Absa Ltd v Moore and Another

• Jurisdiction: South Africa
• Judgment Date: 26 November 2015
• Citation: 2016 (3) SA 97 (SCA)

Absa Ltd v Moore and Another
2016 (3) SA 97 (SCA)

2016 (3) SA p97

Citation	2016 (3) SA 97 (SCA)
Case No	20719/2014; [2015] ZASCA 171
Court	Supreme Court of Appeal
Judge	Lewis JA, Ponnan JA, Pillay JA, Saldulker JA and Van Der Merwe AJA
Heard	November 6, 2015
Judgment	November 26, 2015
Counsel	AR Gautschi SC (with GW Amm) for the appellant.; W Trengove SC (with PMP Ngcongo; heads of argument also prepared by O Ben-Zeev) for the respondents.

Flynote : Sleutelwoorde B

Land — Transfer — Fraud inducing transfer — If misrepresentation such that owner did not intend to transfer ownership, registration of transfer of no force — No simulation in such circumstances.

Headnote : Kopnota

In early 2009 the respondents, the Moores, fell victim to the notorious Brusson C scam. Under the impression that they were applying for a secured loan, the Moores sold their house to an 'investor', Mr Kabini, to whom Absa granted a home loan secured by a mortgage bond. The property was transferred to Mr Kabini and the Moores' (five) mortgage bonds cancelled simultaneously with the registration of Mr Kabini's bond. When Mr Kabini later D defaulted on his loan, Absa took judgment against him and attached the property — which was still occupied by the Moores — in execution of his debt. The Moores received some R160 000 from Brusson while the purchase price payable by Mr Kabini was R686 000.

A High Court granted the Moores' application for an interdict prohibiting the E proposed sale in execution and declaring the various transactions between Brusson, the Moores and Mr Kabini, as well as Mr Kabini's bond, to be invalid. The court ordered the restitution of the property to the Moores subject to the reinstatement of their bonds and payment to Absa of the money they received from Brusson (less payments already made to it). On appeal Absa argued that it should not be deprived of its real right in the property when it was innocent of any wrongdoing. The Moores argued in F turn that since Mr Kabini never acquired ownership, he could not have encumbered the property with a mortgage bond in favour of Absa.

Like other victims of the scam, the Moores were made to sign the following documentation: (i) an offer to purchase under which an unnamed third party (the name of Mr Kabini was later inserted) offered to buy the home; G (ii) a deed of sale under which Mr Kabini sold the house back to the Moores; and (iii) a memorandum of agreement which regulated the tripartite relationship between Brusson, the Moores and Mr Kabini. Most courts dealing with the Brusson scam found that the transactions were invalid simulated sales. The High Court judgment followed one of these cases.

Held H

The transactions were not simulated. The Moores and the other victims of the Brusson scam never intended to disguise their contracts as something they were not, but were instead hoodwinked as to their true nature. The real issues were (i) what the victims really intended to achieve by contracting with Brusson and the so-called investors; and (ii) whether the contracts were rendered invalid as a result of fraud. (Paragraph [26] at 104F – H.) I

It was clear that when they signed the documentation, the Moores thought they were obtaining a loan and not concluding a sale, and that they never had any intention of authorising a transfer of their property. The High Court's finding of simulation was thus unwarranted: the Moores were victims of the Brusson scam and were induced to enter into the contracts by the J

2016 (3) SA p98

A fraudulent misrepresentations of Brusson. (Paragraphs [30] – [31] and [35] at 105G – 106C and 106I – 107A.)

Since the fundamental principle of the transfer of property was that registration had no effect if the transferor did not intend to transfer ownership, Mr Kabini did not acquire ownership. Nor did he have the legal capacity to pass a bond over property he did not own. The High Court finding on these B aspects was thus correct. (Paragraphs [36] – [39] at 107B – 108A.)

There was, however, no basis for the High Court's restitution-for-repayment order. Absa did not ask for it and the court could not make a contract between Absa and the Moores or order the Moores to pay money they did not owe. Nor could the court order that the Moores register a bond over their property in favour of Absa. Absa did, however, have an unsecured C claim against Mr Kabini and perhaps against the conveyancer responsible for the registration of the bond in the first place. (Paragraphs [42] – [43] at 108E – H.) Appeal dismissed.

Cases Considered

Annotations

D Case law

Absa Bank Ltd v Boshoff [2012] ZAECPEHC 58: referred to

Barnard v Nedbank Ltd [2014] ZAGPPHC 723: referred to

Cloete NO v Basson [2010] ZAGPJHC 87: referred to

Commissioner for the South African Revenue Service v NWK Ltd 2011 (2) SA 67 (SCA) ([2011] 2 All SA 347; [2010] ZASCA 168): dicta in paras D [40] – [55] applied

Commissioner, South African Revenue Service v Bosch and Another 2015 (2) SA 174 (SCA): dicta in paras [38] – [41] applied

Ditshego v Brusson Finance (Pty) Ltd [2010] ZAFSHC 68: discussed and criticised

Gainsford and Others NNO v Tiffski Property Investments (Pty) Ltd and Others F 2012 (3) SA 35 (SCA): dicta in paras [38] – [39] applied

Leshoro v Nedbank Ltd [2014] ZAFSHC 69: referred to

Mabuza v Nedbank Ltd and Another 2015 (3) SA 369 (GP) ([2014] ZAGPPHC 513): referred to

Maize Board v Jackson 2005 (6) SA 592 (SCA): dictum in para [8] applied

Meintjes NO v Coetzer and Others G 2010 (5) SA 186 (SCA): dictum in para [9] applied

Michau v Maize Board 2003 (6) SA 459 (SCA): dictum in para [4] applied

Minnaar v Van Rooyen NO 2016 (1) SA 117 (SCA) ([2015] ZASCA 114): compared

Nedbank Ltd v Mendelow and Another NNO H 2013 (6) SA 130 (SCA) ([2013] ZASCA 98): dicta in paras [13] – [14] applied

Quartermark Investments (Pty) Ltd v Mkhwanazi and Another 2014 (3) SA 96 (SCA) ([2013] ZASCA 150): dicta in paras [21] – [25] applied

Radebe v Sheriff, Vereeniging [2014] ZAGPJHC 228: approved

Roshcon (Pty) Ltd v Anchor Auto Body Builders CC and Others 2014 (4) SA 319 (SCA) I ([2014] ZASCA 40): dicta in paras [22] – [37] applied.

Case Information

AR Gautschi SC (with GW Amm) for the appellant.

W Trengove SC (with PMP Ngcongo; heads of argument also prepared by O Ben-Zeev) for the respondents.

An appeal against a decision in the Johannesburg High Court (Chohan AJ). J

2016 (3) SA p99

Order A

The appeal is dismissed with the costs of two counsel, where so employed, save that para 3 of the order of the court a quo is replaced with: 'The applicants are the owners of the property situate at Erf 116, Three Rivers East Township IR Gauteng.'

Judgment

Lewis JA (Ponnan JA, Pillay JA, Saldulker JA and Van der Merwe AJA B concurring):

[1] This appeal concerns a fraudulent scheme devised and implemented by Brusson Finance (Pty) Ltd (Brusson), and to which many individuals and various banks have fallen victim. Brusson has been liquidated and C the fallout has left individuals to litigate against banks in an attempt to preclude sales in execution of their homes. Courts in the Free State and in Gauteng, where Brusson seems to have defrauded most of their victims, have dealt with matters in different ways and Brusson transactions have, to some extent, been differently structured in respect of each victim.

[2] In the matter before us, the respondents Ms Christine Moore and her D husband Mr Jacques Moore, live in a home in Vereeniging, on Erf 116, Three Rivers East, Gauteng. The street address is 6 Egret Avenue, Three Rivers East, Vereeniging. The property was registered in the name of Ms Moore. She is married in community of property to Mr Moore. E The property was subject to five mortgage bonds in favour of the appellant, Absa Bank Ltd (the bank), and the amount owing to the bank in May 2009 was some R145 000. The Moores were in arrears in the payment of the instalments on the bond. They were unable to pay other debts as well. When they applied for an extension of their home loan the bank declined to grant it because of their poor credit rating. They were F in dire financial straits.

[3] The Moores chanced upon an advertisement in the local newspaper for Brusson financing. The advertisement appears as follows: G

[4] The Moores required a loan of some R220 000. Mrs Moore contacted Brusson on the telephone number set out in the advertisement, J

2016 (3) SA p100

Lewis JA (Ponnan JA, Pillay JA, Saldulker JA and Van der Merwe AJA concurring)

A and spoke to a representative. She was apparently keen to assist the Moores provided that they had property to use as security for the loan. Brusson faxed to the Moores various documents that they were required to fill in to facilitate their application for a loan. They subsequently went to a Brusson office and signed three documents which they believed gave B effect to a loan to them and provided security for repayment of the loan in the form of a bond over their property to Brusson. I shall return to the terms of the documents and what the Moores were led to believe was their effect. In summary, the first of the three documents was an 'Offer to Purchase' in terms of which a person (the name of the purchaser, Mr Sunnyboy Kabini, was later inserted, but not by the Moores) offered C to buy the Moores' home for R686 000, payable on transfer of the property to him. The second was a 'Deed of Sale' in terms of which Mr Kabini sold the property back to the Moores, the price to be paid in instalments. The third was a 'Memorandum of Agreement' between Brusson, the Moores and Mr Kabini, that regulated their tripartite D relationship.

[5] The Moores signed all three documents on 12 May 2009. On 30 June 2009 Mr Kabini applied to the bank for a home loan, secured by a mortgage bond...