Case  CCT 323/22
[2023] ZACC 43

Judgement Date:12 December 2023

Post Judgment Media Summary  

The following explanatory note is provided to assist the media in reporting this case and is not binding on the Constitutional Court or any member of the Court.

On 12 December 2023, the Constitutional Court handed down judgment in an application for leave to appeal against a judgment of the High Court of South Africa, Eastern Cape Division, Mthatha (High Court). This application was determined on the papers without an oral hearing.

In terms of the jurisdiction clause in a lease agreement between the parties, they had consented to the jurisdiction of the High Court in relation to all matters arising from the lease agreement. Mthatha Mall (Pty) Ltd (the respondent) instituted proceedings against Saboath General Traders (Pty) Ltd (Saboath) and Mr Bandla Mngonyama (the applicants) in the Mthatha Magistrate’s Court (Magistrate’s Court). The claim against Saboath, as principal debtor, was for arrear rentals, and against Mr Mngonyama was in his capacity as surety and co-principal debtor for Saboath’s obligations under the lease. In a special plea, the applicants contended that the jurisdiction clause ousted the Magistrate’s Court’s jurisdiction. Both the Magistrate’s Court and, on appeal, the High Court held that the jurisdiction clause did not oust the jurisdiction of the Magistrate’s Court. The Supreme Court of Appeal refused leave to appeal. The applicants then sought leave to appeal in the Constitutional Court.

The applicants submitted that the parties plainly intended, and were permitted, to agree on the exclusive jurisdiction of the High Court. They argued that, in holding otherwise, the Magistrate’s Court and High Court disregarded the principle of pacta sunt servanda (agreements must be kept). The respondent submitted that the Magistrate’s Court and High Court were correct: the parties to a contract are not permitted to exclude the jurisdiction of a court, conferred by law, in an agreement. They argued that the jurisdiction clause extends concurrent jurisdiction to the High Court, but does not oust the jurisdiction of the Magistrate’s Court. The respondent also argued that a number of indicators pointed to the parties’ intention to agree to concurrent rather than exclusive jurisdiction: first, the deed of suretyship accompanying the lease provided for the concurrent jurisdiction of the High Court and any Magistrates’ Court; second, the applicants’ previous plea averred that the lease had been concluded in Bedfordview, Gauteng, thereby also giving the relevant Magistrate’s Court under which Bedfordview falls concurrent jurisdiction; and third, without concurrent jurisdiction, the respondent’s tacit hypothec would be unenforceable.

The first judgment, which held the majority, was written by Majiedt J (Maya DCJ, Kollapen J, Madlanga J, Mathopo J, Rogers J, Theron J, Van Zyl AJ concurring). The first judgment held that this matter does not engage this Court’s constitutional or extended general jurisdiction. On constitutional jurisdiction, the first judgment explained that pacta sunt servanda is only implicated, thereby giving rise to a constitutional matter, where a court determines the will of the parties, but then refuses to enforce it due to its incompatibility with public policy or the Bill of Rights. However, a dispute over the interpretational findings of the lower courts, as in this case, does not implicate pacta sunt servanda or give rise to a constitutional issue.

On extended general jurisdiction, the first judgment held that there are no prospects of success, and therefore the point of law not arguable, as the parties intended to consent to the jurisdiction of the High Court, which does not equate to the exclusivity of the High Court’s jurisdiction and the exclusion of the Magistrate’s Court. It held further that the matter does not raise an issue of general public importance in that the interpretation of this particular clause does not extend beyond the parties’ interest.

The second judgment was written by the Chief Justice. In the second judgment the Chief Justice held that this Court has jurisdiction inter alia because this matter relates to jurisdiction and jurisdiction always raises a constitutional issue. Nevertheless, the Chief Justice concluded that there were no reasonable prospects of success and refused leave to appeal. This was because clause 31 of the lease simply did not oust the jurisdiction of the Magistrate’s Court.

The Full judgment  here