
upon in the papers,
in this Court the applicants confined their
attack to rights in section 34 of the Constitution.
[37]
This decision was apparently influenced by two factors. The
High Court based its conclusion on decisions of this Court
in
Chief
Lesapo
,
Jaftha
and
Gundwana
.
The other factor is that the applicants had asserted and the High
Court had upheld that the constitutional defect lies in
the fact that
section 65J(2) fails to provide for judicial oversight when an
emoluments attachment order is granted.
[71]
Therefore we must investigate whether the
impugned provision does not provide for judicial oversight at the
time an emoluments attachment
order is issued. If it does not,
whether the omission limits the right entrenched in section 34 of the
Constitution.
[72]
The High Court proceeded from the premise
that section 65J(2) did not provide for judicial oversight without
interpreting that section.
This was an error. The Court
was bound to determine for itself whether indeed the section failed
to provide for judicial
oversight. The parties’ admission
in this regard did not and could not relieve the High Court from that
duty because
it related to a question of law. The validity of
an Act of Parliament cannot depend on the whims of parties in a
particular
litigation. It is an objective legal issue to which
the parties’ views are immaterial.
[73]
Since here the ground for the challenge is
that section 65J(2) fails to provide for judicial oversight, it is
necessary first to
determine what the concept means before
undertaking the interpretation of the section.
Judicial oversight
[74]
The phrase “judicial oversight”
was defined in
Jaftha
by this Court as denoting a decision by a court, following a
consideration of relevant facts. In that case the Court
observed:
“
Judicial
oversight permits a magistrate to consider all the relevant
circumstances of a case to determine whether there is good
cause to
order execution . . . Even if the process of execution results from a
default judgment the court will need to oversee
execution against
immovables. This has the effect of preventing the potentially
unjustifiable sale in execution of the homes
of people who, because
of their lack of knowledge of the legal process, are ill-equipped to
avail themselves of the remedies currently
provided in the Act.”
[38]
[75]
We must therefore interpret section 65J to
determine whether it empowers the court or a clerk of the court to
grant an emoluments
attachment order. If it is only the court
that is mandated to issue the order, then the inevitable conclusion
must be that
the impugned provision provides for judicial oversight.
[76]
The Constitution obliges us to give the
relevant provision a meaning that preserves its validity, provided
the text is reasonably
capable of that meaning. In other words
a construction that places the provision within constitutional bounds
must be preferred
over the one that renders it inconsistent with the
Constitution.
[39]
Thus in
De Beer NO,
Yacoob
J said:
“
Where
a statutory provision is capable of more than one reasonable
construction, one which would lead to constitutional invalidity
and
the other not, a court ought to favour the construction which avoids
constitutional invalidity, provided such interpretation
is not unduly
strained.”
[40]
[77]
We must also read section 65J(2) not only
in the context of the Act but also of Chapter IX which deals with
execution. Reading
section 65 as a whole reveals two procedures
arising out of payment of judgment debts in instalments. The
one procedure is
where the judgment debtor makes a written offer to
the judgment creditor before the creditor issues a notice in terms of
section
65A(1). If the debtor offers to pay the judgment debt
in specified instalments and the creditor accepts the offer, the
clerk
of the court must upon a written request by the creditor, order
the debtor to pay the judgment debt in those instalments.
[78]
This process which is initiated by the
judgment debtor does not culminate in an emoluments attachment
order. If the debtor
keeps her word and duly pays the
instalments, the need for an emoluments attachment order does not
arise. The object of this
sort of order is to attach the
debtor’s salary and deduct from it instalments to be paid to
the creditor in settlement of
the judgment debt.
[79]
But where the process leading up to an
order that the judgment debt be paid in instalments is initiated by
the judgment creditor,
an emoluments attachment order is necessary to
give effect to payment. This is because the creditor may
initiate this process
only where the debtor has failed to pay the
judgment debt and is not in possession of assets to be attached.
In that event
the debtor’s failure coupled with no offer to pay
the debt in instalments supports the fact that unless coerced, the
debtor
is unlikely to pay the judgment debt.
[80]
Section 65A(1) empowers the creditor to
issue notice calling upon the judgment debtor to appear before a
court in chambers on a
specified date to enable the court to enquire
into the financial position of the debtor and to make such order as
the court may
deem just and equitable. This notice may only be
issued if the judgment debt remains unpaid for a period of at least
10 days
from the date on which the order for payment was made.
If the debtor fails to appear on the specified date, having been
properly
served with the notice, the creditor may apply for a warrant
authorising the sheriff to arrest the debtor and bring her before a
competent court which shall enquire into the failure to appear.
[81]
On appearance before the court in chambers,
the court shall call upon the debtor to give evidence on her
financial position and
permit her cross-examination by the creditor.
The court may also receive further evidence relevant to the debtor’s
financial position from the debtor and the creditor. The object
of this enquiry is to determine the debtor’s ability
to pay the
judgment debt in instalments.
[82]
In determining the debtor’s ability,
the court is guided by considerations listed in section 65D(4).
These include the
debtors income, expenses necessary for her own
maintenance and the support of her dependants and her other financial
commitments
as disclosed in evidence. Once satisfied that the
debtor will be able to pay instalments and still have sufficient
funds
for necessary expenses, section 65E empowers the court to order
the debtor to pay the judgment debt in specified instalments.
In addition, if the debtor is employed by a person who resides,
carries on business or works within the court’s area of
jurisdiction, section 65E(1)(c) mandates the court to issue an
emoluments attachment order in accordance with section 65J(1), for
the payment of the judgment debt by the debtor’s employer.
[83]
What emerges from reading section 65 as a
whole is that this provision sets out consecutive steps to be
followed, if the judgment
creditor wishes to have the debt paid in
instalments. This route is available to the creditor if the
debtor has no assets.
If during the enquiry it emerges that the
debtor has assets, the court may issue a writ of execution against
such assets.
What is of importance is the fact that it is the
court which determines the various issues. It is an enquiry by
the court
albeit in chambers. Even the granting of an
emoluments attachment order is granted by the court. It is in
this context
that section 65J, which forms an integral part of
section 65, is to be read and understood.
Section 65J
[84]
In relevant part section 65J reads:
“
(1) (a)
Subject to the provisions of subsection (2), a judgment creditor may
cause an order
(hereinafter referred to as an emoluments attachment
order) to be issued from the court of the district in which the
employer of
the judgment debtor resides, carries on business or is
employed, or, if the judgment debtor
is employed
by the State, in which the judgment debtor is employed.
(b) An emoluments attachment order—
(i) shall attach the
emoluments at present or in future owing or accruing to the
judgment
debtor by or from his or her employer (in this section called the
garnishee), to the amount necessary to cover the judgment
and the
costs of the attachment, whether that judgment was obtained in the
court concerned or in any other court; and
(ii) shall oblige the
garnishee to pay from time to time to the judgment creditor or
his or
her attorney specific amounts out of the emoluments of the judgment
debtor in accordance with the order of court laying
down the specific
instalments payable by the judgment debtor, until the relevant
judgment debt and costs have been paid in full.
(2)
An emoluments attachment order shall not be issued—
(a) unless the judgment
debtor has consented thereto in writing or the court has so
authorised, whether on application to the court or otherwise, and
such authorisation has not been suspended; or
(b) unless the judgment
creditor or his or her attorney has first—
(i) sent a registered
letter to the judgment debtor at his or her last known address
advising him or her of the amount of the judgment debt and costs as
yet unpaid and warning him or her that an emoluments attachment
order
will be issued if the said amount is not paid within ten days of the
date on which that registered letter was posted; and
(ii) filed with the clerk
of the court an affidavit or an affirmation by the
judgment creditor or a certificate by his or her attorney setting
forth the amount of the judgment debt at the date of the order
laying
down the specific instalments, the costs, if any, which have
accumulated since that date, the payments received since that
date
and the balance owing and declaring that the provisions of
subparagraph (i) have been complied with on the date specified
therein.
(3) Any emoluments
attachment order shall be prepared by the judgment creditor or his
attorney, shall be signed by the judgment creditor or his attorney
and the clerk of the court, and shall be served on the garnishee
by
the messenger of the court in the manner prescribed by the rules for
the service of process.
(4) (a)
Deductions in terms of an emoluments attachment order
shall be made,
if the emoluments of the judgment debtor are paid monthly, at the end
of the month following the month in which
it is served on the
garnishee, or, if the emoluments of the judgment debtor are paid
weekly, at the end of the second week of the
month following the
month in which it is so served on the garnishee, and all payments
thereunder to the judgment creditor or his
attorney shall be made
monthly with effect from the end of the month following the month in
which the said order is served on the
garnishee.
(b)
The judgment creditor or his or her
attorney shall, at the reasonable request of the garnishee or the
judgment debtor, furnish him
or her free of charge with a statement
containing particulars of the payments received up
to the date concerned
and the balance owing.
(5)
An emoluments attachment order may be executed against the garnishee
as if it were
a court judgment, subject to the right of the judgment
debtor, the garnishee or any other interested party to dispute the
existence
or validity of the order or the correctness of the balance
claimed.
(6) If, after the service
of such an emoluments attachment order on the garnishee, it
is shown
that the judgment debtor, after satisfaction of the emoluments
attachment order, will not have sufficient means for his
own and his
dependants’
maintenance, the court shall rescind the emoluments
attachment order
or amend it in such a way that it will affect only the balance of the
emoluments of the judgment debtor over and
above such sufficient
means.
(7) Any
emoluments attachment order may at any time on good cause shown be
suspended,
amended or rescinded by the court, and when suspending any
such order the court may impose such conditions as it may deem just
and reasonable.”
[85]
It is apparent from the text that the
granting of an emoluments attachment order depends on conditions
listed in section 65J(2).
These are the debtor’s written
consent or a prior authorisation by the court or where the debtor had
previously been ordered
to pay the judgment debt in instalments and
has defaulted. In this regard, the creditor must send a
registered letter to
the debtor, advising her of the outstanding
balance and warning her that an emoluments attachment order will be
issued if the debt
is not paid within 10 days from the date of
postage of the letter. In addition, the creditor must also file
an affidavit
with the clerk of the court setting out the amount
outstanding and payments already made.
[86]
Section 65J(1) states that it is the
judgment creditor who may cause an emoluments attachment order to be
issued from the court
with jurisdiction over the area where the
debtor’s employer resides, carries on business or works.
If the debtor works
for the State, the court with jurisdiction over
the area where the debtor is employed. The words “a
judgment creditor
may cause an order to be issued from the court of
the district” are central to determining whether the power to
issue such
orders vests in the court or the clerk of the court.
We have already noted that if the inquiry into the debtor’s
financial
position is conducted by a court with jurisdiction over the
area where the debtor’s employer lives or works, that court may
also issue the emoluments attachment order.
[87]
There is no indication that the situation
is different in the case where an emoluments attachment order is not
made at the conclusion
of the inquiry into the debtor’s
financial position and where the creditor later makes the request at
the court with the
necessary jurisdiction. In section 65J
reference to the clerk of the court is made only once. It is in
section 65J(3)
which reads:
“
A
ny
emoluments attachment order shall be prepared by the judgment
creditor or his attorney, shall be signed by the judgment creditor
or
his attorney and the clerk of the court, and shall be served on the
garnishee by the messenger of the court in the manner prescribed
by
the rules for the service of process.”
[88]
The judgment creditor prepares an
emoluments attachment order by completing Form 38 designed by the
makers of the Magistrates’
Courts Rules.
[41]
The form contains these words:
“
Whereas
it has been made to appear to the above-mentioned court that
emoluments are at present accruing to the judgment debtor from
the
garnishee and that after satisfaction of the following order
sufficient means will be left to the judgment debtor to maintain
himself or herself and those depended on him or her;
It
is ordered.”
[89]
The quoted statement indicates that the
issues mentioned in it were proved to the court and not a clerk of
the court. It is
the court that orders that an emoluments
attachment order be issued. The form concludes with the phrase
“by order of
the Court” and makes provision for the clerk
of the court and the judgment creditor to sign the form. This
accords
with section 65J(3) which requires the judgment creditor to
prepare an order that is signed by her and the clerk of the court.
Accordingly, the construction that the emoluments attachment orders
may be issued by a clerk of the court is not supported by the
text of
section 65J. The correct interpretation is that such orders are
issued by a court. The fact that the parties
here have wrongly
applied the section does not change its meaning which must be
established with reference to the text.
Relevant factors
[90]
A court that determines a request for the
issuing of an emoluments attachment order in terms of section 65J(1)
is guided by the
factors listed in section 65D(4). The latter
section obliges the court to take into account the nature of the
debtor’s
income, the amount she needs for her upkeep and
support of her dependants. The validity of an emoluments
attachment order
depends on whether the debtor has sufficient
residual income to support herself and her dependants. Thus
such order may only
apply to funds that are in excess of the amount
she needs for the maintenance of her own and that of her dependants.
If no
such funds are available, an emoluments attachment order should
not be granted.
[91]
The fact that an emoluments attachment
order should not impact negatively on the debtor’s financial
capacity to support herself
and her dependants is reinforced by the
provisions of section 65J(6). In peremptory terms, this section
obliges the court
to rescind an emoluments attachment order if it is
shown that after executing it, the debtor will be left with
insufficient means
to support herself and her dependants.
Section 65J(6) is in line with international law. The
International Labour Organisation
Protection of Wages Convention
provides:
“
Wages
may be attached or assigned only in a manner and within limits
prescribed by national laws or regulations. Wages shall
be
protected against attachment or assignment to the extent deemed
necessary for the maintenance of the worker and his family.”
[42]
[92]
Read together sections 65D(4) and 65J(6)
safeguard the worker’s salary from attachment, to the extent
that the salary is necessary
for the worker to support herself and
dependants. That principle is pivotal to adjudication of every
application for an emoluments
attachment order. It must be
followed at all times. For non-compliance with it renders an
emoluments attachment order
fatally defective and such order falls to
be set aside as soon as it is shown that it interferes with the
upkeep of the debtor
and her dependants.
[93]
Owing to the widespread incorrect
application of section 65J, I consider it necessary to make a
declaration that emoluments attachment
orders may be issued by a
court only. A court to which an application is made must do so
after taking into account factors
set out here. This will
provide the poor and vulnerable debtors with immediate protection.
Unlike the High Court order
of invalidity which targets and is
restricted to section 65J(2), leaving that part of section 65J which
empowers the granting of
emoluments attachment orders intact.
Even if that order were to come into effect at once, vulnerable
workers would still
be at the risk of these orders issued by clerks
without any guidance and protection to workers. Happily, the
interpretation
of section 65J preferred here brings it within
constitutional bounds.
[94]
Consequently, I hold that section 65J
provides for judicial supervision. Assuming that the
Constitution requires judicial
supervision when emoluments attachment
orders are issued, the section meets that requirement. In these
circumstances I cannot
confirm the order of invalidity made by the
High Court.
Difference in
interpretation
[95]
I have read the judgment prepared by my
colleague Cameron J (second judgment). Although we agree that
section 65J(2) imposes
preconditions for issuing emoluments
attachment orders and that the power to issue these orders sits in
section 65J(1), which
was not challenged, and which does not
form part of the invalidity order made by the High Court, the second
judgment holds that
the invalidity order must be confirmed.
[43]
I have a number of difficulties with this conclusion.
[96]
If section 65J(2) on the common
understanding of both judgments does not confer the power to issue
the orders but lays down preconditions
– what is the basis of
concluding that this section authorises the granting of orders
without judicial supervision?
The only answer to this question
is that it does not. The preconditions in section 65J(2) do not
constitute a source of power
to issue emoluments attachment orders.
There is a clear disconnect between the ground for the invalidity,
namely, failure
to provide for judicial oversight and the provision
declared invalid.
[97]
Consequently the relief granted in the form
of an order of invalidity provides no protection to the thousands of
vulnerable debtors.
This is because on the approach of the
second judgment, section 65J(1) confers the power to issue the
emoluments attachment orders
by someone other than the court and
those orders are not judicially sanctioned. But the order that
is ultimately granted
leaves section 65J(1) intact. Therefore,
those orders may continue to be issued. This is because the
declaration of
invalidity is limited to section 65J(2) only.
[98]
Moreover, the second judgment does not say
who “from the court” is empowered to issue an emoluments
attachment order.
For an order to be issued, someone must have
granted it or authorised that it be issued. On the
interpretative approach of
the second judgment, the difficulty is
that the relevant words “a judgment creditor may cause an order
. . . to be issued
from the court” do not spell out who from
the court may issue the order. The ambiguity of these words
leaves one not
knowing whether the provision means that it is the
court itself or a clerk of the court or an interpreter or some other
court official
working at the court or even all of the above, who are
entitled to issue the orders.
[99]
But happily the ambiguity may be resolved
by applying “a mandatory constitutional canon of statutory
interpretation”.
[44]
According to this canon where the language of a statute is reasonably
capable of more than one interpretation, a court must
prefer a
meaning that brings the legislation within constitutional bounds over
the construction that leads to inconsistency with
the Constitution.
In
Hyundai
this principle was formulated in these terms:
“
The
Constitution requires that judicial officers read legislation, where
possible, in ways which give effect to its fundamental
values.
Consistently with this, when the constitutionality of legislation is
in issue, they are under a duty to examine the objects
and purport of
an Act and to read the provisions of the legislation, so far as is
possible, in conformity with the Constitution.”
[45]
And
later:
“
Accordingly,
judicial officers must prefer interpretations of legislation that
fall within constitutional bounds over those that
do not, provided
that such an interpretation can be
reasonably
ascribed to the section.”
[46]
[100]
Here we must determine whether the words
“from the court” are capable of a meaning that accords
with the assumed constitutional
guarantee that whenever execution is
sought against one’s property regardless of whether movable or
immovable, the execution
must be subject to judicial oversight.
In doing so we must keep in mind that “court” is defined
in the Act as
“a magistrate’s court for any district or
for any regional division”. Therefore, a court does not
mean
a clerk of the court or a registrar or messenger of the court.
Section 58A makes this point clear. It provides:
“
Any
judgment by default entered in terms of this Act by the clerk of the
court, shall be deemed to be a judgment of the court”.
[101]
It is apparent from section 58A that the
Act itself does not treat orders made by a clerk of the court as
court orders but deems
them to be court orders. But
significantly, this deeming provision is limited to orders granted in
default judgment applications.
Moreover, in terms of section 12
only a magistrate “may hold a court”. This
signifies that a court as envisaged
in the Act, may be constituted by
a magistrate. A clerk of the court or registrar or some other
official cannot constitute
a court. Without a magistrate, there
can be no court. It is in this context that the word “a
judgment creditor
may cause an order . . . to be issued from the
court” must be read and understood.
[102]
These words mean that the judgment creditor
may move the court to issue an emoluments attachment order. In
other words the
creditor must obtain the order from the court.
An order obtained from a clerk of the court or some other official is
not
an order issued from the court. This is so because under
the Act an order issued from the court must be an order from a
magistrate
because she alone constitutes the court.
[103]
This is not only a reasonable
interpretation of section 65J(1) but is also an interpretation that
renders the section consistent
with the Constitution.
Accordingly it must be preferred over any meaning. It also
accords with the scheme of the Act
in terms of which orders are
issued by the court. Where the Act allows a clerk of the court
to issue orders, it deems them
to be court orders.
[104]
The second judgment holds that the language
of the text is not reasonably capable of a constitutionally compliant
construction.
For this conclusion it relies on the phrase “as
if it were a court judgment” in section 65J(5). On face
value
the phrase appears to support the second judgment. But a
closer examination of the entire section 65J indicates otherwise.
Firstly, it does not appear from the text that any person other than
the court is empowered to issue emoluments attachment orders.
And if so, who that person is. This is the first hurdle the
second judgment must clear.
[105]
Secondly, when the phrase “as if it
were a court judgment” is read in the context of the structure
of the entire section
65J, a different meaning emerges. That
structure is the following. The court grants an emoluments
attachment order
in terms of section 65J(1) if one of the
preconditions in section 65J(2) is present. Once the order is
granted or issued,
the judgment creditor must take a further step
before execution. It cannot without more proceed to execute.
The judgment
creditor must act in terms of section 65J(3).
[106]
Section 65J(3) provides:
“
A
ny
emoluments attachment order shall be prepared by the judgment
creditor or his attorney, shall be signed by the judgment creditor
or
his attorney and the clerk of the court, and shall be served on the
garnishee by the messenger of the court in the manner prescribed
by
the rules for the service of process.”
[107]
In terms of section 65J(3) the judgment
creditor is under a duty to prepare an emoluments attachment order by
completing the relevant
form. Once this is done she or her
attorney must sign the prepared order which must also be signed by
the clerk of the court.
The signed order must then be served on
the garnishee by the messengers of the court. In this context
what is served is not
an order issued under section 65J(1) but the
one prepared by the judgment creditors. It is the same order to
which section 65J(5)
refers when it says “an emoluments
attachment order may be executed against the garnishee as if it were
a court judgment”.
Read in this sense, the apparent
support for the construction preferred in the second judgment
evaporates. In this sense
the order prepared and signed by the
judgment creditor constitutes an equivalent of a writ of execution
which is a step taken before
execution. The writ is ordinarily
executed as if it is a court order.
[108]
Finally, I need to comment on the second
judgment’s revolutionary approach to execution. On that
approach it means that
from now onwards execution against movable and
immovable property must involve judicial oversight. However, it
is not clear
whether where a court has granted an order for payment
of money or delivery of goods, the court must be engaged again if the
judgment
debtor fails to pay the judgment debt or whether the sheriff
may proceed to execute against movable property of the debtor or take
possession and deliver the goods. This is because at the time
the order is granted, the court does not enquire into whether
the
money would be paid or the goods would be delivered. Payment or
delivery are matters that arise later after service of
the order on
the judgment debtor.
[109]
If upon service the judgment debtor pays,
no execution is triggered. Execution becomes necessary only if
there is a failure
to pay or deliver in terms of the court order.
That is why in respect of immovable property, the judgment creditor
has to
go back to the court for leave to execute against immovable
property if authorisation was not given at the time of making the
order.
The second judgment dispenses with the distinction drawn
between movable and immovable, pertaining to execution.
The appeal
[110]
The Flemix respondents and the Association
sought to appeal against paragraph 3 of the High Court’s
order. That
declared “that in proceedings brought by a
creditor for the enforcement of any credit agreement to which the
National Credit Act 34 of 2005
. . . applies,
section 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.”
[47]
The two appeals overlapped to a large extent and three main arguments
were advanced. First, they submitted that
section 45
of the
Magistrates’ Courts Act (section
45) and
sections 90
and
91
of
the
National Credit Act must
be read in a manner that avoids
conflict. Second, even if it is not reasonably capable of
avoiding the conflict, the declarator
they sought must still be
granted because in the schedule that lists the provisions of the
National Credit Act that
trump Chapter IX of the Magistrates’
Court Act,
section 90
of the
National Credit Act is
not included.
It was submitted that this signifies a clear indication that
section
90
was not intended to prevail over
section 45.
Third, it was
contended that
section 45
promotes the right of access to courts by
enabling parties, for convenience and cost effectiveness, to consent
to the jurisdiction
of a court that would otherwise not have
jurisdiction. Each of these arguments must be addressed.
Do
sections 90
and
91
of
the
National Credit Act conflict
with
section 45?
[111]
Section 45
deals with jurisdiction by
consent. It provides:
“
(1)
Subject to the provisions of section forty-six, the court shall have
jurisdiction to determine
any action or proceeding otherwise beyond
the jurisdiction, if the parties consent in writing thereto: Provided
that no court other
than a court having jurisdiction under section
twenty-eight shall, except where such consent is given specifically
with reference
to particular proceedings already instituted or about
to be instituted in such court, have jurisdiction in any such matter.
(2)
Any provision in a contract existing at the commencement of the Act
or thereafter
entered into, whereby a person undertakes that, when
proceedings have been or are about to be instituted, he will give
such consent
to jurisdiction as is contemplated in the proviso to
subsection (1), shall be null and void.”
[112]
Reading the two subsections of section 45
together, it is clear that the section prohibits what will be defined
as “pre-emptive”
consent to jurisdiction – consent
to jurisdiction that is given at a time prior to any proceedings
having been initiated
or which are about to be initiated. In
other words, the consent can be given only once proceedings are
imminent.
[113]
Section 90(2)(k)(vi)(bb)
of the
National
Credit Act holds
that:
“
(2)
A provision of a credit agreement is unlawful if—
.
. .
(k)
it expresses, on behalf of the consumer—
. . .
(vi)
a consent to the jurisdiction of—
. . .
(bb)
any court seated outside the area of jurisdiction of a court having
concurrent jurisdiction and
in which the consumer resides or works or
where the goods in question (if any) are ordinarily kept.”
And
section 91(2)
of
the same Act holds that:
“
[a]
credit provider must not directly or indirectly require or induce a
consumer to enter into a supplementary agreement or sign
any
document, that contains a provision that would be unlawful if it were
included in a credit agreement.”
[114]
Both the Flemix respondents and the
Association argue that
sections 90(2)(k)(vi)(bb)
and
91
(2) of
the
National Credit Act and
section 45
can be read together.
They submit that
sections 90(2)(k)(vi)(bb)
and
91
(2) are concerned
with provisions that would be prohibited if they were in a credit
agreement (either because they are included
in the agreement itself
or through a supplementary agreement or other document) but that it
must be, in theory, possible for the
provision in question to form
part of a credit agreement. They then point to the
section 45
prohibition on pre-emptive consents to jurisdiction. As noted
above,
section 45
only allows non-pre-emptive consents that arise
from existing or soon-to-be initiated proceedings. The Flemix
respondents
and the Association argue that non-pre-emptive consents
could never be included in a credit agreement because as a practical
reality
they arise from the workings of the credit agreement itself.
Non-pre-emptive consents require there to be a dispute brewing
and a
dispute arising from a credit agreement cannot begin to brew unless
the credit agreement has already come into force.
If the credit
agreement must have come into force before the non-pre-emptive
consent can exist, then the non-pre-emptive consent
could never have
been included in the credit agreement to begin with and so the
prohibition in
sections 90(2)(k)(vi)(bb)
and
91
(2) will not apply.
[115]
It is a clever argument. But it is
unpersuasive. Firstly, the focus of
sections 90
and
91
is on
“unlawful provisions” and
section 91(2)
is in the
hypothetical “if it
were
included”. The Association argue that the “document”
referred to in
section 91(2)
must be a credit agreement-related
document. But the wording of the statue clearly states “any”
document so this
assertion is unsustainable. So we are looking
at hypothetical provisions. The question is simply: would the
provision
of a document be unlawful
if
that provision were in a credit
agreement.
[116]
Here we are concerned with
section 45
consents to jurisdiction. These exist in a document that is
signed. They can
[48]
include a provision in which a consumer consents to the jurisdiction
of a court seated outside the area of jurisdiction of a court
having
concurrent jurisdiction and in which the consumer resides or works or
where the goods in question (if any) are ordinarily
kept. If
that provision were transported into a credit agreement, it would be
unlawful under
section 90(2)(k)(vi)(bb).
Section 90(2)(k)(vi)(bb)
does not specify whether the “consent”
it prohibits is pre-emptive or not, it simply talks about “a
consent to
the jurisdiction . . . .”. The Flemix
respondents and the Association’s technical focus on whether,
by logic,
a consent to jurisdiction included in a credit agreement
would be pre-emptive and, therefore, not possible under
section 45(2)
both overcomplicates and side-steps the legislative prohibition in
the
National Credit Act. It
must be rejected.
[117]
The Flemix respondents also submit in the
appeal that
section 91(2)
prohibits only specific conduct, namely
when a credit provider “directly or indirectly require[s] or
induce[s] a consumer
to enter into a supplementary agreement or sign
any document, that contains a provision that would be unlawful if it
were included
in a credit agreement”. They contend that a
section 45
consent is a voluntary agreement that does not involve any
inducing or requiring by the credit provider. But the facts
patently
illustrate how this assertion is wrong and that these
consents are often induced and debtors are frequently subject to
outside
pressure. The wording of the statute also sets a low
threshold – “indirectly . . . induce”. By
informing
a debtor about the
section 45
procedure and providing them
with the necessary documents, the credit provider has indirectly
induced the consumer to sign the
consent. This interpretation
is underscored by the purposes of the
National Credit Act, one
of
which is “to prohibit certain unfair credit and credit
marketing practices”. And
section 91
itself is titled
“Prohibition of unlawful provisions in credit agreements and
supplementary agreements”. The
focus is on the unlawful
provisions rather than the credit provider’s conduct.
[118]
So there is a conflict here, to the extent
that some consents to jurisdiction under
section 45
are not
permissible under
sections 90
and
91
of the
National Credit Act.
It
may be more accurate to say that
sections 90
and
91
“limit”
section 45
, rather than “conflict” with it. This is
because
sections 90
and
91
only prevent
section 45
consents that (i)
deal with a relationship arising out of a credit agreement and (ii)
provide consent to the jurisdiction of a
court seated outside the
area of jurisdiction of a court having concurrent jurisdiction and in
which the consumer resides or works
or where the goods in question
(if any) are ordinarily kept. But whether it is seen as a
limitation or a partial conflict
makes no difference for present
purposes, as will now emerge.
Schedule 1 of the
National Credit Act
[119
]
Section 2(7)(a)
of the
National Credit Act
states
that:
“
Except
as specifically set out in, or necessarily implied by, this Act, the
provisions of this Act are not to be construed as—
(a)
limiting, amending, repealing or otherwise
altering any provision of any other Act.”
The Schedule,
entitled “Rules Concerning Conflicting Legislation”, then
sets out a list of legislation that conflicts
with the
National
Credit Act. The
Schedule details provisions of the
National
Credit Act that
conflict with the legislation at issue and the
“conflict resolution rule” that solves the conflict.
According
to
section 172(1)
of the
National Credit Act, “if
there is a conflict between a provision of this Act mentioned in the
first column of the table set out in Schedule 1, and a provision
of
another Act set out in the second column of that table, the conflict
must be resolved in accordance with the rule set out in
the third
column of that table”.
[49]
[120]
The Flemix respondents and the Association
draw attention to the fact, that although Chapter IX of the
Magistrates’ Courts Act (of
which
section 45
is a part) is
listed in the second column of Schedule 1,
sections 90
and
91
of the
National Credit Act are
not included in the list of provisions of the
National Credit Act that
prevail to the extent of a conflict with
Chapter IX. On this basis, they argue that
sections 90
and
91
of that statute should not be read to limit, amend, repeal or
otherwise alter
section 45.
[121]
This approach ignores a key phrase in
section 2(7)
– “necessarily implied”. What I
have set out above shows that
sections 90
and
91
partially conflict
with or limit
section 45
– and that this is necessarily implied
by an interpretation of both statutes. “Necessarily
implied” means
that the implication is necessary and not merely
possible.
[50]
But, as my analysis shows,
[51]
a reading of the plain language of
sections 90
and
91
of the
National
Credit Act, in
the light of the mischief they are designed to
prevent, clearly meets this test.
[52]
Right of access to
courts
[122]
Finally, both the Association and the
Flemix respondents submit that
section 45
consents enhance access to
courts and that this must be considered when interpreting the
provisions.
[53]
According to the Association, debtors can reduce litigation costs
through consents. For example, a debtor may wish
to consent to
the jurisdiction of a single court for both the judgment debt and the
issuing of the emoluments attachment order
where these two would
otherwise be in separate jurisdictions. By doing so, the debtor
saves on the costs of instructing different
attorneys in different
jurisdictions and the time and expense of separate proceedings.
The Association also submits that
allowing
section 45
consents to
jurisdiction enables creditors and debtors to choose magistrates’
courts that have greater capacity to deal with
judgments quickly.
And speedier justice enhances access to courts.
[123]
The argument of the Flemix respondents
focuses more on access to courts for the creditors. They submit
that there is a practical
reality that a number of magistrates’
courts refuse to consider
section 58
[54]
applications for judgment, because, in their view,
section 58
is not
permitted by the
National Credit Act. Section
45 consents are,
therefore, necessary to allow creditors to approach different courts
that will entertain their applications.
[124]
To take the Association’s arguments
first. It is conceivable that in some circumstances a
section
45
consent may result in cost-savings for the debtor. But the
facts of this case show, to an order of considerable magnitude,
the
contrary. Where a debtor consents to a magistrates’ court
located many miles away from his or her residence, the
debtor will
likely incur much greater costs and practical difficulties. In
my view, the risks of the latter markedly outweigh
the potential
benefits of the former.
[125]
Although it may be possible for the debtor
to ensure, through a
section 45
consent, that the same jurisdiction
will deal with the judgment debt and the issuing of any emoluments
attachment order, there
is no guarantee that this is how
section 45
consents will be used. So the Association has failed to show
why reading
section 45
as compatible with
sections 90
and
91
of the
National Credit Act will
ensure better protection of the right of
access to courts.
[126]
Now the Flemix respondents. Their
remedy lies in bringing a legal challenge to the conduct of the
magistrates’ courts
that routinely deny
section 58
applications. What they cannot do is to ask this Court to
re-interpret distinct statutory provisions supposedly to alleviate
an
unconnected problem. In fact, the Flemix respondents were in
the process of launching a High Court application for declaratory
relief on the issue when the applicants launched their initial
application in this matter. Once these proceedings were
launched,
the Flemix respondents filed a counter-application
requesting “[a] declaratory order that all Magistrates’
Courts are
obliged to grant judgment in favour of credit providers
who comply with the requirements of
sections 57
and
58
of the
Magistrates’ Courts Act 32 of 1944
as read with the relevant
provisions of the
National Credit Act, 34 of 2005
”. This
was dismissed with costs. The Flemix respondents appealed to
this Court against this dismissal.
For the reasons I have
given, that appeal must fail.
[55]
[127]
In the circumstances I would set aside the
High Court’s order but declare that only a magistrates’
court may issue an
emoluments attachment order in terms of
section
65J(1)
of the
Magistrates’ Courts Act 32 of 1944
. I would
also dismiss the appeal.
CAMERON J (
Mogoeng
CJ, Moseneke DCJ, Bosielo AJ, Froneman J, Khampepe J, Madlanga J,
Mhlantla J, Nkabinde J and Zondo J
concurring):
[128]
I have had the pleasure and benefit of
reading the judgment of my colleague Jafta J (first judgment).
I gratefully adopt
its exposition of the background facts and of the
statutory and constitutional provisions. It sets out vividly
the searing
stories of human stress and distress that lie behind this
litigation. But I do not agree with its overall approach, nor
with
its outcome. I have also had the benefit of reading the
judgment of my colleague Zondo J (third judgment), and concur in his
judgment and order.
[129]
There are two major differences with the
first judgment. First, we differ on an issue of principle.
The first judgment
assumes, without affirming definitively, that the
Constitution requires judicial supervision when orders issued from a
court are
executed and finds that this is how the contested provision
ought to be properly interpreted.
[56]
The High Court in striking down the contested provision went
further. It pointed out that this Court’s judgments
have
repeatedly found that where an applicant seeks an order to execute
against or seize control of the property of another person,
there
must be judicial oversight.
[57]
To my mind, the High Court was right. This is not a
principle that should merely be assumed in deciding this case.
It has been established in the jurisprudence of this Court that
execution of court orders is part of the judicial process.
[58]
It requires judicial oversight. Though previous cases dealt
with debtors’ homes,
[59]
the principle underlying them was that judicial oversight of
the execution process against all forms of property is
constitutionally
indispensable. Clearly then, the fundamental
principles relating to the proscription against self-help flowing
from the section
34 right of access to courts apply, with equal
force, to the execution process. I would therefore affirm the
breadth of the
High Court’s approach.
[130]
Indeed, this case is a prime example of why
judicial oversight over the execution process is required.
[60]
An emoluments attachment order may deal with the enforcement of a
judgment debt, but it is a substantive decision in itself.
By
granting an order that a debtor will pay the debt through her wages,
the court is deciding how the debt will be paid.
A decision on
the means of paying a debt can often be as important as the debt
itself – and parties may contest the means
of payment, even
when they do not dispute that the debt itself must be paid.
[61]
A large debt payable through lenient means may be less burdensome
than a small debt payable in one go.
[131]
An emoluments attachment order is clearly
burdensome. It severely constricts the autonomy of the debtor
to decide how she
will pay off the debt. It is also inflexible
as it does not adapt to the debtor’s changing circumstances
from week
to week.
[62]
It goes directly off a debtor’s wages – and these wages
will often form the means for the debtor’s day-to-day
survival. These are all important considerations to be borne in
mind when deciding whether an emoluments attachment order
should be
granted.
[63]
What is more, a debtor’s personal circumstances may well have
changed in the interim between when a judgment debt is
entered and
ordered to be paid in instalments and when an emoluments attachment
order is sought. It is, therefore, crucial
that these
considerations are taken into account at the time the emoluments
attachment order is sought.
[132]
All this accentuates the importance of the
High Court’s encompassing approach to execution against
property and the constitutional
necessity for judicial supervision
over it. The broader approach takes fuller account of the harsh
effects in the absence
of judicial oversight, acknowledging that they
threaten the livelihood and dignity of low-income earners, a
distinctly vulnerable
group in our society. Even though
Jaftha
and
Gundwana
dealt with the section 26 right of access to housing, they find
analogous application here, where indigent debtors run the risk
of
losing a part of their only property – their monthly income.
[133]
Primarily, the debtor’s section 34
right of access to court is breached by an execution process not
sanctioned by a court.
Moreover, taking away the basic income
that indigent debtors rely on for subsistence, without court
supervision, rubs right up
against the right to dignity (which
underlies all the socio-economic rights of housing, food and health
care). It may also
implicate the protection against arbitrary
deprivation of property afforded under section 25.
[64]
[134]
I now turn to a second, bigger difference
with the first judgment. Together with associated relief, the
High Court granted
an order striking down certain words in section
65J(2)(a), (b)(i) and (b)(ii) of the Act “to the extent that
they fail to
provide for judicial oversight over the issuing of an
emolument[s] attachment order against a judgment debtor”.
The
first judgment would deny this order confirmation (the other
relief the applicants obtained remains intact). Instead, it
parses the provision at issue to render it conformable with the
assumption that judicial oversight is constitutionally necessary.
It finds that the ills and abuses this application details are the
result, not of debtors’ and debt collectors’ use
of a
provision that is constitutionally offensive, but merely of
widespread incorrect practical application of the provision.
[65]
So the remedy is not to strike down the provision – a highly
interventive route, which laps at the boundary separating
judicial
power from legislative prerogative – but a declaratory order
that sets right the wrong understanding of the provision.
[135]
The interpretive route is attractive.
Since
Hyundai
,
it has been gold-plate doctrine in this Court that judges must
embrace interpretations of legislation that fall within
constitutional
bounds over those that do not, provided that the
interpretation can be reasonably ascribed to the section.
[66]
Where a legislative provision is reasonably capable of a meaning that
places it within constitutional bounds, it should be
preserved.
Only if this is not possible, this Court has held, should resort be
had to the remedy of notional severance.
[67]
[136]
The High Court’s order here –
striking down the provision “to the extent” that it
failed constitutional
conformity – was an order of notional
severance.
[68]
Was it right to grant it? That depends on whether the impugned
portions of section 65J(2) are reasonably capable of
being read to
mean that emoluments attachment orders can be granted only with
judicial oversight – that is, by a magistrate
only, and not by
the clerk of the court.
[137]
The first judgment reasons that the text of
section 65J(2) does not support the construction that emoluments
attachment orders may
be issued by a clerk of the court. The
correct interpretation, it finds, is that these orders are issued by
a court.
[69]
And it is only the court that is mandated to issue the order.
[70]
It grounds this interpretation in the provisions of especially
section 65A(1)(a) and the other provisions that precede section
65J.
Section 65A(1)(a) enables a judgment creditor to issue a notice to a
debtor whose judgment debt remains unsatisfied
for the debtor “to
appear before a court in chambers . . . to enable the court to
inquire into the financial position of
the debtor and to make such
order as the court may deem just and equitable”.
[71]
[138]
The first judgment points to provisions
that guide the court in the inquiry.
[72]
It also invokes provisions that empower the court to order the debtor
to pay the judgment debt in specified instalments and
“in
addition authorize the issue of an emoluments attachment order by
virtue of section 65J(1)” if satisfied that the
judgment debtor
(i) “has made an offer in writing to the judgment creditor or
his attorney to pay the judgment debt and costs
in specified
instalments or otherwise” or (ii) “if such an offer has
not been made, that the judgment debtor is able
to pay the judgment
debt and costs in reasonable instalments”.
[73]
[139]
The first judgment concludes that these
provisions, seen as a whole, support the conclusion that it is the
court, and not the clerk
of the court, that grants emoluments
attachment orders.
[74]
It also notes that the statutory form a judgment creditor must fill
in for the issue of an emoluments attachment order recites
that the
requirements set out “have been made to appear to the
above-mentioned court”.
[75]
From this, the first judgment infers that the court itself, and not
its clerk, must be satisfied of the requirements.
[140]
This approach cannot in my view save
section 65J(2) from its constitutional shortfalls. Section 65J
forms a part of Chapter
IX of the Act, entitled “Execution”.
But it operates with its own force as a free-standing provision.
No
language links section 65J directly to sections 65A, 65D or 65E.
It is true that section 65E, which deals with proceedings
initiated
under section 65A, provides that a court may “authorize the
issue of an emoluments attachment order by virtue of
section
65J(1)”. But clearly not all emoluments attachment orders
are issued through this process.
[76]
For those that have been issued outside the section 65E process,
there is no equivalent guarantee of judicial oversight.
[141]
Here, a little difference goes a long way.
Under section 65E, the court authorises the issue of the emoluments
attachment
order. The word is significant.
[77]
It must be contrasted with section 65J(1) which envisages simply that
the emoluments attachment order is “issued from
the
court”.
[78]
The only wording that suggests any court authorisation at all is in
section 65J(2)(a), which, as we will see, is stated only
as an
alternative to a clerk-issued order.
[142]
So there can be no reason why a court that
determines a request for the issuing of an emoluments attachment
order in terms of section
65J(1) should be guided by the factors
listed in section 65D(4).
[79]
Section 65D, like section 65E, relates to a specific process that
though connected, does not completely overlap with section
65J. The
crucial provision that puts into operation the issuing of emoluments
attachment orders is section 65J. So
we must give it its own
autonomous significance. And – adding to the mischief –
there is nothing anywhere in
the provision that requires a magistrate
to give consideration to whether a debt should be paid in instalments
or, more particularly,
what proportion of the judgment debtor’s
emoluments the emoluments attachment order should cover.
[143]
Then there is the wording of section 65J
itself. Section 65J(1) – which the applicants did not
directly attack, and
which did not form part of the High Court’s
order of invalidity – sets the scene for section 65J(2), which
was the
focus of their attack. It provides, subject to
subsection (2), that “a judgment creditor may cause an order .
. . to
be issued from the court”. The prime agency is
clear – it is the judgment creditor. Not the court.
The judgment creditor causes the order to be issued. And the
emoluments attachment order is issued not “by” the
court,
but “from” the court. The portents of judicially
unsanctioned execution are unpalatably signalled.
Unsurprisingly, the Flemix respondents conceded as much in their
answering affidavit in the High Court.
[144]
Subsection (2) subjects the issue of an
emoluments attachment order to preconditions (an order “shall
not be issued . . .
unless . . . .”). These require
either the written consent of the judgment creditor or court
authorisation;
[80]
or, alternatively, that the process in section 65J(2)(b) is
followed.
[81]
[145]
Strikingly, subsection (2)(a) licenses the
issue of an emoluments attachment order in two circumstances.
These are posited
as alternatives. The order may be issued if
the debtor consents in writing. Or it may be issued if “the
court
has so authorised”. The conjunction “or”
seems to make linguistically plain that an emoluments attachment
order may be obtained through the debtor’s written consent even
when the court has not authorised it. If at all times
it is a
court that issues an emoluments attachment order, whyever would the
alternative phrase be necessary? This conforms
with the
scene-setting provisions of subsection (1), which locate the agency
in the judgment creditor and envisage the issue of
the order “from”
the court, and not by it. All of this points to judicially
unsanctioned execution.
[146]
The no-sanction scheme conforms also with
section 65J(5). This provides that an emoluments attachment
order may be executed
“as if it were a court judgment”.
Against the backdrop of subsection (2), this seems to signal further
license
for absence of judicial sanction. It posits that an
order may be obtained that is not a court judgment – namely
through
the judgment debtor’s written consent – but that
it may nevertheless be executed “as if it were” a court
judgment. Again, whyever would this provision have been
necessary if emoluments attachment orders were issued by a court
only?
[147]
It is possible to try to repress or smooth
away these verbal eruptures of unsanctioned extra-judicial
debt-enforcement. But
this cannot be done comfortably, nor, in
my view, plausibly. The linguistic significations are just too
overt. They
block any reasonable route to linguistic
amelioration. The interpretive attempt is, against the warning
of this Court in
De Beer N.O.
,
“unduly strained”.
[82]
And it risks stepping beyond the limits of the judicial function into
the terrain of the Legislature by interpreting the
statute beyond
what is linguistically viable.
[148]
It is true, as the first judgment points
out, that the provision envisaging consent on the part of the
judgment debtor must be read
in the context of the provisions that
precede it. But that context, to my mind, cannot save the
provision from the plain
meaning of its wording, which is to permit
judicially unsanctioned enforcement of judgment debts.
[149]
The safest, soundest and most secure
remedy, one that recognises the plain meaning of the language, and
the constitutional limits
it seeks to transgress, is to strike the
offensive legislation down, as the High Court did.
Magistrates’
Court Rules
[150]
Nor can the Magistrates’ Court Rules
be used to save the impugned provision. The Flemix respondents
and the Association
argued that section 65J could be saved through
the application of rule 4(4) of the Magistrates’ Court Rules
(Rules), which
came into effect in July 2014.
[83]
Rule 4(4) provides that rule 12(5) applies to “a request for
judgment in terms of section 57 and 58”.
[84]
Rule 12(5) provides that the registrar or clerk of the court
“shall refer to the court any request for judgment on
a claim
founded on any cause of action arising out of or based on an
agreement governed by the
National Credit Act, or
the Credit
Agreements Act” and that “the court shall thereupon make
such order or give such judgment as it may deem
fit”.
[85]
According to the Flemix respondents and the Association, the effect
of these Rules is to create a comprehensive legislative
scheme in
which it is impossible to obtain an emoluments attachment order
without judicial supervision.
[151]
This argument cannot be sustained.
First, an invalid statutory scheme cannot be saved by a
regulation.
[86]
The Association pointed out that in the definitions section of the
Act, “this Act” includes the Rules.
Of course.
But that does not give the Rules the same legislative force as the
Act itself.
[87]
[152]
Second, and as highlighted by the amicus,
the South African Human Rights Commission, section 65J is not limited
to judgment debts
that arise out of the
National Credit Act or
the Credit Agreements Act. It applies to a broader range of
judgment debts than rule 12(5) envisages. So, even trying
to
use patchwork, as the argument would have us do, rule 12(5) does not
fill the gap completely. Finally, even if there is
a guarantee
of judicial oversight over requests for judgment on those claims
governed by rule 12(5), this does not equate to judicial
oversight
over the granting of an emoluments attachment order. An
emoluments attachment order might be granted in separate
proceedings
to those of the judgment debt. For the reasons set out
earlier,
[88]
the decision to grant an emoluments attachment order requires its own
guarantee of judicial oversight. Rule 12(5) cannot
help.
[89]
[153]
I conclude that the High Court’s
reading of the provision was correct, and so too the order of
invalidity it granted.
That order implicitly incapacitates
section 65J(1), which permits a judgment creditor to cause an
emoluments attachment order
to be issued from the court. This
is because section 65J(1) permits the judgment creditor to do so only
if one of the alternative
processes set out in section 65J(2) has
been satisfied – “[s]ubject to the provisions of
subsection (2)”.
Two of those processes are
constitutionally unsound for want of judicial oversight – and
no judicial oversight is provided
by section 65J(1) itself. So
section 65J(1) is necessarily rendered inoperative to the extent that
it allows for those constitutionally
invalid processes. The
section 36 limitation analysis also does not help the respondents in
this case. There is no
justification for the infringement of
section 34, despite the Flemix respondents’ suggestion to the
contrary.
[90]
No expansion of the High Court’s order is, therefore, required.
[154]
This means that debtors whose rights would
have been infringed under the constitutionally invalid provisions of
section 65J receive
immediate protection from the date of the
order.
[91]
As from that date, emoluments attachment orders may be issued only
when a court has so authorised.
[92]
Of course the Legislature is free to develop further how this
judicial oversight must operate. And the door is not
closed to
any future challenge against the adequacy of judicial oversight.
But that is for another time.
[155]
So the substance of the High Court’s
order must be confirmed (though in the third judgment it is rendered
in the form of a
reading in, rather than a severance), subject only
to a minor clarification I would add.
Section 90(2)(k)(vi)(bb)
of the
National Credit Act provides
that a provision in a credit
agreement is unlawful if the consumer expresses consent to the
jurisdiction of “any court seated
outside the area of
jurisdiction of a court having concurrent jurisdiction and in which
the consumer resides or works or where
the goods in question (if any)
are ordinarily kept”. The prohibition against written
consent in paragraph 3 of the
High Court’s order must therefore
make provision for the additional jurisdictional instance the order
omits, namely where
the goods are kept.
Retrospectivity
[156]
The applicants conceded that debts
recovered under past emoluments attachment orders should not be
affected by any declaration of
invalidity. But, beyond that,
they contended that there was no reason to limit the retrospective
operation of the declaration.
They disclaimed any evidence of
dislocation or uncertainty that would result if the order operates
retrospectively. This
was because the constitutional invalidity
of the provisions at issue would not result in judgments against
debtors being rendered
invalid.
[157]
By contrast, the Association and Flemix
respondents urged that invalidity should operate solely
prospectively, invoking for this
contention the general principle in
this Court that an order of legislative invalidity operates from the
time of the order only.
[93]
They urged that retrospectivity would subject the credit industry as
a whole to “systemic risk”. Retrospectivity
would
be highly adverse to the entire credit industry. It is an issue
that deserves the proper consideration of the National
Treasury and
the South African Reserve Bank, who are responsible for oversight of
the banking and credit industry. Given
that these institutions
are not before the Court, the Court should craft an order that does
not undermine their legitimate interests
in securing the stability of
the credit and banking industries.
[158]
The Minister supported the respondents’
plea for a prospective order only because of remedies. This
stance seemed to
stem from two main reasons. First,
retrospectivity would, as the respondents argued, create significant
uncertainty in the
credit industry. Second, legislation is
pending to address the abuse of emoluments attachment orders. This
Bill, we
were told during argument, is already being circulated in
its second draft.
[159]
Though the matter is difficult, I am
inclined to issue a prospective order only. It is true that the
grievous effect of this
is that past emoluments attachment orders,
unscrupulously procured or issued, will continue to be operative,
unless individually
challenged. But I am persuaded by the
consideration that the issue is one of considerable complexity, best
regulated by the
Legislature. In these circumstances, the Court
does best by reverting to its accustomed practice and principle.
These
point to prospectivity.
Costs
[160]
The Law Clinic submitted that the proper
order for costs would be to order costs against all of the parties
who opposed the confirmation
application. It accepted, however,
that perhaps in this case the Minister should not have to pay costs.
It asked for
the costs of three counsel when three counsel were used
and otherwise for two counsel. In the unusual circumstances of
this
case the costs of a third counsel are warranted where used.
The Association by contrast emphasised that it was a non-profit
organisation and was not connected to Flemix. It pursued this
litigation in the interests of its members and the public and
it
submitted that
Biowatch
[94]
should apply to it. Flemix pointed out that it had consented to
the judgment regarding the 15 individual applicants.
[161]
There is no reason why the High Court’s
costs order should not be confirmed. It correctly applied
Biowatch
.
ZONDO J (Mogoeng CJ,
Moseneke DCJ, Bosielo AJ, Cameron J, Froneman J, Khampepe J,
Madlanga J, Mhlantla J and Nkabinde J concurring):
Introduction
The main question for
determination in this matter is whether the
Magistrates’ Courts
Act
[95]
(Act) provides for judicial oversight
when an emoluments attachment order is issued against a judgment
debtor in favour of a judgment
creditor. The High Court
answered this question in the negative. It held that section
65J(2) of the Act is inconsistent
with section 34 of the
Constitution
[96]
and invalid to the extent that it
fails to provide for judicial oversight when emoluments attachment
orders are issued. The
matter has now been referred to this
Court for confirmation of that order of invalidity. In his
judgment (first judgment),
my Colleague, Jafta J, concludes that the
Act does provide for judicial oversight in this regard. He
holds, therefore, that
the High Court erred in concluding
differently. He declines to confirm the
order
of invalidity.
[162]
In his judgment (second judgment), my
Colleague, Cameron J, concludes that the Act does not provide for
judicial oversight in all
cases when an emoluments attachment order
is issued. He, therefore, agrees with the High Court except
that, like me, he agrees
that notional severance is not appropriate
and that a reading-in, with limited severance, is the appropriate
remedy in this case.
I concur in the second judgment.
However, I write separately to deal with the issue from another angle
and to provide
additional reasons for my conclusion.
[163]
To determine whether the Act provides for
judicial oversight, it is necessary to inquire into whether it is the
court or someone
else that has the power to issue emoluments
attachment orders. If it is the Magistrates’ Court, that
will mean that
the Act provides for judicial oversight. If it
is someone else, that will mean that there is no judicial oversight
unless,
prior to the issuing of an emoluments attachment order, there
is judicial intervention. The first judgment says that under
the Act the power to issue emoluments attachment orders vests with
the court whereas the second judgment says that it vests with
the
clerk of the court.
Are emoluments
attachment orders issued by the court?
[164]
Emoluments attachment orders are provided
for under Chapter IX of the Act. That chapter deals with
execution. Section
61 defines the term “emoluments”
as including—
“
(i)
salary, wages or any other form of remuneration; and
(ii)
any allowances,
whether
expressed in money or not.”
The same section
defines the word “debts” as including “any income
from whatever source other than emoluments”.
[165]
Section 65J(1)(a) and (b)
[97]
tells us who may cause an emoluments attachment order to be issued,
what an emoluments attachment order does and what its legal
force
is. The gist of paragraph (a) is that it confers power on a
judgment creditor to cause an emoluments attachment order
to be
issued “from the court” in which the employer of the
judgment debtor resides, carries on business or is employed.
The thrust of paragraph (b) is that an emoluments attachment order
attaches the emoluments owing or accruing to the judgment debtor
by
or from his or her employer to the amount necessary to cover the
judgment debt and the costs of the attachment. Paragraph
(b)
also places an obligation on the employer of the judgment debtor to
pay from time to time to the judgment creditor specific
amounts from
the emoluments of the judgment debtor. The amounts must accord
with the order of the court laying down specific
instalments payable
by the judgment debtor until the relevant judgment debt and costs
have been paid in full. I do not propose
to discuss sections
65J(a) and (b) at this stage and will do so a little later.
[166]
Section 65A(1) deals with a situation where
a court has given judgment for the payment of a sum of money or has
ordered the payment
in specified instalments or otherwise of such an
amount and the judgment order remains unsatisfied for a period of 10
days.
Section 65A(1)(a) provides that in such a case—
“
.
. . the judgment
creditor may issue,
from the court
of the district in which
the judgment debtor resides, carries on business or is employed . . .
a notice calling upon the judgment
debtor . . . to appear before the
court in chambers on a date specified in such notice . . . to enable
the court to inquire into
the financial position of the judgment
debtor and to make such order as the court may deem just and
equitable.”
[167]
Section 65A(1)(b) and (c) provides:
“
(b)
A notice referred to in paragraph (a) shall be drawn up by the
judgment creditor or his or her
attorney, signed by the judgment
creditor or his or her attorney and the clerk of the court, and
served by the sheriff, or by the
attorney of the judgment creditor or
any candidate attorney in his or her employ, on the judgment debtor .
. . in the manner prescribed
by the rules for the service of process
in general and at least ten days before the date fixed in the notice
for the appearance
before the court.
(c)
The fees and charges in respect of a notice served by any attorney or
candidate attorney
shall be determined in accordance with the tariffs
prescribed by the rules for the service of process by a sheriff:
Provided
that no such fees and charges shall be payable unless
personal service of the notice has been effected.”
[168]
Section 65E(1)(c) confers power on the
Magistrates’ Court to “authorize the issue of an
emoluments attachment order
by virtue of section 65J(1) for the
payment of the judgment debt and costs by the employer of the
judgment debtor . . .”.
Section 65E(1) relates to
proceedings in terms of section 65A(1). Section 65E(1) gives
the court certain powers if it
is satisfied as to certain matters.
One of those is that, if the court is satisfied “that the
judgment debtor . . .
at any time after receipt of a notice referred
to in section 65A(1), has made an offer in writing to the judgment
creditor or his
attorney to pay the judgment debt and costs in
specified instalments
or otherwise,
whether by way of an emoluments attachment order or otherwise,
or, if such an offer has not been made, that the judgment debtor is
able to pay the judgment debt and costs in reasonable instalments,
the court may
order the judgment debtor to pay the judgment debt and costs in
specified instalments . . .” and postpone any further hearings
of the proceedings. In addition, “if the judgment debtor
is employed by any person who resides, carries on business
or is
employed in the district, or if the judgment debtor is employed by
the State in the district,” the court has power
to “
in
addition authorize the issue of an emoluments attachment order by
virtue of section 65J(1)
for the
payment of the judgment debt and costs by the employer of the
judgment debtor, and postpone any further hearings of the
proceedings”.
[169]
We see that under this provision the power
of the court is to “authorize the issue of an emoluments
attachment order . . .”.
Its power is not to issue an
emoluments attachment order itself. The court’s role is
to authorise that someone else
issue the emoluments attachment
order. I make this distinction not to say that there is no
judicial oversight because, if
the court authorises the issuing of an
emoluments attachment order, there is judicial oversight. I do
so to make the point
that this provision suggests that the role of
issuing emoluments attachment orders may be for someone else to play
and not the
court.
[170]
Since in terms of section 65E(1)(c) the
court authorises “the issue of an emoluments attachment order
by virtue of section
65J(1)”, it is necessary to quote section
65J(1). The heading to section 65J is: “Emoluments
attachment orders”.
Section 65J(1) has paragraphs (a) and
(b). They read:
“
(a)
Subject to the provisions of subsection (2), a judgment creditor may
cause an order (hereinafter
referred to as an emoluments attachment
order) to be issued from the court of the district in which the
employer of the judgment
debtor resides, carries on business or is
employed, or, if the judgment debtor is employed by the State, in
which the judgment
debtor is employed.”
(b)
An emoluments attachment order—
(i)
shall attach the emoluments at present or
in future owing or accruing to the judgment debtor by or from his or
her employer (in
this section called the garnishee), to the amount
necessary to cover the judgment and the costs of the attachment,
whether that
judgment was obtained in the court concerned or in any
other court; and
(ii)
shall oblige the garnishee to pay from time
to time to the judgment creditor or his or her attorney specific
amounts out of the
emoluments of the judgment debtor in accordance
with the order of court laying down the specific instalments payable
by the judgment
debtor, until the relevant judgment debt and costs
have been paid in full.”
[171]
The first judgment deals with the issue at
hand on the basis that section 65J(1)(a) is the source of the
power for the issue
of emoluments attachment orders. Section
65J(1)(a) does not expressly say that the court or the clerk of the
court or anyone
else has the power to issue or make an emoluments
attachment order. So, if it is the court or the clerk of the
court that
has that power, then that power must be necessarily
implied in the provision. The first judgment says that section
65J(1)(a)
must be given a meaning that is consistent with the
Constitution if it can be given such a meaning without straining the
language
of the statute. It says that the meaning that must be
given to the provision is that it is the court and not the clerk of
the court that has the power to issue an emoluments attachment order
contemplated in the provision. The judgment implies
that this
meaning can be given to this provision without straining the language
of the provision.
[172]
At face value, the proposition that section
65J(1)(a) should be read as meaning that it is the court that issues
emoluments attachment
orders contemplated in section 65J(1)(a)
seems attractive. However, upon further reflection, one
realises that the proposition
is not sustainable. Section 65J
confers upon a judgment creditor the power to “cause an
[emoluments attachment] order
. . . to be issued
from
the court . . .”. If one were to say that
the provision means that the court issues the emoluments attachment
order, one would be forced to read the provision as saying that “a
judgment creditor may cause an [emoluments attachment]
order . . . to
be issued [
by
]
the court . . .”. That would mean that a judgment
creditor has power to in effect instruct the court to issue an
emoluments attachment order. That would be the meaning of the
phrase “may cause an [emoluments attachment] order . .
. to be
issued from the court . . .”. The meaning that
a litigant may effectively instruct a court to make
or grant a
certain order is not a meaning that is consistent with the
Constitution. It is one that is inconsistent with the
independence of the Judiciary. It is linguistically impossible
to give this provision the meaning that it is the court that
issues
an emoluments attachment order.
[173]
The phrase “a judgment creditor may
cause an [emoluments attachment] order . . . to be issued .
. .” means
that the judgment creditor has the authority to
ensure that the emoluments attachment order is issued. If you
have power
to cause something to be done, it means that you have
control over whatever may be necessary to ensure that it is done.
It
means that you can do the thing yourself or you can instruct
somebody else to do it and you can see to it that it is done.
Under section 65J(1)(a), the person who has the power to cause
an emoluments attachment order to be issued is a judgment creditor.
A judgment creditor cannot have power to cause a court to issue an
emoluments attachment order. It may be that he or she
may have
power to cause the clerk of the court, but not the court, to issue an
emoluments attachment order.
[174]
The proposition that section 65J(1)(a) must
be given the meaning that it is the court that issues an emoluments
attachment order
contemplated therein overlooks the fact that that
meaning would require that the provision be read to say: “Subject
to subsection
(2), a judgment creditor may cause an order (herein
after referred to as an emoluments attachment order) to be issued
[by] the
court.” In other words, the word “from”
which appears before the words “the court” in section
65J(1)(a) would have to be replaced with the word “by”.
While there may be a case where it would be justified
to read “from”
as “by” in a statutory provision, it does not appear to
me that, in the context of this
provision, there would be
justification to do so. I note that the first judgment does not
expressly go that far. However,
the meaning it attaches to
section 65J(1)(a) can only be attributed to that provision if the
word “from” is to be replaced
with the word “by”.
Otherwise, there is no other way to accommodate the suggested meaning
within that provision.
[175]
To read the word “from” to mean
“by” in section 65J(1)(a) also overlooks the fact that
the word “from”
in this provision is used as part of the
concept of issuing. When one looks at the Act, one sees that
there are other sections
in which issuing is used with either the
word “from” or the words “out of”. A
few examples should
suffice. Section 4(3) and (4) of the Act
both contain the phrase “issued out of any court”.
Respectively,
they read:
“
(3)
Every process issued out of any court shall be of force throughout
the Republic.
(4)
Any process issued out of any court may be served or executed by the
messenger of
the court appointed for the area within which such
process is to be served or executed.”
In section 65A(1)(a)
we also find the concept of something being “issued from the
court” which we find in section 65J(1)(a).
In so far as
is relevant, section 65A(1)(a) reads:
“
If
a court has given judgment for the payment of a sum of money or has
ordered payment in specified instalments or otherwise of
such an
amount and such judgment or order has remained unsatisfied . . . the
judgment creditor may issue, from the court of the
district in which
the judgment debtor resides, carries on business or is employed . . .
a notice calling upon the judgment debtor
to . . . appear before the
court . . . .”
This means that the
use of the word “from” in section 65J(1)(a) is
deliberate. If that is the case, it cannot
be read as “by”.
[176]
The proposition that section 65J(1)(a) must
be read to mean that it is the court that issues an emoluments
attachment order contemplated
therein also overlooks the fact that,
where under the Act, there is judicial intervention before an
emoluments attachment order
is issued, it is not the court that
issues the emoluments attachment order. The court only
authorises the issue of the emoluments
attachment order. In
support of this, it is only necessary to refer to sections 65J(2)(a)
and 74D. In section 65J(2)(a)
we find the following: “
. . . unless the judgment debtor has consented thereto in writing or
the court has so authorised”.
In section 74D we find the
words: “ . . . where the administration
order provides for the payment of
instalments out of future
emoluments or income, the court shall
authorize
the issue of an emoluments attachment order in terms of section 65J
in order to attach emoluments at
present or in future owing . . .”.
[177]
There is also section 65E(1)(c) which
contains this part: “ . . . the court may order the judgment
debtor to pay the judgment
debt and costs in specified instalments
and . . . in
addition authorize the
issue of an emoluments attachment order by virtue of section 65J(1)
for the payment of the judgment debt . . .”. Therefore,
reading section 65J(1)(a) as meaning that it is the court
that
issues an emoluments attachment order goes against the actual role of
the court in relation to emoluments attachment orders.
The
scheme of the Act is that, where the court has a role to play in
regard to emoluments attachment orders, its role is to authorise
the
issuing of such orders and someone else issues them. Where the
court does not authorise the issue of an emoluments attachment
order
– and there are such cases – it has no role at all to
play in the issuing of emoluments attachment orders.
[178]
It is necessary to also consider the
meaning of the word “issued” in the phrase “issued
from the Court”
in section 65J(1)(a). Its meaning may
reveal whether what is contemplated is a judicial function or an
administrative function.
If it is a judicial function, that may
help us to conclude that it is the court that issues the order.
If it is an administrative
function, that would point to the function
being performed by someone other than a Magistrate or the Court.
[179]
Winer v Garcia
[98]
dealt with the issue of a warrant. In that
case Hopley J said:
“
A
person empowered to grant and issue warrants may, on receiving
sufficient information to justify his action, “grant”
a
warrant and order it to be prepared. When it is ready he
completes it by signing it and doing any other thing which is
necessary on his part to make it a perfect instrument. He has
then issued it.”
[99]
In
Nxumalo
[100]
Kuper J regarded the issuing of summons to occur when it is signed by
the Registrar and handed to the plaintiff’s attorney
to enable
him or her to have it served. He put it thus:
“
Now,
when is it that an action is commenced? It is quite clear in my
view that, once a summons has been issued, i.e. once
it has been
signed by the Registrar of this Court and handed to the plaintiff’s
attorney to enable him to have the matter
served, the litigation has
commenced . . . .”
[101]
[180]
In
Protea
Assurance Co Ltd
[102]
Hofmeyr J said about the word “issue”:
“
The
term ‘issue’ is not defined in the Rules and as a
transitive verb its ordinary meaning, in my opinion, is merely
to
send (hand) out, publish or put in circulation.”
[103]
Black’s Law
Dictionary
[104]
gives the verb “issue” the following meanings:
“
Issue
(
v
) To
send forth; to emit; to promulgate; as, an officer issues orders,
process issues from a court. To put into circulation;
as the
treasury issues notes. To send out, to send out officially; to
deliver, for use, or authoritatively; to go forth as
authoritative or
binding . . . .”
When
the verb “issue” is used with reference to a writ,
Black’s Law Dictionary gives it the following meaning:
“
A
writ is ‘issued’ when it is delivered to an officer, with
the intent to have it served.”
[181]
Although one cannot rely on the Rules of
the Magistrates’ Court to interpret provisions of the Act, it
needs to be pointed
out that the word “issue” in the
context of court processes under the Rules of the Magistrates’
Court is normally
used in relation to the function of the clerk of
the court or Registrar of the court. Good examples in this
regard are to
be found in Rule 36 of the Rules of the Magistrates’
Court. Rule 36(1) reads:
“
The
process for the execution of any judgment for the payment of money,
for the delivery of property whether movable or immovable,
or for
ejectment shall be by warrant
issued and
signed
by the registrar or clerk of the
court and addressed to the sheriff.”
Rule 36(5) reads:
“
The
registrar or clerk of the court shall at the request of a party
entitled thereto
reissue
process issued under sub-rule (1)
without
the court having sanctioned the reissue.
”
[182]
Rule 37 contemplates that the court would
authorise the issue of, for example, emoluments attachment orders in
the circumstances
contemplated therein. It does not contemplate
that the court does the actual issuing of an emoluments attachment
order.
Rule 37(1) reads:
“
Where
any warrant or emoluments attachment order or garnishee order has
been lost or mislaid, the court may on the application of
any
interested party and after notice to any person affected thereby,
authorise
the issue of a second or further warrant or emoluments attachment
order or garnishee order, as the case may be, on such conditions
as
the court may determine and may make such order as to costs as it may
deem fit.”
[183]
Rule 46 specifically deals with the
attachment of emoluments by emoluments attachment orders. Rule
46(1) contemplates that
it is a judgment creditor who issues an
emoluments attachment order. It reads:
“
When
an emoluments attachment order is issued by a judgment creditor
out of any court other than the court in which the judgment or order
was obtained, a certified copy of the judgment or order against
the
judgment debtor shall accompany the affidavit or affirmation or
certificate referred to in section 65J(2)(b) of the Act.”
[184]
It seems to me that the meaning of the word
“issue” in the phrase “a judgment creditor may
cause an [emoluments
attachment] order . . . to be issued . . .”
in section 65J(1)(a) is the same as the meaning of that same
word in the
sentence: the plaintiff may cause a summons to be
issued. Causing a summons to be issued does not involve a
judicial officer.
To cause a summons to be issued, a plaintiff
or their attorney would prepare the summons, sign it, get the clerk
of the court or
Registrar, as the case may be, to sign it and hand it
over to someone so that it can be taken to the Sheriff or messenger
of the
court who would have to serve it. Interestingly,
section 65J(3) contemplates a similar process in regard to an
emoluments
attachment order. Section 65J(3) reads:
“
Any
emoluments attachment order shall be prepared by the judgment
creditor or his attorney, shall be signed by the judgment creditor
or
his attorney and the clerk of the court
and shall be served on the garnishee by the messenger of the court in
the manner prescribed by the rules for the service of process.”
[185]
The provision of section 65J(3) captures
all the steps for the preparation of an emoluments attachment order
and the journey it
travels until it is issued and served. The
first step is the preparation of the emoluments attachment order.
That is
done by the judgment creditor or his or her attorney.
The second step is that the order is signed by the judgment creditor
or his or her attorney. The third is that it is signed by the
clerk of the court. Thereafter, it is served on the garnishee.
In this journey of the emoluments attachment order there is no
judicial intervention. In my view, when section 65J(1)(a)
says
that “a judgment creditor may cause an [emoluments attachment]
order . . . to be issued from the court”, it is
referring to
the process outlined in section 65J(3). Since there is no role
for the court in that process, there is no judicial
oversight.
Under section 65J(1)(a) an emoluments attachment order is not issued
by a court. It is issued by the clerk
of the court.
[186]
Elsewhere in this judgment
[105]
I have said that under section 65J(1)(a) a judgment creditor is given
power to cause an emoluments attachment order to be issued
from the
court. I have also said that that is effected when the process
provided for in section 65J(3) is carried out.
What one
therefore has is that in section 65J(1)(a) a judgment creditor is
given power to cause an emoluments attachment order
to be issued from
a court and in section 65J(3) provision is made that tells us how an
emoluments attachment order gets issued.
[187]
In section 65A(1)(a) and (b) we have the
same thing. In section 65A(1)(a) we find this concept of a
judgment creditor having
power to issue a certain notice from the
court just as he or she has the power under section 65J(1)(a) to
cause an emoluments attachment
order to be issued from the court.
In section 65J(3) we find the provision that says that “[a]ny
emoluments attachment
order shall be prepared by the judgment
creditor or his attorney, shall be signed by the judgment creditor or
his attorney and
the clerk of the court, and shall be served on the
garnishee by the messenger of the court . . .”. Then in
section
65A(1)(b) we find a provision comparable to section 65J(3).
Section 65A(1)(b) reads:
“
A
notice referred to in paragraph (a) shall be drawn up by the judgment
creditor or his or her attorney, signed by the judgment
creditor or
his or her attorney and the clerk of the court, and served by the
sheriff or by the attorney of the judgment creditor
or any candidate
attorney in his or her employ, on the judgment debtor . . . .”
[188]
This type of provision is there to show how
the notice in terms of section 65A(1)(a) or the emoluments
attachment order, in
the case of section 65J(3), is issued.
In providing how the notice or emoluments attachment order is issued,
section 65A(1)(b),
in the case of the notice contemplated under
section 65A(1)(a), or, an emoluments attachment order, in the case of
section 65J(3),
reveals that the court is not the one that issues
either the notice or an emoluments attachment order. In fact
one finds
the same thing in section 65A(6)(c) and (7). In
section 65A(6)(c) provision is made for the court to authorise the
issuing
of a warrant and in subsection (7) one finds a provision that
tells us how that warrant gets issued. Section 65A(6)(c)
provides,
in so far as it is relevant, that, if the court is
“satisfied on the ground of sufficient proof or otherwise that
the judgment
debtor . . . has failed to remain in attendance . . .
the court may, at the request of the judgment creditor or his or her
attorney,
authorise the issue of a warrant directing the sheriff to
arrest the said judgment debtor . . .”. Then
subsection (7)
reads: “A warrant authorised under
subsection (6) shall be prepared by the judgment creditor or his or
her attorney, signed
by the judgment creditor or his or her attorney
and the clerk of the court, and executed by the sheriff”.
[189]
The location of section 65J(3) is also
important in the whole scheme of section 65J. Section
65J(1)(a) tells us that
a judgment creditor has power to cause an
emoluments attachment order to be issued. Paragraph (b) tells
us what an emoluments
attachment order does. Subsection (2)
lays down conditions that must be met or satisfied before an
emoluments attachment
order may be issued. Then subsection (3)
tells us the various steps that must be taken to have an emoluments
attachment order
issued and served.
[190]
Section 65J(1)(b) explains what an
emoluments attachment order does. It reads:
“
(b)
An emoluments attachment order—
(i)
shall attach the emoluments at present or
in future owing or accruing to the judgment debtor by or from his or
her employer (in
this section called the garnishee), to the amount
necessary to cover the judgment and the costs of the attachment,
whether that
judgment was obtained in the court concerned or in any
other court; and
(ii)
shall oblige the garnishee to pay from time to time to the judgment
creditor or his or her attorney
specific amounts out of the
emoluments of the judgment debtor in accordance with the order of
court laying down the specific instalments
payable by the judgment
debtor, until the relevant judgment debt and costs have been paid in
full.”
[191]
What emerges from paragraph (b)(i) is that
an emoluments attachment order attaches the judgment debtor’s
present and future
emoluments. What emerges from paragraph
(b)(ii) is that an emoluments attachment order obliges the garnishee
(the judgment
debtor’s employer) to pay, from time to time, to
the judgment creditor or his or her attorney specific amounts out of
the
emoluments of the judgment debtor in accordance with the order of
court laying down the specific instalments payable by the judgment
debtor until the relevant judgment debt and costs have been paid in
full.
[192]
It seems that it is paragraph (b)(ii) that
confers legal force on an emoluments attachment order. Without
that provision,
an emoluments attachment order would not place any
legal obligation upon the judgment debtor’s employer to pay the
emoluments
over to the judgment creditor or his or her attorney.
After all, despite it being called an order, an emoluments attachment
order is not granted or issued by a court. Therefore, it is not
a court order.
[193]
It is now appropriate to deal with section
65J(2). It reads:
“
An
emoluments attachment order shall not be issued—
(a)
unless
the judgment debtor has consented thereto in writing or the court has
so authorised, whether on application to the court
or otherwise, and
such authorisation has not been suspended; or
(b)
unless
the judgment creditor or his or her attorney has first—
(i)
sent
a registered letter to the judgment debtor at his or her last known
address advising him or her of the amount of the judgment
debt and
costs as yet unpaid and warning him or her that an emoluments
attachment order will be issued if the said amount is not
paid within
ten days of the date on which that registered letter was posted; and
(ii)
filed
with the clerk of the court an affidavit or affirmation by the
judgment creditor or a certificate by his or her attorney setting
forth the amount of the judgment debt at the date of the order laying
down the specific instalments, the costs, if any, which have
accumulated since that date, the payments received since that date
and the balance owing and declaring that provisions of
subparagraph (1)
have been complied with on the date specified
therein.”
[194]
Section 65J(2) precludes the issuing of an
emoluments attachment order unless either one of the conditions
falling under paragraph
(a) or those falling under paragraph (b) have
been met. Under paragraph (a) there are two conditions and they
are alternative
to each other. The two conditions are that “the
judgment debtor has consented thereto in writing or the court has so
authorised, whether on application to the court or otherwise, and
such authorisation has not been suspended”.
Subsection (2)(a)
means that an emoluments attachment order may
be issued if the judgment debtor has consented thereto in writing or
if the court
has so authorised.
[195]
Where the court has authorised the issue of
an emoluments attachment order, there is judicial oversight in regard
to the issuing
of an emoluments attachment order. However,
where a judgment debtor has consented thereto in writing, there is no
judicial
oversight. The first judgment does not deal with the
fact that section 65J(2)(a) contemplates that one of the situations
under which an emoluments attachment order may be issued is where a
judgment debtor “has consented thereto in writing”
and
that another one is where the court has authorised the issue of an
emoluments attachment order. If the position was that
an
emoluments attachment order was issued by a court only, there would
be no need for the provision that an emoluments attachment
order is
also issued where the judgment debtor has provided written consent or
where the court has authorised the issue of an emoluments
attachment
order.
[196]
The view that in every case under the Act
judicial oversight is provided for before an emoluments attachment
order may be issued
is irreconcilable with the fact that one of the
scenarios contemplated by section 65J(2)(a) is where an emoluments
attachment order
is issued on the basis that there is a written
consent of the judgment debtor and is not authorised by the court.
[197]
Subsection (2)(b) sets out two conditions
that must both be met. They are in subparagraphs (i) and (ii).
In regard to
the condition in subparagraph (i) it is significant that
part of what the judgment creditor or his or her attorney must do by
way
of a registered letter is to warn the judgment debtor that “an
emoluments attachment order will be issued if the said amount
is not
paid within ten days of the date on which the registered letter was
posted”. The fact that this provision requires
the
judgment creditor or his or her attorney to give the judgment debtor
a warning – not that an emoluments attachment order
may be
issued – but that as a matter of fact it “will be issued
if the said amount is not paid . . .” is irreconcilable
with
the proposition that it is the court that issues emoluments
attachment orders.
[198]
If it were the court that issues emoluments
attachment orders, the provision would have been formulated in a way
that showed that
the court may or may not issue that order. The
fact that the provision is formulated in a way that is to the effect
that
an emoluments attachment order will be issued is indicative of
the fact that it is within the power of the judgment creditor to
issue or not to issue the emoluments attachment order. The way
in which this part of subsection (2)(b)(i) is formulated is
consistent with section 65J(1)(a) where the latter provides that,
subject to subsection (2), “a judgment creditor
may
cause an [emoluments attachment] order . . . to be issued . . .”.
[199]
I have already dealt with section 65J(3).
Subsection (5) is important. It reads:
“
An
emoluments attachment order may be executed against the garnishee as
if it were a court judgment,
subject to
the right of the judgment debtor, the garnishee or any other
interested party to dispute the existence or validity of
the order or
the correctness of the balance claimed.”
The question that
this provision raises is this: if an emoluments attachment order is a
court order as the first judgment implies
it is, why would a
provision be necessary that says that an emoluments attachment order
may be executed
as if it were
a court judgment? The answer is that there would be no such
need. The need exists because an emoluments attachment
order is
not a court order.
[200]
The provisions of section 65J(6) and (7)
are also important. Respectively, they read:
“
(6)
If, after the service of such an emoluments attachment order on the
garnishee, it is shown that
the judgment debtor, after satisfaction
of the emoluments attachment order, will not have sufficient means
for his own and his
dependant’s maintenance
,
the court shall rescind the emoluments attachment order or amend it
in such a way that it will affect only the balance of the emoluments
of the judgment debtor over and above such sufficient means.
(7)
Any emoluments attachment order may at any time on good cause shown
be
suspended, amended or rescinded by
the court
, and when suspending any such
order
the court may
impose such conditions as it may deem just and reasonable.”
[201]
The importance of subsections (6) and (7)
is that there is a clear and express role for the court after an
emoluments attachment
order has been issued and served. At that
stage provision is made for the court to suspend, rescind or amend
it. If
there is a role for the court at the time of the issue
of all emoluments attachment orders, why is it that that role is not
clearly
and expressly spelt out in regard to that time in the same
way in which the court’s role after the service of emoluments
attachment orders is clearly and expressly provided for?
[202]
Section 73 reads:
“
Order
for payment by instalments
(1)
The court may, upon application of any
judgment debtor or under section 65E(1)(a)(ii) or 65E(1)(c) and if it
appears to the court
that the judgment debtor is unable to satisfy
the judgment debt in full at once, but is able to pay reasonable
periodical instalments
towards satisfaction thereof or
if
the judgment debtor consents to an emoluments attachment order
or a garnishee order being made against him, suspend execution
against that debtor either wholly or in part on such conditions
as to
security or otherwise as the court may determine.”
This provision
reveals that there are cases where an emoluments attachment order is
made on the strength of the fact that the judgment
debtor has
consented to such an order and not that a court has authorised the
issue of the emoluments attachment order.
[203]
I conclude that there is no justification
in law for the proposition that section 65J(1)(a) must be
construed to mean that
it is the court that issues emoluments
attachment orders contemplated in that provision. I also
conclude that under the Act
there are cases where the court
authorises the issue of emoluments attachment orders and there are
cases where emoluments attachment
orders are issued without any court
intervention. This means that there is judicial oversight in
those cases where it is
the court that authorises the issuing of
emoluments attachment orders but there is no judicial oversight in
those cases where emoluments
attachment orders are issued without any
prior intervention of the court. I am, therefore, of the view
that, to the extent
that the Act makes provision for the latter
category of cases, it is inconsistent with section 34 of the
Constitution and is, therefore,
constitutionally invalid.
Remedy
[204]
The order of invalidity that was granted by
the High Court read as follows:
“
2.
It is declared that:
2.1
the words ‘the judgment debtor has consented thereto in
writing’ in section
65J(2)(a) of the Magistrates’
[Courts] Act 32 of 1944 (“the
Magistrates’ Courts
Act&rdquo
;) and;
2.2
section 65J(2)(b)(i)
and
section 65J(2)(b)(ii)
of the
Magistrates’
Courts Act, are
inconsistent with the Constitution of the Republic of
South Africa Act, 1996 (“the Constitution”) and invalid
to the
extent that they fail to provide for judicial oversight over
the issuing of an emoluments attachment order against a judgment
debtor.”
This was an order of
notional severance. It declared a statutory provision invalid
“to the extent that” it permitted
conduct inconsistent
with the Constitution. The order of constitutional invalidity
in 2.1 of the High Court order simply
declares the words “the
judgment debtor has consented thereto in writing” in section
65J(2)(a) to be inconsistent with
the Constitution and invalid “to
the extent that they fail to provide for judicial oversight over the
issuing of emoluments
attachment orders”. I do not think
that this was an appropriate remedy. In my view it is not the
words “the
judgment debtor has consented thereto in writing”
that are constitutionally offensive. What is constitutionally
offensive
is the absence in section 65J(2)(a) of words requiring
judicial oversight before the issuing of an emoluments attachment
order
when the judgment debtor has consented thereto in writing.
The constitutional defect with which we are concerned is an omission.
[205]
The order of constitutional invalidity in
2.2 of the High Court order simply declares that “section
65J(2)(b)(i) and
section 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 emoluments attachment order.” The
remedy the High Court gave was notional severance. Again, the
constitutional
defect is the absence of words providing for judicial
oversight.
[206]
What is the appropriate remedy? In my
view, notional severance is not appropriate. The appropriate
remedy is a reading-in.
This is because we are here dealing
with a constitutional defect that takes the form of a legislative
omission. The order
granted by the High Court will leave the
statutory provision looking exactly the same after the judgment has
been handed down as
it looked before the judgment in circumstances
where the section has not been wholly declared invalid.
[207]
Speaking about notional severance and
reading-in, Ackermann J said in
National
Coalition:
[106]
“
The
device of notional severance can effectively be used to render
inoperative portions of a statutory provision, where it is the
presence
of particular provisions which is constitutionally offensive and
where the scope of the provision is too extensive and hence
constitutionally
offensive, but the unconstitutionality cannot be
cured by the severance of actual words from the provision.”
[107]
Ackerman J went on:
“
Where,
however, the invalidity of a statutory provision results from an
omission, it is not possible, in my view, to achieve notional
severance by using words such as ‘invalid to the extent that’
or other expressions indicating notional severance.
An omission
cannot, notionally, be cured by severance. This is implicit in
the constitutional jurisprudence of Canada and
the United States
dealt with later in this judgment and has been expressly so held in
Germany. The only logical equivalent
to severance, in the case
of invalidity caused by omission, is the device of reading in.
In the present case there are only
two options; declaring the whole
of s 25(5) to be invalid or reading in provisions to cure such
invalidity.”
[108]
[208]
In
National
Coalition
reading-in was effectively in
paragraph 2 of the order. Paragraph 2 reads:
“
2.
The appeal of the applicants succeeds and paras 1, 2 and 3 of the
order made by the
High Court are set aside and replaced with the
following:
2.1
the omission from s 25(5) of the Aliens Control Act 96 of 1991, after
the word ‘spouse’
of the words ‘or partner, in a
permanent same sex life partnership’, is declared to be
inconsistent with the Constitution;
2.2
s 25(5) of the Aliens Control Act 96 of 1991, is to be read as though
the following words
appear therein after the word ‘spouse’:
‘or partner, in a permanent same-sex life partnership’.”
[109]
[209]
These words are apposite. Although,
in the main, reading-in is thus the appropriate remedy in this case,
it needs to be used
jointly with severance because of the way the
statutory provisions are structured. Certain words must be
severed from the
provisions and certain words must be read-in.
In my view, the word “or” in section 65J(2)(a) must be
severed
and in its place the word “and” should be
read-in. That will ensure that under subsection (2)(a) an
emoluments
attachment order will not be issued unless the judgment
debtor has not only consented to it in writing but also the court has
authorised
its issue. This will differ from the current
position where, if the judgment debtor has consented in writing to
the issuing
of an emoluments attachment order, that is enough and the
court’s authorisation is not required. Furthermore, after
the word “authorised” in section 65J(2)(a) we must read
in the words “after satisfying itself that it is just
and
equitable that an emoluments attachment order be issued and that the
amount is appropriate”. Reading-in these words
is
necessary to ensure that the court will consider whether it is just
and equitable that an emoluments attachment order be issued
and that
the amount is appropriate before it authorises the issuing of the
emoluments attachment order.
[210]
In section 65J(2)(b)(i) the word “will”
should also be severed and the word “may” should be read
in its
place. This is necessary to acknowledge the fact that
whether or not an emoluments attachment order will be issued is not
certain as it will depend upon the court’s exercise of a
discretion. At the end of section 65J(2)(b)(ii) the full-stop
must be severed, a colon and the word “and” must be read
in. Then, a new section 65J(2)(b)(iii) must be read
into the
provision after section 65J(2)(b)(iii) which will read as follows:
“
(iii)
been granted an order of court authorising that an emoluments
attachment order be issued after
satisfying itself that it is just
and equitable that the order be issued and that
the
amount is appropriate.”
[211]
The order I propose is prospective only and
not retrospective. In this regard I agree with the reasons
given in the second
judgment for making the order prospective
only.
[110]
For the sake of clarity, included in the order is section 65J(2)(a)
and (b) as it reads after the severance and reading-in.
Words
that have been severed are shown by way of strikethrough and words
that have been read-in are underlined.
Order
[212]
In the result the following order is made:
1.
The appeals are dismissed with costs.
2.
The order of constitutional invalidity made
by the Western Cape Division of the High Court is not confirmed.
3.
The use of the word “or” after
the word “writing” and the omission of the word “and”
in the
place of the word “or”, and the omission of the
words “after satisfying itself that it is just and equitable
that an emoluments attachment order be issued and that the amount is
appropriate” after the word “authorised”
in
section 65J(2)(a)
of the
Magistrates’ Courts Act, 1944
are
inconsistent with the Constitution and invalid.
4.
The use of the word “will”
after the words “an emoluments attachment order” and the
omission of the word
“may” in the place of the word
“will” in
section 65J(2)(a)
of the
Magistrates’
Courts Act, 1944
are inconsistent with the Constitution and invalid.
5.
The
omission of:
(a)
a semi-colon in the place of the full-stop at the end of
section
65J(2)(b)(ii)
of the
Magistrates’ Courts Act, 1944
;
(b)
the word “and” at the end of
section 65J(2)(b)(ii)
of the
Magistrates’ Courts Act, 1944
; and
(c)
sub-paragraph (iii) under
section
65J(2)(b)
of the
Magistrates’ Courts Act, 1944
reading:
“
been
granted an order of court authorising that an emoluments attachment
order be issued after satisfying itself that it is just
and equitable
that the order be issued and that
the
amount is appropriate.”
is
inconsistent with the Constitution and invalid.
6.
Section 65J(2)
of the
Magistrates’
Courts Act, 1944
shall be read as though:
(a)
the word “or” after the word “writing” in
paragraph (a) is replaced
with the word “and”;
(b)
the words: “after satisfying itself that it is just and
equitable that an emoluments
attachment order be issued and that
the amount is appropriate.” appear after the
word “authorised” in paragraph (a);
(c)
the word “will” after the words “an emoluments
attachment order”
in paragraph (b)(i) is replaced with the word
“may”;
(d)
the full-stop at the end of paragraph (b)(ii) is replaced with a
semi-colon and the word
“and” appears after the
semi-colon;
(e)
the provision:
“
(iii)
been granted an order of court authorising that an emoluments
attachment order be issued after satisfying
itself that it is just
and equitable that the order be issued and that
the
amount is appropriate.”
appears
as paragraph (b)(iii) after paragraph (b)(ii).
7.
The orders in 2, 3, 4, 5, 6 and 8 operate
with effect from the handing down of this judgment.
8.
It is declared that
section 65J(2)(a)
and
(b) of the
Magistrates’ Courts Act, 1944
reads as follows:
“
65J.
Emoluments attachment orders
. . .
(2)
An emoluments attachment order shall not be issued—
(a)
unless the judgment debtor has consented thereto in writing
or
and
the court has so authorised
after satisfying itself
that it is just and equitable that an emoluments attachment order be
issued and that the amount is appropriate
, whether on application
to the court or otherwise, and such authorisation has not been
suspended; or
(b)
unless the judgment creditor or his or her attorney has first—
(i)
sent a registered letter to the judgment debtor at his or her last
known address advising
him or her of the amount of the judgment debt
and costs as yet unpaid and warning him or her that an emoluments
attachment order
will
may
be issued if the
said amount is not paid within ten days of the date on which that
registered letter was posted; and
(ii)
filed with the clerk of the court an affidavit or an affirmation by
the judgment creditor or
a certificate by his or her attorney setting
forth the amount of the judgment debt at the date of the order laying
down the specific
instalments, the costs, if any, which have
accumulated since that date, the payments received since that date
and the balance owing
and declaring that the provisions of
subparagraph (i) have been complied with on the date specified
therein
.
;
and
(iii)
been granted an order of court authorising
that
an emoluments attachment order be issued after satisfying itself that
it is just and equitable that the order be issued and
that the amount
is appropriate.
”
9.
The respondents who opposed confirmation of
the order of constitutional invalidity made by the Western Cape
Division of the High
Court are ordered to pay the applicants’
costs jointly and severally, the one paying the other to be absolved,
including
the costs of three counsel.
For the University Of
Stellenbosch Legal Aid Clinic: G M Budlender SC, A Katz SC and
S Margardie instructed by Webber Wentzel.
For the Minister of
Justice and Correctional Services: D Potgieter SC and L Dzai
instructed by the State Attorney.
For Flemix &
Associates Incorporated Attorneys: P F Louw SC and K Pillay
instructed by Werksmans Attorneys.
For the Association
of Debt Recovery Agents NPC: D N Unterhalter SC, D E Loggerenberg SC,
A R G Mundell SC and K S Hofmeyr
instructed by Knowles
Hussain Linsey Inc.
For the South African
Human Rights Commission: J Brickhill and E Webber instructed by Legal
Resources Centre.
[1]
32 of 1944.
[2]
Apart from section 172 of the Constitution,
section 15
of the
Superior Courts Act 10 of 2013
and the Rules of
the Constitutional Court regulate confirmation proceedings.
[3]
53 of 1979.
[4]
Both the Usury Act 73 of 1968 and the
Credit Agreement Act 75 of 1980 regulated the financial credit
market list. The latter
Act replaced the Hire-Purchase Act 36
of 1942.
[5]
This was the scale of attorney and own client.
[6]
The Magistrates’ Courts Amendment Act
63 of 1976 introduced Chapter VIII comprising sections 55-60.
[7]
34 of 2005.
[8]
Section 3
of the
National Credit Act.
[9
]
Section 129(1)
provides:
“
If
the consumer is in default under a credit agreement, the credit
provider—
(a)
may draw the default to the notice of the
consumer in writing and propose that the consumer refer the credit
agreement to a debt
counsellor, alternative dispute resolution
agent, consumer court or ombud with jurisdiction, with the intent
that the parties
resolve any dispute under the agreement or develop
and agree on a plan to bring the payments under the agreement up to
date;
and
(b)
subject to
section 130(2)
, may not
commence any legal proceedings to enforce the agreement before—
(i)
first providing notice to the consumer, as
contemplated in paragraph
(a)
,
or in
section 86(10)
, as the case may be; and
(ii)
meeting any further requirements set out
in
section 130.
”
[10]
Sebola and Another v Standard Bank of South
Africa Ltd and Another
[2012] ZACC 11
;
2012 (5) SA 142
(CC);
2012 (8) BCLR 785
(CC) (
Sebola
)
at para 45.
[11]
Section 130(4)
provides:
“
In
any proceedings contemplated in this section, if the court
determines that—
(a)
the credit agreement was reckless as described in
section 80
, the
court must make an order contemplated in
section 83
;
(b)
the credit provider has not complied with the relevant provisions
of
this Act, as contemplated in subsection (3)(u), or has approached
the court in circumstances contemplated in subsection (3)(c)
the
court must—
(i)
adjourn the matter before it; and
(ii)
make an appropriate order setting out the steps the credit provider
must complete before the matter may be resumed;
(c)
the credit agreement is subject to a pending debt review in terms
of
Part D of Chapter 4, the court may—
(i)
adjourn the matter, pending a final determination of the debt
review
proceedings;
(ii)
order the debt counsellor to report directly to the court, and
thereafter make an order contemplated in section 85(b); or
(iii)
if the credit agreement is the only credit agreement to which the
consumer is a party, order the debt counsellor to discontinue the
debt review proceedings, and make an order contemplated in section
85(b);
(d)
there is a matter pending before the Tribunal, as contemplated in
subsection (3)(b), the court may—
(i)
adjourn the matter before it, pending a determination of the
proceedings before the Tribunal; or
(ii)
order the Tribunal to adjourn the proceedings before it, and refer
the matter to the court for determination; or
(e)
the credit agreement is either suspended or subject to a debt
re-arrangement order or agreement, and the consumer has complied
with that order or agreement, the court must dismiss the matter.”
[12]
Section 172(1) provides:
“
If
there is a conflict between a provision of this Act mentioned in the
first column of the table set out in Schedule 1, and a
provision of
another Act set out in the second column of that table, the conflict
must be resolved in accordance with the rule
set out in the third
column of that table.”
[13]
Sebola
above n
10 at para 53.
[14]
African Bank Ltd v Myambo NO and Others
[2010] ZAGPPHC 60;
2010 (6) SA 298
(GNP) (
Myambo
).
[15]
Section 34 provides:
“
Everyone
has the right to have any dispute that can be resolved by the
application of law decided in a fair public hearing before
a court
or, where appropriate, another independent and impartial tribunal or
forum.”
[16]
Chief Lesapo v North West Agricultural Bank
and Another
[1999] ZACC 16
;
2000 (1)
SA 409
(CC);
1999 (12) BCLR 1420
(CC) at para 13.
[17]
Section 66(1)
of the
Magistrates Courts Act.
[18
]
Jaftha v Schoeman and Others, Van Rooyen v
Stoltz and Others
[2004] ZACC 25
;
2005
(2) SA 140
(CC);
2005 (1) BCLR 78
(CC
).
[19]
Section 73
of
Magistrates’ Courts Act.
>
[20]
Section 65A(1)
of the
Magistrates’
Courts Act.
[21
]
Section 65D(1)
of the
Magistrates’ Courts
Act.
[22
]
Section 65D(4)
of the
Magistrates’ Courts
Act.
[23
]
Section 65E(1)
of the
Magistrates’ Courts
Act.
[24]
Id.
[25]
Section 65J(1)
of the
Magistrates’ Courts
Act.
[26
]
Section 81(2)
provides:
“
A
credit provider must not enter into a credit agreement without first
taking reasonable steps to assess—
(a)
the proposed consumer’s—
(i)
general understanding and appreciation of the risks and
costs of the
proposed credit, and of the rights and obligations of a consumer
under a credit agreement;
(ii)
debt re-payment history as a consumer under credit agreements;
(iii) existing
financial means, prospects and obligations; and
(b)
whether there is a reasonable basis to conclude that any commercial
purpose may prove to be successful, if the consumer has such a
purpose for applying for that credit agreement.”
[27]
Section 83
provides:
“
(1)
Despite any provision of law or agreement to the contrary, in any
court or
Tribunal proceedings in which a credit agreement is being
considered, the court or Tribunal, as the case may be, may declare
that the credit agreement is reckless, as determined in accordance
with this Part.
(2) If a
court or Tribunal declares that a credit agreement is reckless
in
terms of
section 80
(1)(a) or
80
(1)(b)(i), the court or
Tribunal, as the case may be, may make an order—
(a)
setting aside all or part of the consumer's rights and obligations
under that agreement, as the court determines just and reasonable in
the circumstances; or
(b)
suspending the force and effect of that credit agreement in
accordance
with subsection (3)(b)(i).
(3)
If a court or Tribunal, as the case may be, declares that a credit
agreement is reckless in terms of
section 80(1)(b)(ii)
, the court or
Tribunal, as the case may be—
(a)
must further consider whether the consumer is over-indebted at the
time of those proceedings; and
(b)
if the court or Tribunal, as the case may be, concludes that the
consumer is over-indebted, the said court or Tribunal may make an
order—
(i)
suspending the force and effect of that credit agreement
until a
date determined by the Court when making the order of suspension;
and
(ii)
restructuring the consumer's obligations under any other credit
agreements, in accordance with
section 87.
(4)
Before making an order in terms of subsection (3), the court
or
Tribunal, as the case may be, must consider—
(a)
the consumer's current means and ability to pay the consumer's
current financial obligations that existed at the time the agreement
was made; and
(b)
the expected date when any such obligation under a credit agreement
will be fully satisfied, assuming the consumer makes all required
payments in accordance with any proposed order.”
[28]
Section 58
provides:
“
(1)
If any person (in this section called the defendant), upon receipt
of a letter
of demand or service upon him of a summons demanding
payment of debt, consents in writing to judgment in favour of the
creditor
(in this section called the plaintiff) for the amount of
the debt and the costs claimed in the letter of demand or summons,
or
for any other amount, the clerk of the court shall, on the
written request of the plaintiff or his attorney accompanied by—
(a)
if no summons has been issued, a copy of the letter of demand; and
(b)
the defendant's written consent to judgment,
(i)
enter judgment in favour of the plaintiff for the amount of
the debt
and the costs for which the defendant has consented to judgment; and
(ii)
if it appears from the defendant's written consent to judgment
that
he has also consented to an order of court for payment in specified
instalments or otherwise of the amount of the debt and
costs in
respect of which he has consented to judgment, order the defendant
to pay the judgment debt and costs in specified instalments
or
otherwise in accordance with this consent, and such order shall be
deemed to be an order of the court mentioned in
section 65A(1).
(2) The
provisions of
section 57(3)
and (4) shall apply in respect of the
judgment and court order referred to in subsection (1) of this
section.”
[29]
The
notice reads:
“
Dear
Sir/Madam
IN
RE: DEMAND IN TERMS OF THE PROVISIONS OF SECTION 58 OF ACT 32 OF
1944
1.
We, the undersigned, Coombe & Associates Inc., are
a firm of
attorneys. We address this letter to yourself on behalf of our
client.
2.
Our client is Mavava Trading 279. Our client is a money
lender and
our client was registered with the Micro Finance Regulatory Council
and is now registered with the National Credit
Regulator.
3.
You borrowed money from our client in terms of a written
agreement.
We confirm that you are in default and have been in default
for at least 20 (twenty) business days as required
by Section 129 of
Act 34 of 2005.
4.
A Letter of Demand as required in terms of Section 129
of Act 34 of
2005 was sent to you after the expiry of the 20 (twenty) business
days in which you were in default.
5
We confirm that we will not take any further legal
action before 10
(ten) business days have elapsed from date of this letter.
6.
In terms of the agreement you had to make repayments
of the loan
amount together with interest and certain other amounts to our
client.
7.
You failed to make all the repayments as required in
the agreement.
8.
The total balance outstanding in terms of the agreement
today is the
amount of R4623.58 (Four Six Two Three Rand and Five Eight Cents).
9.
We confirm that a credit assessment as required by section
81(2) of
the NCA was conducted by our client before the said credit agreement
was entered into and also that the said credit
agreement was not
reckless as provided for in section 80(1) of the NCA
10.
We confirm the following in terms of section 130(3) of the NCA—
10.1
that there is no matter under the credit agreement, and pending
before the
Tribunal, that could result in an order affecting the
issues to be determined by the court;
10.2
that the credit provider has not approached the court during the
time the
matter was before a debt counsellor, alternative dispute
resolution agent, consumer court or the ombud with jurisdiction; or
10.3
despite the consumer having surrendered property to the credit
provider,
and before that property has been sold, agreed to a
proposal made in terms of section 129(1 )(a) and acted in good faith
in fulfilment
of that agreement;
10.4
complied with an agreed plan as contemplated in section 129(1)(a);
or
10.5
brought the payments under the credit agreement up to date, as
contemplated
in section 129(1)(a).
11.
In terms of the agreement the amount mentioned in the previous
paragraph is payable after 10 (ten) business days and it attracts
interest from the date of this letter at the rate of 60.00%
per
year.
12
.
In terms of the agreement you are also liable for all costs on
attorney
and client scale that our client will have to spend in
order to obtain judgment against yourself as well as all commissions
that
our client will have to pay out in order to obtain payment from
yourself as well as interest on the amount referred to above until
such time as the total amount has been paid by yourself.
13.
The effect of our client been registered as a micro lender is that
the provisions of the Usury Act of 1978 do not apply to the loan
agreement between our client and yourself.
14.
The first purpose of this letter is to demand payment from yourself
of the amount of R4623.58 (Four Six Two Three Rand and Five Eight
Cents) and costs on attorney and client scale. Should you pay
the
amount within 10 (ten) business days from the date of this letter to
our client, our client will not take any further legal
proceedings
against yourself.
15.
Should you not pay the amount of R4623.58 (Four Six Two Three Rand
and Five Eight Cents) and costs on attorney and client scale
incurred within 10 (ten) business days to our client, our client
may
take further legal steps against yourself. This means that summons
may be issued by a Magistrates Court in which you may
be named as
the defendant.The summons will be served on you by the sheriff and
you will be called on to enter an appearance to
defend the action.
The matter will proceed to court and should judgment be obtained
against you the court order will once again
be served on you by the
sheriff and thereafter the judgment will be executed. This means,
for example, that the sheriff may attach
and sell your goods in
order to obtain money to pay to our client in order to satisfy the
judgment. You may also be subpoenaed
to appear in court in terms of
section 65 of the Magistrates Court Act 32 of 1944. You will be held
liable for all the costs
that our client will have to incur in order
to obtain the judgment and thereafter execution of the judgment.
16.
The process set out above can be shortened, should you acknowledge
your debt to our client and undertake to pay off the outstanding
debt to our client, in monthly instalments, until the debt together
with interest, expenses and costs on attorney and client scale have
been paid. This agreement will be made an Order of Court
and should
you default with any payment even if it is just one payment, we will
obtain a Judgment against you in terms of Section
58 of the
Magistrates Court Act 32 of 1944, without any further notice to you,
save for a notice as required in terms of
Section 129
of the
National Credit Act 34 of 2005
. We will then obtain an Emolument
Attachment Order against your salary, for monthly payments of the
debt in instalments, until
the debt together with interest expenses
and costs on attorney & client scale have been paid and settled
in full.
17.
If you sign the attached document under the heading “Acknowledgement
of Debt”, you acknowledge that you are legally indebted to our
client in the sum of R4623.58 (Four Six Two Three Rand and
Five
Eight Cents) and costs on attorney and client scale incurred.
18.
You do not have to sign the acknowledgment of debt. Should you
decide not to sign the acknowledgment of debt our client may after
10 (ten) business days of the date of this letter proceed to
institute action against yourself. The benefit of acknowledging your
debt to our client is that you will ultimately save substantial
costs.
19.
Section 58 of the Magistrates Court Act 32 of 1944 provides that
you
may consent to judgment and that a court may enter judgment against
you, should you fail to honour the payment arrangement
made by
yourself.
20.
The only requirement for the consent is that this letter of demand
must be handed to you personally before you may sign the consent.
You are therefore requested to confirm that you received this
letter
of demand before you sign the consent to judgment.
21.
The Magistrates Court Act 32 of 1944 makes it possible for you to
offer to pay the debt owing to our client in instalments.
22.
Section 65J of the Magistrates Court Act 32 of 1944 makes it
possible
for you to give consent to our client to ask the
Magistrates Court to issue an order, called an emoluments attachment
order,
to instruct your employer to pay the amounts of the
instalments that you have offered to pay to our client to our client
directly.
23.
The benefit of you making this arrangement is that initially,
payments will be automatically deducted from your nominated bank
account and later, your employer will be required to attend to
making the payment to us, our client or its nominee, as the case may
be
.
24.
It is important for you to understand that after the amounts have
been deducted from your salary, you must have adequate funds to
maintain yourself as well as your dependents.”
[30]
Chief Lesapo
n
16 above.
[31]
Jaftha
n
18 above.
[32]
Gundwana v Steko Development CC and
Others
[2011] ZACC 14; 2011 (3) SA 608
(CC); 2011 (8) BCLR 792 (CC).
[33]
University of Stellenbosch Legal Aid Clinic
and Others v Minister of Justice and Correctional Services and
Others
[2015] ZAWCHC 99
;
2015 (5) SA
221
(WCC);
[2015] 3 All SA 644
(WCC) (High Court judgment) at para
76.
[34]
Id at paras 84–5.
[35]
Id at para 94.
[36]
CUSA
v
Tao Ying Metal Industries and Others
[2008]
ZACC 15
;
2009 (2) SA 204
(CC);
2009 (1) BCLR 1
(CC) at para 68.
[37]
In their papers the applicants also relied on
sections 9, 10, 25(1) and 28 of the Constitution.
[38]
Jaftha
above n
18 at para 59.
[39]
Investigating Directorate: Serious Economic
Offences and Others v Hyundai Motor Distributors (Pty) Ltd and
Others In re: Hyundai
Motor Distributors (Pty) Ltd and Others v Smit
NO and Others
[2000] ZACC 12
;
2001 (1)
SA 545
(CC);
2000 (10) BCLR 1079
(CC) (
Hyundai
)
at para 23.
[40]
De Beer NO v North-Central Local Council and
South-Central Local Council and Others (Umhlatuzana Civic
Association Intervening)
[2001] ZACC
9
;
2002 (1) SA 429
(CC);
2001 (11) BCLR 1109
CC
at para 24.
[41]
Magistrates’ Courts Act, 1944 (Act No.
32 of 1944)
Regulations
Annexure 1 : Forms
Form 38 :
Emoluments Attachment Order - Section 65J of the Magistrates'
Court Act 1944 (Act 32 of 1944)
IMPORTANT NOTICE:
YOUR ATTENTION IS DIRECTED
to section 65J(3) of the Magistrates’ Courts Act, 1944 (read
with section 3(1) of the Sheriffs
Act, 1986), which provides that
only a sheriff may serve this order on a garnishee in the manner
prescribed by rule 9 of the
Magistrates' Courts Rules. Service of
this order by a person who is not a sheriff appointed in terms of
section 2 of the Sheriffs
Act, 1986, constitutes a criminal offence
in terms of section 60(1)(gA) of the Sheriffs Act, 1986, and renders
such service invalid
and of no effect. A person who is convicted of
an offence in terms of section 60(1)(gA) of the Sheriffs Act, 1986,
shall be liable
to a fine or to imprisonment for a period not
exceeding three years or both such fine and such imprisonment.
YOUR ATTENTION IS FURTHER
DIRECTED to
section 65J(6)
of the
Magistrates’ Courts Act,
1944
, which provides as follows:
“
If, after the
service of such an emoluments attachment order on the garnishee, it
is shown that the judgment debtor, after satisfaction
of the
emoluments attachment order, will not have sufficient means for his
or her own and his or her dependants' maintenance,
the court shall
rescind the emoluments attachment order or amend it in such a way
that it will affect only the balance of the
emoluments of the
judgment debtor over and above such sufficient means.”
In the Magistrate's Court
for the District/Region of
..............................................................held
at .............................................
Case No.
.....................................of 20........
In the matter
between
................................................................................................................................
Judgment Creditor.
and
................................................................................................................................
Judgment Debtor.
.....................................................................................
.....................................................................................
....................................................................................
Particulars for the identification of the judgment
debtor inclusive
of his or her identity or work number or date of birth and address.
...........................................................................................................................
Garnishee.
Address of
garnishee.
...........................................................................................................................
Whereas it has been made
to appear to the above-mentioned Court that emoluments are at
present or in future owing or accruing
to the judgment debtor by or
from the garnishee and that after satisfaction of the following
order sufficient means will be left
to the judgment debtor to
maintain himself or herself and those dependent upon him or her;
It is ordered:
(1)
That the said emoluments are attached;
(2)
That the
garnishee pay to the judgment creditor or his or her attorney on
the .......... day of each and every month/week
after this order
has been granted the sum of R........ of the emoluments of the
said judgment debtor until a sufficient
amount has been paid to
satisfy a judgment or order obtained against the judgment debtor
by the judgment creditor in the
.......... Court at ....... on
the .......... day of ............... for the amount of R
........ (on which judgment or
order the amount of R ........
remains unpaid) with costs amounting to R ........ and the costs
of attachment amounting
to R ........ as well as R ........
sheriff's fees.
Dated at
.................................... this
............................ day of ..............., 20......
By Order of the Court,
......................................................
Registrar/Clerk of the
Court.
...............................................................................
Judgment Creditor/Attorney
for Judgment Creditor.
Address of Judgment
Creditor/Attorney for Judgment Creditor.
...................................................................................
...................................................................................
...................................................................................
Attention is directed to
the provisions of
section 65J
(10) of the
Magistrates' Courts Act,
1944
, which reads as follows:
'Any garnishee may,
in respect of the services rendered by him or her in terms of an
emoluments attachment order, recover from
the judgment creditor a
commission of up to 5 per cent of all amounts deducted by him or her
from the judgment debtor's emoluments
by deducting such commission
from the amount payable to the judgment creditor.'
[42]
International Labour Organisation Protection of
Wages Convention (No. 95), 1949 at Article 10.
[43]
Second judgment at [143] to [145].
[44]
Fraser v ABSA Bank Limited
[2006] ZACC 24
;
2007 (3) SA 484
(CC);
2007 (3) BCLR 219
(CC) at para
43.
[45]
Hyundai
above n
39 at para 22.
[46]
Id at para 23.
[47]
It should be noted that both the Flemix
respondents and the Association accepted that for purposes of
granting an emoluments attachment
order under section 65J of the
Act, section 45 does not permit a debtor to consent in writing to
the jurisdiction of a court
other than “the court of the
district in which the employer of the judgment debtor resides,
carries on business or is employed,
or, if the judgment debtor is
employed by the State, in which the judgment debtor is employed”.
[48]
I state “can” because, in theory, a
consumer could consent, under section 45, to the jurisdiction of a
court where
“the goods in question (if any) are ordinarily
kept”. This is because section 45 allows for consents to
jurisdiction
beyond those courts “having jurisdiction under
section twenty-eight” of the
Magistrates’ Courts Act and
a court with jurisdiction over the goods in question might not be
covered by
section 28.
[49]
Section 172(1)
of the
National Credit Act.
[50
]
See
Kent NO v South
African Railways
1946 AD 398
at 405:
“
In
considering that question, it is necessary to bear in mind a
well-known principle of statutory, construction, viz., that Statutes
must be read together and the later one must not be so construed as
to repeal the provisions of an earlier one, or to take away
rights
conferred by an earlier one unless the later Statute expressly
alters the provisions of the earlier one in that respect
or such
alteration is a necessary inference from the terms of the later
Statute. The inference must be a necessary one and not
merely a
possible one.”
[51]
One might add that
section 172
and Schedule 1 do
not purport to set out an exhaustive list of explicit conflicts.
Thus,
section 4(7)
of the
National Credit Act regulates
how the
National Credit Act and
the
Electronic Communications and
Transactions Act 25 of 2002
should be read together if there is an
inconsistency – yet this statute is not included in the
schedule at all. In
addition, counsel for the applicants in
the confirmation proceedings (respondents in the appeal) observed
that the Schedule applies
only to “conflicts” properly
so termed. Here we are not dealing with a “conflict”,
but a limitation
or qualification.
[52]
The High Court, at para 91, similarly found that
“[t]he [National Credit Act’s] limitation of section 45
is in the
circumstances necessarily implied”.
[53]
Access to courts is protected by Section 34 of
the Constitution, and Section 39(2) of the Constitution provides
that:
“
When
interpreting any legislation, and when developing the common law or
customary law, every court, tribunal, or forum must promote
the
spirit, purport and objects of the Bill of Rights.”
[54]
Of the
Magistrates’ Courts Act.
[55
]
The High Court did not deal at all with the first
part of the counter-application of the Flemix respondents.
[56]
First judgment at [94].
[57]
High Court judgment above n 33 at paras 76-81.
[58]
See
Chief Lesapo
above n 16 at para 13;
Jaftha
above n 18 at paras 43-4 and 52-4 and
especially at paras 56, 58-9 and 62-4;
Gundwana
above n 32 at paras 37-41.
[59]
In
Gundwana
above
n 32 at para 41, this Court found that:
“
The
combined effect of [
Chief Lesapo
and
Jaftha
]
is that execution may only follow upon judgment in a court of law.
And where execution against the homes of indigent debtors
who run
the risk of losing their security of tenure is sought after judgment
on a money debt, further judicial oversight by a
court of law of the
execution process is a must.”
[60]
For a rigorous approach to judicial oversight of
the grant of emoluments attachment orders, see the Full Bench
judgment in
Minter NO v Baker
2001 (3) SA 175
(W) (Fevrier and Selvan AJJ); see too Brett Bentley
[2013]
De Rebus
31.
[61]
See
Chief Lesapo
above n 16 at paras 13-5. In
particular at para 15:
“
The
judicial process, guaranteed by
section 34
, also protects the
attachment and sale of a debtor’s property, even where there
is no dispute concerning the underlying
obligation of the debtor on
the strength of which the attachment and execution takes place.”
[62]
Through
section 65J(6)
and (7), an emoluments
attachment order can be rescinded, suspended or amended – but
these provisions kick in only after
the emoluments attachment order
has been granted.
[63]
A decision that illustrates the practical
operation of emoluments attachment orders is
MBD
Securitisation (Pty) Ltd v Booi
[2015]
ZAFSHC 134
;
2015 (5) SA 450
(FB), especially at paras 29 and 41.
[64]
Section 25(1) of the Constitution provides:
“
No
one may be deprived of property except in terms of law of general
application, and no law may permit arbitrary deprivation
of
property.”
[65]
First judgment at [93].
[66]
Hyundai
above n
39 at para 23.
[67]
Id at para 26.
[68]
See
National
Coalition for Gay and Lesbian Equality and Others v Minister of Home
Affairs
and
Others
[1999] ZACC 17
;
2000 (2) SA 1
(CC);
2000 (1) BCLR 39
(CC) (
National
Coalition
) at paras 63-7, usefully
explicating the remedy of notional severance.
[69]
First judgment at [89].
[70]
Id at [93].
[71]
Id at [80].
[72]
Section 65D(4).
[73]
Section 65E.
[74]
First judgment at [83], [85] to [87] and [93].
[75]
Id at [88].
[76]
As the first judgment recognises at [87]:
“
There
is no indication that the situation is different in the case where
an emoluments attachment order is
not
made at the conclusion of the inquiry
into the debtor’s financial position and where the creditor
later makes the request
at the court with the necessary
jurisdiction.”
According to a report by
the National Industry Steering Committee
National
Treasury/Banking Association of South Africa Joint Statement on
Responsible Lending: Position Paper on the Retrospective
Actions for
Emoluments Attachment Orders
(September 2013), there are 683 215
emoluments attachment orders currently in existence. Only
68 390 of these
were obtained via section 65A and section 65J.
[77]
Note that section 65E(4) envisages that “the
judgment creditor issues or causes to be issued” an emoluments
attachment
order.
[78]
Chapter IX overall seems to evince a distinction
between “issue” and “authorise the issue of”.
See
section 74D. Further, section 62, in relevant part,
provides that:
“
(1)
Any
court
which has jurisdiction to try an action shall have jurisdiction to
issue
against any party thereto any form of process in execution of its
judgment in such action.
(2)
A court (in this subsection called a second court), other than the
court which gave judgment in an action, shall have jurisdiction on
good cause shown to stay any warrant of execution or arrest
issued
by another court
against a party who is subject to the
jurisdiction of the second court.”
In
Ems v Viljoen
1947
(4) SA 78
(O), Fischer JP held that a warrant of execution can be
lawfully issued by the clerk of the court (though the warrant of
execution
was set aside on other grounds). This Court in
Jaftha
above n 18 at para 15 implicitly recognises the same
(that a clerk can issue a warrant of execution), which prompted it
to read
into section 66(1)(a) of the Act protections of judicial
oversight.
[79]
First judgment at [90].
[80]
Section 65J(2)(a).
[81]
Section 65J(2)(b) requires that the judgment
creditor or his or her attorney has first—
“
(i)
sent a registered letter to the judgment debtor at his or her last
known
address advising him or her of the amount of the judgment debt
and costs as yet unpaid and warning him or her that an emoluments
attachment order will be issued if the said amount is not paid
within two days of the date on which that registered letter was
posted; and
(ii)
filed with the clerk of the court an affidavit or an affirmation
by
the judgment creditor or a certificate by his or her attorney
setting forth the amount of the judgment debt at the date of
the
order laying down the specific instalments, the costs, if any, which
have accumulated since that date, the payments received
since that
date and the balance owing and declaring that the provisions of
subparagraph (i) have been complied with on the date
specified
therein.”
[82]
De Beer N.O.
at
para 24, quoted in the first judgment at [76].
[83]
Rules Regulating the Conduct of the Proceedings
of the Magistrates’ Courts of South Africa GN R507
GG
37769, 27 June 2014.
[84]
Rule 4(4) of the Rules reads as follows:
“
Rules
12(5), (6), (6A) and (7) apply to a request for judgment in terms of
sections 57 and 58 of the Act.”
[85]
Rule 12(5) of the Rules provides in full:
“
The
registrar or clerk of the court shall refer to the court any request
for judgment on a claim founded on any cause of action
arising out
of or based on an agreement governed by the
National Credit Act, or
the Credit Agreements Act, 1980 (Act 75 of 1980), and the court
shall thereupon make such order or give such judgment as it may
deem
fit.”
[86]
Moodley and Others v Minister of Education and
Culture, House of Delegates and Another
[1989] ZASCA 45
;
1989 (3) SA 221
(A) at 233D-G.
[87]
Even if the Rules could save the statute, which
is clearly not accepted here, it is doubtful that they could do so
decades after
the statute was enacted. See
New
National Party of South Africa v Government of the Republic of South
Africa and Others
[1999] ZACC 5
;
1999
(3) SA 191
(CC);
1999 (5) BCLR 489
(CC) at para 22:
“
Consistent
with this objective approach to statutory invalidity, the
circumstances which become apparent at the time when
the validity of
the provision is considered by a Court are not necessarily
irrelevant to the question of its consequential invalidity.
However, a statute cannot have limping validity, valid one
day, invalid the next, depending upon changing circumstances.
Its
validity must ordinarily be determined as at the date it was
passed. Nevertheless, the implementation of an Act
which passes
constitutional scrutiny at the time of its enactment, may well give
rise to a constitutional complaint, if, as a
result of circumstances
which become apparent later, its implementation would infringe a
constitutional right.”
[88]
See [130] to [131].
[89]
Counsel for the Association conceded during oral
argument that its contentions were premised on rule 12(5) saving the
statute.
Since rule 12(5) is not capable of doing so, the
argument fails.
[90]
The Flemix respondents contend that emoluments
attachment orders are rooted in the debtor’s consent and that
the order is
“issued” by the Court. As these
proceedings show, the very problem is that consent is often obtained
dubiously,
far from the courtroom. And the very problem is
that it is not the Court that issues the order. That the
debtor has
a later opportunity to dispute the order, as the Flemix
respondents also contended, does not meet the initiating invalidity.
[91]
First judgment at [93].
[92]
Being the part of section 65J(2) left standing.
[93]
Estate Agency Affairs Board v Auction Alliance
(Pty) Ltd and Others
[2014] ZACC 3
;
2014 (3) SA 106
(CC);
2014 (4) BCLR 373
(CC) at para 47; and
Engelbrecht v Road Accident Fund and
Another
[2007] ZACC 1
;
2007 (6) SA 96
(CC);
2007 (5) BCLR 457
(CC) at para 45.
[94]
Biowatch Trust v Registrar Genetic Resources
and Others
[2009] ZACC 14
;
2009 (6) SA
232
(CC); 2009 (10) BCLR 1014 (CC) (
Biowatch
).
[95]
32 of 1944.
[96]
Section 34 of the Constitution reads:
“
Everyone
has the right to have any dispute that can be resolved by the
application of law decided in a fair public hearing before
a court
or, where appropriate, another independent and impartial tribunal or
forum.”
[97]
See section 65J(1)(a) and (b) at [171] below.
[98]
Winer v Garcia & Another
(1908) 25 SC 576
(
Winer v Garcia
).
[99]
Id at 588.
[100]
Nxumalo v Minister of Justice and Others
1961 (3) SA 663 (W).
[101]
Id at 667A.
[102]
Protea Assurance Co Ltd v Vinger
1970 (4) SA 663
(O) at 664-5.
[103]
Id at 396.
[104]
Black
Black’s
Law Dictionary
4 ed (West Publishing
Co, St Paul USA, 1968) at 964.
[105]
See [166], [172] to [174].
[106]
National Coalition
above n 68.
[107]
Id at para 63.
[108]
Id at para 64.
[109]
Id at para 98.
[110]
See [156] to [159] of the second judgment.