SAHRC challenges major banks on mortgages
THE SA Human Rights Commission (SAHRC) is squaring off with three major banks over their tendency to apply for default judgments in the high court against debtors who owe amounts as little as R7 000 on their home loans.
Standard Bank, Nedbank and FNB stand accused of avoiding the magistrate’s court, which is “more accessible than the high court to impoverished respondents”, in terms of being closer geographically and less expensive.
In 2016 the Judge President of the Gauteng Division of the High Court raised the alarm over the trend. The case has now reached the Constitutional Court and is due to be heard this month.
“The SAHRC submits that, if applications for default judgments in respect of money amounts falling within the jurisdiction of the magistrate’s court are instituted in the high court, there is a material threat that impecunious debtors will be unable to defend their cases.
“This impairs their constitutional right of access to the courts,” said the SAHRC’s papers filed at the apex court.
“The high court has a duty to take measures to mitigate or reduce the impediments to access the courts. This duty includes that the high court may exercise its inherent power in terms of section 173 of the Constitution to decline to hear the matter, and transfer it to the magistrate’s court.”
The North Gauteng High Court, Pretoria, found in favour of this argument, that a high court was entitled to decline to hear default judgment cases, despite enjoying concurrent jurisdiction with the magistrate’s court on these judgments.
The banks took the ruling on appeal to the Supreme Court of Appeal (SCA), which found in their favour.
In a judgment it delivered last year, the SCA ruled that the high court was obliged to hear matters brought to it, but which can also be heard in the magistrate’s court.
“We respectfully submit that the SCA erred in doing so,” said the SAHRC’s papers.
“The Constitution does not oblige the high court to hear all matters falling within its jurisdiction.”
The case emanates from applications by banks to auction the homes of 13 debtors who defaulted while owing small amounts on their home loans.
“In all 13 matters, the applicant (a bank) sought default judgments against a debtor for the payment of money owing, as well as an order declaring that the immovable property of the debtor (ie his or her home) is specially executable.
“In each case, the application was brought in the high court, despite the fact that it fell within the monetary jurisdiction of the magistrate’s court,” the SAHRC said.
One couple owed R7 772 in arrears on their bond of R95 129, while another family was in arrears of R9 533 on their R161 430 bond.
A Pretoria woman who was R9 600 in arrears on her R125 700 bond was among the 13 debtors.
Said the SAHRC: “In light of the limited financial means of distressed debtors, many will not be able to afford legal representation and will have little option but to represent themselves in these legal proceedings.”
The three banks are to oppose the SAHRC’s application in the Constitutional Court.
They want the SCA ruling to stand. Standard Bank said it took complex foreclosure cases to the high court due to inefficiencies in the magistrate’s court.
“In Standard Bank’s experience, documents and files often go missing in the magistrate’s courts.
“There are also often delays owing to the unavailability of stenographers, recording machines and court rooms,” said the bank’s papers.
“Standard Bank proceeds in the high court because it is quicker, less costly, and more efficient to do so. That is the antithesis of conduct that breaches the right of access to courts.”
Said Nedbank: “We submit that the SAHRC’s criticisms of the SCA judgment are misdirected, and that the SCA judgment is correct.”
The bank said what it accepted was that the high court might decline to hear a matter that falls within its jurisdiction on the basis that its process is being abused.
“In other words, a finding that there has been an abuse of process must necessarily involve a fact-specific inquiry,” said Nedbank.
Part of the legal flaws in the SAHRC’s argument is that the commission did not attack the validity of the conferring of concurrent jurisdiction between the high court and the magistrate’s court, FNB submitted.
“The concurrency of jurisdiction between the magistrate’s court and the high court has consistently been recognised since 1918,” the bank said.
“The joint working of the legislative framework (that permits concurrent jurisdiction) and the jurisdiction principle facilitates the widest possible pool of courts to provide access to courts,” it said.