Eeny, meeny, miny, moe, to which court will foreclosures go? (Part 2): The SCA has spoken

September 1st, 2021
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Standard Bank of SA Ltd and Others v Thobejane and Others; Standard Bank of SA Ltd v Gqirana NO and Another (SCA) (unreported case no 38/2019; 47/2019; 999/2019, 25-6-2021) (Sutherland AJA (Maya P, and Petse, Dambuza and Plasket JJA concurring))

Some may recall a recent article ‘Eeny, meeny, miny, moe, to which court will foreclosures go? A brief analysis of recent foreclosure proceedings and a consideration of the need for specialised foreclosure courts in SA’ 2019 (Oct) DR 31, which dealt with the issue of the jurisdiction of foreclosure matters in the magistrate’s court and High Court. The crux of the article dealt with the cases of In re: Nedbank Limited v Thobejane and related matters [2018] 4 All SA 694 (GP) and Nedbank Limited v Gqirana NO and Another and related matters [2019] 4 All SA 211 (ECG), and the burning issue of which court held jurisdiction over foreclosure proceedings.

Summaries of High Court decisions

In Thobejane, the Full Bench of the Gauteng Division of the High Court held that all the matters falling within the jurisdiction of the magistrates’ court must be heard before the magistrate court and not the High Court. The Full Bench found that the advent of the Constitution introduced access to justice as a primary consideration during court proceedings and this approach required the High Court to regulate their own processes regarding this right. The court held that it would be an abuse of process and contrary to the principles of access to justice to allow a matter, which could be decided in the magistrates’ court, which was geographically closer and financially viable for a consumer, to be heard in the provisional division simply because it had concurrent jurisdiction.

In Gqirana, the Full Bench of the Eastern Cape Division of the High Court in Grahamstown found that the right to access to justice in s 34 of the Constitution, and the principles of the National Credit Act 34 of 2005 (NCA) affords equality and access to justice to financially and previously disadvantaged persons. Accordingly, the NCA, properly interpreted through the prism of the Constitution, provided that the magistrates’ court be the court of first adjudication of all NCA matters (including foreclosures) to the exclusion of the High Court. In other words, the High Court found that the principle of access to justice required all NCA matters to be brought before the magistrates’ court, save only if there are exceptional circumstances justifying otherwise.

The Supreme Court of Appeal (SCA) decision

The effect of the Thobejane and Gqirana judgments dictated that all foreclosure proceedings had to be brought before the magistrates’ court. This ruling sparked controversy among the mortgage debt enforcement industry and forged a movement to appeal these rulings. These judgments were accordingly taken on appeal by several financial institutions in 2019. Due to the COVID-19 pandemic there was a prolonged delay with delivery of the judgment, however, on 25 June 2021, the SCA handed down judgment in Standard Bank of SA Ltd and Others v Thobejane and Others; Standard Bank of SA Ltd v Gqirana NO and Another. The SCA confirmed that the High Court has no power to refuse to hear a matter falling within its jurisdiction on the ground that another court has concurrent jurisdiction (see also s 169 of the Constitution). The court further confirmed that it was not an abuse of process for a plaintiff to choose which court to litigate from as they are entitled to this right and there is no obligation in law on financial institutions to consider the cost implications and access to justice of financially distressed people when a particular court of competent jurisdiction is chosen in which to institute proceedings. The court held that the provisions of the NCA affirmed that the High Court has concurrent jurisdiction with the magistrates’ court and there was no cogent reason to oust the jurisdiction of the High Courts. Accordingly, the High Court was obliged to entertain all matters falling within the jurisdiction of the magistrates’ court. The SCA further held that as drastic an event such as the repossession of a person’s home ought, as a matter of policy, to enjoy the scrutiny of the High Court rather than the magistrates’ court.

Conclusion

It has now been accepted that foreclosure proceedings can be brought before the High Court as it has concurrent jurisdiction with the magistrates’ court, however, the controversy of the above judgments have brought the need for certainty and specialisation during foreclosure proceedings to light. The foreclosure against a home involves a complex analysis of legal, financial and factual circumstances coupled with the interaction of competing constitutional rights of homeowners and creditors. Accordingly, such complex issues justify these cases being heard before specialised courts and judges. I submit that the need may have arisen for the establishment of specialised foreclosure courts, within the High Court, and a Foreclosure Act to govern the execution process against a home (see C Singh A critical analysis of the home mortgage foreclosure requirements and procedure in South Africa and proposals for legislative reform (published PhD thesis, UKZN, 2018) and C Singh ‘To foreclose or not to foreclose: Revealing the “cracks” within the residential foreclosure process in South Africa’ (2019) 31(1) South African Mercantile Law Journal 145).

Dr Ciresh Singh LLB LLM LLD (PhD) (UKZN) is a legal manager in Durban.

This article was first published in De Rebus in 2021 (Sept) DR 29.

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