A recent judgment by a full Bench of the Eastern Cape High Court (Grahamstown) makes it unlawful for banks to bring National Credit Act (NCA) matters before the High Court instead of the much cheaper Magistrate’s Courts, according to a Moneyweb report.

Lawyers have complained for years that forcing customers into High Courts – often far from where they live, a practice known as ‘forum shopping’ – is a further prejudice intended to stack the deck against a customer in default. This judgment means lenders no longer have that luxury of suing in High Courts.

Though the judgment is confined to credit agreements falling under the NCA, a minority ruling by Judge Mbulelo Jolwana called for all civil actions and applications to be instituted in the Magistrate’s Courts to give effect to the constitutional right of access to justice.

The report says disputes over credit agreements must now be argued in Magistrate’s Courts, where the allowable scale of legal costs are a fraction of that in the High Court.

Customers being sued by the banks can argue their own cases without legal representation in Magistrate’s Courts and will not get lumbered with huge legal bills from the opposing side should they lose the case.

The full Bench was asked by the Judge President of the Eastern Cape High Court to deliberate on several cases involving Nedbank, Standard Bank, Ford Credit and Wesbank.

All involved unopposed matters brought by the lenders seeking default judgment against clients, notes Moneyweb.

The Judge President asked the full Bench to consider why the High Court should entertain matters that properly belong in the Magistrate’s Courts. The banks argued – without success – that in matters where the Magistrate's Courts and High Courts had ‘concurrent jurisdiction’, forcing them to bring matters to the Magistrate's Courts would infringe their right of access to justice.

The judges did not agree.

The Black Lawyers Association and the Minister of Justice & Correctional Services were admitted as friends of the court.

Consumer lawyer Leonard Benjamin says the judgment is a major victory for consumers and tilts the scales of justice in their direction.

‘A majority of foreclosures and repossessions are unopposed, which allows banks to get judgments which could be based on defective cases and incorrect information. ‘I believe that the main reasons why consumers do not oppose the banks are because of their use of the High Court. They are inaccessible because they have unfamiliar procedures, are intimidating and located far away.’

Full Moneyweb report

Judgment