Quartermark Investments (Pty) Ltd v Mkhwanazi and Another

• Jurisdiction: South Africa
• Judge: Maya JA, Bosielo JA, Theron JA, Pillay JA and Petse JA
• Judgment Date: 01 November 2013
• Citation: 2014 (3) SA 96 (SCA)
• Docket Number: 768/2012 [2013] ZASCA 150
• Hearing Date: 20 August 2013
• Counsel: AW Pullinger for the appellant. N Mkhize for first respondent.
• Court: Supreme Court of Appeal

Theron JA (Maya JA, Bosielo JA, Pillay JA and Petse JA concurring):

[1] The first respondent, Ms Pinky Mkhwanazi (Ms Mkhwanazi), E instituted application proceedings against the appellant, Quartermark Investments (Pty) Ltd (Quartermark), a property investment company, claiming that it had fraudulently induced her into signing certain sale and lease agreements in respect of her immovable property. In the South Gauteng High Court Ms Mkhwanazi sought and obtained an order F setting aside the transfer of the property to Quartermark; declaring the sale agreements that led to the transfer null and void; directing that the second respondent transfer the property into her name, and other ancillary relief. [1] Quartermark appeals against the decision of the high court (Spilg J) with the leave of that court. The second respondent, the Registrar of Deeds, Johannesburg, has not taken part in the proceedings G and abides the decision of this court.

[2] In 2004 Ms Mkhwanazi purchased the immovable property known as Erf 1795 Klipfontein (the property), with a loan obtained from Nedbank Ltd (Nedbank), which was secured by registering a mortgage H bond over the property. Subsequently, Ms Mkhwanazi fell into substantial arrears in respect of her loan obligations to Nedbank, as well as her obligations to another financier in respect of her motor vehicle. Nedbank obtained default judgment against Ms Mkhwanazi some time prior to 13 March 2007, when the property was judicially attached by it.

[3] During 2007 Ms Mkhwanazi approached Mr George Mthebe (Mr Mthebe), I an agent of Quartermark, for financial assistance. She explained to Mr Mthebe that she required a loan in the amount of

Theron JA (Maya JA, Bosielo JA, Pillay JA and Petse JA concurring)

R30 000. To this end she signed documents presented to her for A signature by Mr Mthebe. Ms Mkhwanazi said she did not read the documents prior to signing them because Mr Mthebe did not give her an opportunity to do so. On the assurance given to her by Mr Mthebe, she assumed they related to her loan application. Shortly after signing the documents a portion of the loan amount, R12 000, was paid into her B bank account. This amount represented the arrears due in respect of her motor-vehicle instalments. Mr Mthebe advised her that the arrears in respect of the mortgage bond would be paid directly to Nedbank and thereafter Quartermark would continue paying the monthly instalments directly to Nedbank.

[4] On the instructions of Mr Mthebe, Ms Mkhwanazi paid monthly C instalments of between R2500 and R3000 to Quartermark. She understood that in doing so she was repaying the loan she had received from Quartermark. It was also her understanding that a portion of the instalments would be paid by Quartermark to Nedbank in respect of her bond instalments. She made these monthly payments to Quartermark D for a period of two years and nine months.

[5] During 2009 Ms Mkhwanazi received a municipal utility bill in respect of the property reflecting Quartermark as the account holder. She contacted Mr Mthebe who told her not to be concerned as that was done E for 'convenience' and to create the impression that Quartermark was paying the utility bill. In August 2009 she was visited by a police officer, Inspector Ngobeni, and another male person identified as Mr Calisto Mutayi (Mr Mutayi). Mr Mutayi informed her that he used to 'work with' Mr Mthebe and that it was possible that the transactions concluded between herself and Quartermark were tainted with fraud. F

[6] Ms Mkhwanazi's subsequent enquiries revealed that the property had been purchased by Quartermark for R157 000. She obtained copies of the documents Mr Mthebe had presented to her for signature. These were a sale of land agreement, an agreement of lease, and a power of attorney authorising transfer of the property. In terms of the purported G sale agreement, Ms Mkhwanazi sold the property to Quartermark for the sum of R157 000, payable in monthly instalments of R1570 from 1 May 2007. The instalments were to be paid directly to Nedbank. It was stipulated that Quartermark would pay a deposit of R12 398 and would take occupation and possession of the property on 3 April 2007. In terms H of the purported lease agreement, Ms Mkhwanazi leased the property from Quartermark for a monthly rental of R2500, escalating by 10% annually. The lease was to commence on 3 April 2007 and continue 'indefinitely on a month-to-month basis until validly terminated by either party'. In terms of the power of attorney signed by Ms Mkhwanazi on 12 June 2007, she purportedly confirmed having sold the property I to Quartermark on 3 April 2007 and authorised transfer thereof to Quartermark.

[7] According to Ms Mkhwanazi, this was the first time she realised the import and implications of the documents she had signed. She had been under the impression that the documents related to her loan application J

Theron JA (Maya JA, Bosielo JA, Pillay JA and Petse JA concurring)

A with Quartermark. According to her, at no stage was she advised by Mr Mthebe that the documents related to the sale and lease of the property.

[8] The appellant's answering affidavit in the high court was deposed to B by Mr Brett Provan (Mr Provan), an employee of Quartermark. It was alleged that Ms Mkhwanazi had voluntarily and without undue influence entered into the sale and lease agreements with Quartermark. It was further alleged that Ms Mkhwanazi had at the time been in dire financial trouble — to the extent that the property was about to be sold in execution — and that the purchase of the property by Quartermark and C the leasing of it to her afforded her the opportunity to remain in occupation thereof. Quartermark denied that it provided loans or was a registered credit provider. Quartermark asserted that the monthly payments made by Ms Mkhwanazi constituted rental due to it.

[9] Quartermark also raised the lack of a tender by Ms Mkhwanazi to D restore the benefit she had received under the agreements to Quartermark, as an impediment to her obtaining relief in the high court. This is stated as follows:

'I further draw the court's attention to the fact that the applicant seeks relief for the reversal of the transfer of the property but she does not E even tender repayment of the loan amount that [Quartermark] paid towards the cancellation of the then existing bond over the property.'

[10] In its answering affidavit Quartermark denied that Mr Mutayi had 'worked for' Mr Mthebe, and stated that it had merely instructed him F (Mr Mutayi) 'to attend the property and to offer' it to Ms Mkhwanazi for repurchase. It was common cause that Quartermark had offered to sell the property back to Ms Mkhwanazi for R440 000.

[11] Ms Mkhwanazi, in reply, put up an affidavit deposed to by Mr Mutayi in which he states that he had been employed by Quartermark G from June 2008 to the latter part of 2009. He...