Some may recall the articles ‘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, and ‘Eeny, meeny, miny, moe, to which court will foreclosures go? (part 2): The SCA has spoken’ 2021 (Sept) DR 29, which dealt with the issue of the jurisdiction of foreclosure matters in the magistrates’ court and High Court. The crux of these articles dealt with the cases of In re: Nedbank Limited v Thobejane and related matters [2018] 4 All SA 694 (GP), and Nedbank Ltd v Gqirana NO and Another, and Similar Matters [2019] 4 All SA 211 (ECG), and the burning issue of which court held jurisdiction over foreclosure proceedings.
These cases have since been appealed all the way to the Constitutional Court (CC). On 9 December 2022, the CC delivered judgment on the appeal in South African Human Rights Commission v Standard Bank of South Africa Ltd and Others (CC) (unreported case no CCT 291/21, 9-12-2022) (Madlanga J (Kollapen J, Majiedt J, Mathopo J, Mhlantla J, Theron J, Tshiqi J and Unterhalter AJ concurring)) confirming the mandatory jurisdiction principle and finding that once a High Court is seized with jurisdiction it is bound to hear a matter, even if the matter falls within the jurisdiction of the magistrates’ court. This essentially means that banks are now entitled to bring their foreclosure applications before the High Court, even if the magistrate’s court has jurisdiction over the matter. The paragraphs below provide a background into the matter and summarises the findings of the CC.
‘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 magistrates’ 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 [see ss 90 and 172 of 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’ (C Singh ‘Eeny, meeny, miny, moe, to which court will foreclosures go? (Part 2): The SCA has spoken’ 2021 (Sept) DR 29).
The effect of the Thobejane and Gqirana judgments dictated that all foreclosure proceedings, irrespective of the monetary amount claimed, had to be brought before the magistrates’ court. This ruling sparked controversy in the mortgage debt enforcement industry and forged a movement to appeal these decisions. On 25 June 2021, the SCA handed down judgment in Standard Bank and Others v Mpongo and Others and a related matter (South African Human Rights Commission and Others as Amici Curiae) [2021] 3 All SA 812 (SCA). 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. 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’ (para 88). ‘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 [brought before it] 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 (Singh (op cit)).
The South African Human Rights Commission appealed the SCA’s decision to the CC. In a relatively short judgment, the CC unequivocally confirmed the mandatory jurisdiction principle and held that a court is bound to entertain a matter properly brought before it falling within its jurisdiction. The court rejected the view that the High Court possessed the liberty or discretion to refuse to hear matters, and the apex court confirmed the principle that our courts are bound to hear matters falling within its jurisdiction and are not entitled to decline to hear matters properly brought before it, unless there is an abuse of process. The court further confirmed that although s 34 provides for the right to access to courts, it does not guarantee a choice of forum or court to access justice. The mandatory jurisdiction principle confirms that a High Court cannot run away from matters that fall within its jurisdiction, accordingly, the High Court was entitled and obliged to hear all foreclosure matters before it.
Importantly, the CC did take concern with the observations by the High Court, namely: The over-clogging of the court rolls and delay in administration and orders. In particular, during foreclosures, which involve a fight over the retention of one’s home, the court is required to undertake several assessments, in most instances in the absence of the debtor due to geography and financial means. Hence, the court found it necessary to refer these concerns to the Minister of Justice and Correctional Services.
It has now been accepted and confirmed 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 to light the need for certainty and specialisation during foreclosure proceedings. Although the CC judgment did not expressly mention anything about foreclosure proceedings and the impact and constitutional rights implicated during such an application, the court did express concern over the foreclosure process and the absence of the debtor to such proceedings. I submit that an opportunity was missed by the court to make a clear declaration regarding the status of foreclosure proceedings and its place in the judicial system.
‘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’ (Singh (op cit)). Accordingly, I submit that the need may have arisen for the establishment of specialised foreclosure courts and/or rolls, 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, 2020) 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, for proposals on a Foreclosure Act and Foreclosure Courts).
Professor Ciresh Singh LLB LLM PhD (Law) (UKZN) is a Law Professor at the University of South
Africa.
This article was first published in De Rebus in 2023 (April) DR 6.
