Emolument Attachment Orders in South Africa and Yesterday's Western Cape High Court Ruling

South Africans are drowning in debt! According to the National Credit regulator, debt counsellors have assisted over indebted consumers with repayment plans worth up to R18 BILLION in total. Statistics show that by 2013, about 240 034 government employees and about 120 000 private sector employees had emolument attachment orders against their salaries.

During the month of July 2015, in celebration of Mandela Day, Legal Hero and Cape Debt Clinic, one of our trusted partners, are here to answer your money/ debt/ debt review questions free of charge. Please submit your question/s to capedebtclinic@legalhero.co.za. Policyholders may contact their hero directly.

WHAT IS AN EMOLUMENT ATTACHMENT ORDER (EAO)? 

Often incorrectly referred to as a garnishee, an EAO orders the employer of the debtor to religiously deduct money directly from the debtor’s salary each month in order to ensure prompt payment to the credit provider. 

HOW DOES IT HAPPEN? 

• When the consumer/ debtor breaches the terms and conditions of the loan agreement by failing to pay in terms thereof, 
• the creditor can take action by sending letters of demand, summons, obtaining a court order against the debtor, and then lastly using the court order to enforce payment by applying for an EAO or warrant of execution...

OR 

• The creditor can ask the debtor to sign a consent to judgment form, in terms of which the debtor consents to the judgment debt and agrees to the EAO against his/ her salary; 
• Section 58 of the Magistrate’s Court Act 32 of 1994 deals with consent to judgment applications; 
• In the year 2010 it was decided by the court in African Bank Limited v Additional Magistrate Myambo that section 58 of the Magistrate’s Court Act remains unaffected by the National Credit Act (which offers protection to consumers). The court ruled that credit providers may continue to make use of consent to judgment applications in terms of section 58; 
• Note that it is unlawful for the creditor to request a signed consent to judgment form prior to granting you a loan/ you falling into arrears. Therefore, always remember to check the dates. 

IMPLICATIONS OF YESTERDAY’S WESTERN CAPE HIGH COURT RULING BY JUDGE SIRAJ DESAI (08/07/2015): 

• Certain sections of the Magistrate’s Court Act regarding emolument attachment orders have been declared unconstitutional. We applaud the University of Stellenbosch’s Legal Aid Clinic who brought this application on behalf of 15 financially distressed low-income consumers; 
• However, remember that Constitutional invalidity needs to be confirmed by the Constitutional Court; 
• Should the Constitutional Court confirm this order: 

a) Credit providers may no longer obtain an EAO against the debtor’s salary by way of the debtor merely signing a consent to judgment form! 

b) Judicial oversight will be required. In other words, the Magistrate needs to consider the financial implications of the garnishee against the debtor first;

c) Judge Desai furthermore pointed out that consumers/ debtors may not be coerced into agreeing to a Magistrate’s Court in the jurisdiction/ area outside of where the consumer lives or works. This is often done as it is convenient for a credit provider to rather make use of the Magistrate's Court in its own area.

Please remember that you may send any further legal questions on the above/ debt/ debt review to capedebtclinic@legalhero.co.za during the month of July 2015. 

Cape Debt Clinic represents a network of registered Debt Counsellors and trusted partners, able to provide over-indebted consumers with debt solutions uniquely tailored to your personal circumstances and all the supporting services you need, in complete confidence. www.capedebtclinic.co.za. 021 828 2658.

Five Unexpected Hangouts of the Law at Your Family Home

Remember to set the table for one extra (sometimes uninvited) guest that hangs out at your family home. Yes, it is important to have a basic understanding of the law, as it is with us wherever we go. Let’s have a look at a few Family, Civil, Criminal and Labour Law examples at home to put things into perspective.

1.       The irritating neighbours. Your neighbour has the right to the use and enjoyment of his/ her property. This, however, does not mean he can start a band and cause widespread upset by his 2am practise sessions. Neighbour law is based on reasonableness and tries to find a balance between opposing property rights. Your neighbour may therefore only use and enjoy his property to the extent that it does not infringe YOUR right to use and enjoy YOUR property. Remember that one cannot be oversensitive and all factors are taken into account when you apply for an interdict against your neighbour. An interdict can force someone to do something, prohibit someone from doing something or force someone to continue doing something.

2.       That new faulty washing machine. The Consumer Protection Act awards goods an implied warranty of 6 months. According to section 56 of the Act, a Consumer may ask for a repair/ replacement or refund at no cost to the consumer should a defect occur within the first 6 months. Where to complain: contact your hero or contact complaints@thencc.org.za.

3.       School fees. Previously schools could only sue the custodian parent (parent with whom the child stays) for arrear school fees. Only after the Supreme Court of Appeal ruling in Fish Hoek Primary School v GW 2010, can the other biological parent be held liable for arrear school fees. How to claim an increase in child maintenance: contact your hero or visit the Maintenance Division of the Magistrate’s Court and ask for the relevant forms. 

4.       Aging parents. It is true that an aging parent can claim maintenance from his/ her independent children. The parents would have to prove their expenses, that they are unable to support themselves and that the child is in a position to support his/her parent. How to claim: contact your hero or visit the Maintenance Division of the Magistrate’s Court and ask for the relevant forms.

5.       Domestic workers. A Domestic Worker MUST be provided with an employment contract and a pay slip. The employer must safe keep pay slips for THREE years. Impermissible deductions from your Domestic Worker’s pay include damages caused by ironing, meals provided during working time and crockery/ electrical appliances breakages. Noncompliance: the Department of Labour can send an Investigating Officer to your home and you may receive a fine. The matter could proceed to the Labour Court.

If you have any questions on one of the above, please send an email to freeadvice@legalhero.co.za.

Yours faithfully,

Legal Hero 

www.legalhero.co.za

Enforcement or cancellation of a contract

Question received

“Can I claim back my money? I ordered hay for my horses in November 2013 after seeing an advertisement on the internet. The man was very polite over the phone and convinced me to pay the full R3 000 in advance. He explained that the hay was fresh and the only reason for selling was to clear his storeroom. When the man came to deliver the hay I realised that the hay was OLD, MOULDY AND STALE - I have photos to prove it - and refused to accept the goods. He left with the bad hay and promised to be back at a later stage with better quality. I am still waiting!! He no longer answers my calls but I’ve managed to get his address. Should I approach him?”

Reply:

You and this man (let’s call him Mr X) entered into a verbal contract over the phone the moment the two of you agreed that the hay would be delivered in exchange for R3 000 – to be paid up front.

It is an underlying requirement that the parties to a contract act in good faith and fair dealing. As you have possibly learned, this is sadly not always the case.

The truth is that Mr X has been in breach of contract for more than a year. The type of breach here is called positive malperformance.

-          Positive malperformance happens where the supplier delivers the ordered goods on time but where the quality of the goods is improper/ incomplete/ defective;

-          The receiving party subsequently has a right to reject the improper/ incomplete or defective goods;

-          What generally happens next is that the receiving (innocent) party would demand:

a)      That the supplier replace defective goods with proper/ complete goods in an acceptable order;  OR

b)      A cancellation if the defect/ breach is material/ very serious. 

Seeing as stale/ mouldy hay can cause your horses infection and/ or hay induced-colic, the defect appears to be material in this instance! 

Van der Merwe et al (Contract, General Principles 1 ed 1993, at 255) describes a very serious breach as follows (also quoted in the case of Singh v McCarthy Motors):

“The test for seriousness has been expressed in a variety of ways, for example that the breach must go to the root of the contract, must affect a vital part or term of the contract, or must relate to a material or essential  term of the contract, or  that there must have been a substantial failure to perform.   It has been said that the question whether a breach would justify cancellation is a matter of judicial discretion.   In more general terms the test can be expressed as whether the breach is so serious that it would not be reasonable to expect that the creditor should retain the defective performance and be satisfied with damages to supplement the malperformance.”

Can you claim back your money?

Firstly, well done on tracking down Mr X’s address! This is invaluable, not necessarily for approaching Mr X (in fact, we advise against it) but for delivering the relevant legal documents to demand fresh hay or cancellation (repayment of your R3 000).

The good news is that you are able to pursue the matter via the Small Claims Court as your claim is less than R15 000. The aforementioned court is free of charge and does not allow for legal representation. Proceedings are informal and you will be able to rely on text messages and informal means of communication.

The first step is to put your claim in writing by sending Mr X a Small Claims Court section 29 letter of demand in terms of which you request fresh hay as agreed upon within 14 days, failing which you will cancel the contract and demand repayment. If you are a Legal Hero policyholder, please contact us and open a new file for assistance as soon as possible. 

It is very important to note that a civil claim prescribes (becomes invalid) after 3 years since last date of payment/ acknowledgement of the debt provided no legal action has been instituted during that time. This means that your civil claim against Mr X will prescribe in November 2016.  After November 2016, Mr X will be able to raise the special defence of prescription in court.

Lastly, based on the information provided to us, it appears that this sale was a once-off. Should Mr X, however, sell hay on a regular basis during the ordinary course of business, Mr X would be bound by the rules of the Consumer Protection Act (as a supplier). In terms of the Consumer Protection Act, a consumer may request repayment, a repair or replacement of defective goods. One could also lodge a consumer complaint via complaints@thencc.org.za.

Wishing you a fantastic day,

Legal Hero.

www.legalhero.co.za 

When a Network Provider Disappoints

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