SCA Confirms The High Court’s Concurrent Jurisdiction Over NCA Shortfall Claims

The Supreme Court of Appeal (“SCA”) confirmed that section 127(8) of the National Credit Act, 2005 (“NCA”) does not confer exclusive jurisdiction on the Magistrates’ Court in respect of shortfall claims following the repossession and sale of goods under credit agreements. On 22 May 2026, the SCA delivered judgment in Dreyer NO and Another v Standard Bank and Nedbank Limited and Another v Abrahams on 22 May 2026.

The matter arose from two applications decided by different Divisions of the High Court.

In the first matter, The Standard Bank of South Africa Limited (“Standard Bank”) entered into three instalment sale agreements with the Doornfontein Trust on 14 August 2017. The Trust defaulted on its obligations, and on 23 August 2019, Standard Bank obtained an order from the High Court requiring the appellants to return various assets. Standard Bank repossessed the assets and sold them at auction, but a shortfall remained. When Standard Bank returned to the North West Division of the High Court, Mahikeng, seeking an order for payment of the shortfall, the appellants challenged the High Court’s jurisdiction contending that only the Magistrates’ Court was competent to grant such an order under section 127(8) of the NCA. The Mahikeng High Court rejected this contention and ordered the Trust to pay the shortfall.

In the second matter, Nedbank Limited (“Nedbank”) entered into instalment sale agreements with the respondents for the purchase of motor vehicles. The respondents subsequently voluntarily surrendered the vehicles, and Nedbank sold them in accordance with section 127 of the NCA, with each sale resulting in a shortfall. Nedbank initiated applications in the Gauteng Division of the High Court, Johannesburg seeking payment of the shortfalls. The applications were unopposed. The Johannesburg High Court, on its own accord, raised the question of whether it had concurrent jurisdiction with the Magistrates’ Court, in light of obiter remarks by the SCA in Mpongo. The Johannesburg High Court concluded that section 127(8) of the NCA ousted its jurisdiction and that the Magistrates’ Court had exclusive jurisdiction, striking the application from the roll. The Banking Association of South Africa (“BASA”) was admitted as amicus curiae in those proceedings.

The High Court’s jurisdiction is not ousted by section 127(8)

The SCA held that section 127(8) of the NCA does not oust the High Court’s jurisdiction. The court confirmed the enduring principle that the curtailment of a court’s power is not to be easily presumed and that any inference of ouster must be clear from the language of the statute. The court emphasised that following Mpongo, the threshold for concluding that there is an ouster of the High Court’s jurisdiction is “very high.”

The SCA rejected the Johannesburg High Court’s reasoning on three grounds. 

• First, the Johannesburg High Court’s reliance on the Constitutional Court’s decision in South African Human Rights Commission v Standard Bank (“SAHRC”) to interpret the word “may” in section 127(8)(a) as “must’” was held to be inapposite. The Constitutional Court’s reasoning in SAHRC was confined to the specific context of constitutional provisions granting jurisdiction to superior courts. This did not establish a general rule that “may” must be interpreted as “must” wherever it appears. In the context of section 127(8), “may” merely gives credit providers an option to initiate legal proceedings in the Magistrates’ court, without imposing an obligation to do so.
• Second, the SCA held that the words “in terms of the Magistrates’ Court Act” in section 127(8) do not oust the High Court’s jurisdiction by implication. Rather, those words expand the Magistrates’ Courts’ jurisdiction without conferring exclusive jurisdiction on it. The SCA explained that because a Magistrates’ Court is a creature of statute, it is not empowered to adjudicate a claim for specific performance without an alternative claim for damages.
• Third, the SCA noted that where the NCA intends to confer exclusive jurisdiction on the Magistrates’ Court, it does so expressly and unambiguously, as is the case with sections 86 and 87. Section 127(8) is not among those provisions.

The court also held that an interpretation that the High Court’s jurisdiction was ousted would lead to absurd results as credit providers would, after obtaining an attachment order in the High Court and selling goods, be compelled to claim the shortfall in the Magistrates’ Court.

By affirming the High Court's concurrent jurisdiction over shortfall claims under section 127(8) of the NCA, the SCA has brought much-needed clarity to a question that could create procedural complications for credit providers across the country.

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