Sash appeals deduction case

Black Sash appealed against a judgment that permits Net1 to continue to allow deductions from the social grants it administers last week.

The appeal has been lodged with the Supreme Court of Appeal (SCA) after Justice Van der Westhuizen, who decided the initial application, denied leave to appeal in the Pretoria High Court. The matter began when Net1 and some of its subsidiaries filed an application challenging new Regulations that prohibited EFTs, debit and stop orders from being made from grant recipient bank accounts. Under the Regulations, a “method of payment” may not make any deductions from social grants except deductions for funeral cover if these deductions are less than 10% of the grant amount.

In effect, the Regulations attempted to limit whether companies would be allowed to make deductions from social grants.

Under the current structure of the social grants system, Cash Paymaster Services administers the funds for social grants and pays them into SASSA Fund Accounts at Grindrod Bank.

In SASSA and the Minister of Social Development’s view, the Grindrod accounts were a “method of payment” and could not have deductions made against them. As a result, SASSA instructed CPS and Grindrod to stop processing debit orders on beneficiary accounts.

CPS and Grindrod refused to comply with this instruction and they, along with Net1 were charged with committing a criminal offence under the Social Assistance Act, 2004. They then filed a court application, arguing that the Minister’s interpretation of the Regulations and Act was incorrect in that the Minister did not have the authority to restrict debit orders.

During the case, the Minister conceded that the regulations restricting debit orders and deductions would not apply to accounts held at other banking institutions.

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