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[2015] ZASCA 171
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Absa v Moore [2015] ZASCA 171; 2016 (3) SA 97 (SCA) (26 November 2015)
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THE SUPREME COURT OF
APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 20719/2014
DATE: 26 NOVEMBER 2015
Reportable
In the matter between:
ABSA BANK
LIMITED
....................................................................................................
APPELLANT
And
CHRISTINA MARTHA
MOORE
....................................................................
FIRST
RESPONDENT
JACQUES
MOORE
.....................................................................................
SECOND
RESPONDENT
Neutral Citation: Absa v Moore
(20719/2014)
[2015] ZASCA 171
(26 November 2015)
Coram: Lewis, Ponnan, Pillay and
Saldulker JJA and Van der Merwe AJA
Heard: 6 November 2015
Delivered: 26 November 2015
Summary:
Where a sale giving
rise to the transfer of immovable property is induced by fraudulent
misrepresentation, such that the owner
does not intend to transfer
ownership, registration of the transfer is of no force. A person who
is not the owner of immovable
property cannot grant a valid mortgage
bond over it.
ORDER
On appeal from: Gauteng Local Division
of the High Court, Johannesburg (Chohan AJ sitting as court of first
instance):
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 [1…..], [T….. R…….]
[E…..
T…..] IR Gauteng.’
JUDGMENT
Lewis JA (Ponnan, Pillay and
Saldulker JJA and Van der Merwe AJA 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 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 husband Mr Jacques Moore, live
in a home in Vereeniging,
on Erf [1…..], [T….. R…….
E……], Gauteng. The street address is 6 [E…..
A…….],
[T….. R…… E……],
Vereeniging. The property was registered in the name of Ms Moore. She
is married
in community of property to Mr Moore. 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 arrear 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 in dire
financial straits.
[3] The Moores chanced upon an
advertisement in the local newspaper for Brusson financing. The
advertisement appears as follows:
[4] The Moores required a loan of some
R220 000. Mrs Moore contacted Brusson on the telephone number set out
in the advertisement,
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 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 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
relationship.
[5] The Moores signed all three
documents on 12 May 2009. On 31 June 2009 Mr Kabini applied to the
Bank for a home loan, secured
by a mortgage bond over the property.
The loan was granted. On 24 August 2009 the property was transferred
to Mr Kabini and a mortgage
bond over it was registered in favour of
the Bank. Five bonds, all in favour of the Bank where the Moores were
the mortgagors,
were simultaneously cancelled. The Moores were
unaware that the property was transferred and that a new bond was
registered in
favour of the Bank.
[6] Before then, and soon after their
visit to the Brusson office, an amount of R157 651 was paid into
their bank account. They
believed this to be the loan from Brusson
that would tide them over their financial plight. Brusson informed
them that this amount
would be repayable in monthly instalments of R6
907 that would include interest.
[7] The Moores could not pay these
monthly instalments, and on 2 November 2009 Ms Moore applied for debt
review under the
National Credit Act 34 of 2005
. A debt counsellor
was appointed and he applied to the Magistrates’ Court,
Vereeniging, for a restructuring of their debt
obligations. He
recorded the debt owing to Brusson as a ‘bond’. In terms
of the court order the Moores were required
to repay Brusson only R3
058 a month.
[8] In July 2010, the Moores received a
letter from an attorney, Mr T C Hitge, written on behalf of Brusson,
advising that they
were in breach of their obligation to pay to
Brusson the monthly instalment of R6 907. Significantly, Mr Hitge
advised that the
instalments were payable in terms of the ‘Offer
to Purchase and Instalment Sale Agreement’ with Mr Kabini. The
arrears
said to be owing to Brusson at that stage amounted to R43
597. He threatened the Moores with legal action.
[9] The Moores reacted to the letter by
instructing an attorney, Mr W van Vuuren, who, on 13 October 2010,
wrote a letter of complaint
to the National Credit Regulator. Mr Van
Vuuren advised the Regulator that the Moores had approached Brusson
when they experienced
financial difficulty, and were under the
impression that an investor, Mr Kabini, would lend them money and
that the property would
be the security for the loan. He referred to
the letter from Mr Hitge, and advised that it was the first time that
the Moores had
received notice that they had apparently sold their
property to Mr Kabini. He also advised that the Moores had applied
for debt
review, that the monthly instalments payable to Brusson had
been reduced and that Brusson had been told of this.
[10] Mr van Vuuren referred the
Regulator to the decision of Jordaan J in Ditshego v Brusson Finance
(Pty) Ltd in the Free State
High Court (unreported case no 5144/2009,
handed down on 22 July 2010) in which the court had held that similar
contracts with
Brusson were invalid. He asked the Regulator for
advice on how to proceed on behalf of the Moores. Apparently no
response to this
letter was received, and the Moores said they could
not afford to pay a lawyer to represent them anymore.
[11] On 23 March 2011, the Bank issued
summons against Mr Kabini, who was in default of his obligations
under the bond. It took
judgment by default on 12 July 2011 for
payment of R500 067 plus interest and costs. The court declared the
property specially
executable. On 3 August 2011 the Bank issued a
writ of execution and a notice of attachment of the property was
served at the property
of the Moores. It was addressed to Mr Kabini,
but it referred specifically to 6 [E….. A……],
[T….. R…..
E…..], Vereeniging, which was of
course occupied by the Moores. The Sheriff noted that it was received
on 26 August 2011.
The Moores knew then that the property was
attached in execution of Mr Kabini’s debt to the Bank.
[12] No further steps were taken after
that by the Moores. It was only when the Moores received a letter
from Resque Financial Solutions,
that was sent to Mr Kabini at their
address, that they realized that their home was going to be sold in
execution of someone else’s
debt. The letter was dated 17 May
2013 and was received on 23 May. It was then that the Moores took
action. They approached the
Legal Resources Centre (LRC) for legal
advice. The LRC had been approached by several other victims of the
Brusson scam and it
wrote immediately, on 27 May 2013, to the
Sheriff, Vereeniging and to the attorneys for the Bank, requesting
the stay of the execution,
and stating that, if not stayed, the
Moores would bring an urgent application to prevent the sale.
[13] On 28 May 2013 the Moores brought
an urgent application to interdict the sale of the property in the
South Gauteng High Court,
and for the rescission of the default
judgment against Kabini. The application for the interdict was
granted on 30 May 2013. And
on 24 June 2013 they applied for
declaratory orders that the three agreements be declared invalid,
that Ms Moore was entitled to
restitution of the property and that
the mortgage bond over the property was invalid and should be set
aside. The applications
were brought against the Sheriff for the
District of Vereeniging, Mr Kabini, the Bank (as third respondent),
the liquidators of
Brusson and the Registrar of Deeds.
[14] Only the Bank opposed the
applications. They were consolidated and heard by Chohan AJ (in what
had been renamed the Gauteng
Local Division of the High Court), who
found for the Moores, and handed down judgment on 26 September 2013.
The appeal against
the orders of the court a quo is with its leave.
That court found that the agreement concluded between the Moores and
Brusson,
and the agreements between the Moores and Mr Kabini, were
‘invalid, unlawful and of no force and effect’. It also
ordered
that the Moores were entitled to restitution of the property
subject to two conditions: the reinstatement of the five mortgage
bonds that had been previously been registered over the property; and
the Moores paying the Bank the amount that they had received
from
Brusson, less any amounts that they had paid to it. The court also
set aside the mortgage bond over the property and the default
judgment, (in so far as at permitted execution) against Mr Kabini. It
ordered the parties to pay their own costs, having found
that the
Moores were in some respects to blame for their predicament. The
Moores have not cross-appealed against the order that
the restitution
of their property be subject to conditions, nor against the costs
order.
The issues on appeal
[15] The Bank now focuses first on
whether the court a quo correctly found that the Moores were entitled
to an order setting aside
the mortgage bond, or an order that
deprives the Bank of its real right in the property. Secondly, the
Bank argues that it should
not be deprived of its real right over the
property when it was innocent of any wrongdoing. The Bank argues that
it advanced R480
000 to Mr Kabini in good faith against the security
of the bond and that the bond stands independently of the invalid
transactions.
The Moores argue, on the other hand, that Mr Kabini did
not ever acquire ownership of the property and therefore could not
grant
security in the form of a bond over the property.
[16] I shall return to these arguments
as they are the crux of the appeal, but wish first to clarify the law
on which the court
a quo’s judgment was based, its findings and
those of other courts that have dealt with the Brusson scam. Other
grounds of
appeal, including that the agreement with Brusson did not
amount to a pactum commissorium, and that the agreements did not
contravene
the
National Credit Act, were
not pursued at the hearing
of the appeal.
[17] Moreover, the argument raised by
the Bank in its heads of argument on appeal, that the Moores should
be estopped from disputing
the validity of the transfer of their
property to Mr Kabini, was also not pursued at the appeal hearing. In
its heads of argument
the Bank had also contended that the Moores had
signed the documents, which they had had ample opportunity to read,
and were precluded
from arguing that the documents did not reflect
their consensus by the principle underlying the maxim caveat
subscriptor. The principle
is of no application in the face of fraud
and the argument was thus rightly not pursued at the appeal hearing.
The Brusson scam and the agreements
that the Moores signed
[18] It is necessary, however, before
turning to the legal principles on which the court a quo, and other
courts found, to deal
with the salient provisions of the agreements
between the Moores, Brusson and Kabini. The first agreement signed
was headed ‘Offer
to Purchase’. The Moores, on the face
of it, sold their property to Mr Kabini for payment of the purchase
price of R686 000,
payable on transfer. The sale was conditional on
Mr Kabini raising a loan, against a bond, of R480 000. Occupation of
the property
was to be given to the Moores (despite the fact that
they were already in occupation) on transfer, and they were required
to pay
a monthly sum in consideration for occupation of R7 909. The
contract also required the Moores to pay a commission of R47 910 to
Brusson.
[19] The ‘Deed of Sale’
between the Moores and Mr Kabini provided that he sold the property
back to the Moores for R648
000, payable in monthly instalments of R7
578 plus interest. The full outstanding balance had to be paid
within 36 months, and
on that happening, Mr Kabini would transfer the
property back to the Moores. Payment of the instalments was to be
made to Brusson,
not Mr Kabini, and in addition, the Moores were
required to pay an administration fee of some R2 207 monthly to
Brusson. Mr Kabini
was required to pay to Brusson an amount of R168
000 in consideration for Brusson standing surety for his obligations.
[20] The third contract was the
tripartite ‘Memorandum of Agreement’ that regulated the
relationship of Brusson, the
Moores and Mr Kabini. It reflected the
obligations already purportedly arising out of the other two
agreements.
[21] As I have indicated, the three
contracts are typical of those that have been examined by the
provincial divisions in other
matters involving the Brusson scam, and
the divisions have generally followed the same approach in deciding
that the contracts
signed by victims of the scam are invalid.
The approach of the court a quo and
other courts
[22] The decisions dealing with the
Brusson scam include Ditshego v Brusson Finance (Pty) Limited
[2010]
ZAFSHC 68
(above); Cloete NO v Basson [2010] ZAGPJHC 87 (4 October
2010); Absa Bank v Boshoff [2012] ZAECPEHC 58 (28 August 2012);
Leshoro
v Nedbank
[2014] ZAFSHC 69
(20 March 2014); Mabuza v Nedbank
[2014] ZAGPPHC 513
2015 (3) SA 365
(GP); Barnard v Nedbank [2014]
ZAGPPHC 723 (11 September 2014) and Radebe v Sheriff for the District
of Vereeniging [2014] ZAGPJHC
228 (25 September 2014).
[23] In Ditshego (followed by the court
a quo in this matter) Jordaan J in the Free State High Court held
that the contracts were
all interrelated and interdependent, such
that there was in effect only one transaction, and that was invalid.
He regarded several
features of the transaction as unusual and
‘foreign’ to bona fide agreements of sale of immovable
property. The court
had regard not only to the contracts themselves,
but also to a brochure describing the Brusson scheme, produced by
Brusson as client
information. (In her founding affidavit to the
application for declaratory relief, Ms Moore attached a similar
brochure explaining
the scheme.) I deal only with those common to the
transaction in this matter.
[24] The unusual features include: the
investor does not really intend buying the property and never takes
occupation; the client
does not really intend selling the property
and does not lose occupation; the investor pays nothing, but applies
for a bond over
the property as he has a good credit rating; the
price payable in terms of the instalment sale agreement accrues not
to the investor
but to Brusson; all payments are made to Brusson; in
the event of default by the clients, Brusson is entitled to take
transfer
of the property.
[25] Jordaan J concluded that the
contracts were simulated and accordingly invalid. He did not deal
with the validity of the bond
over the property. In finding that the
transaction was simulated, Jordaan J relied on Maize Board v Jackson
2005 (6) SA 592
(SCA) para 8. There, following a long line of cases
in this court, Ponnan JA held that the true enquiry, in determining
whether
contracts are simulated, ‘is to establish whether the
real nature and the implementation of these particular contracts is
consistent with their ostensible form. In pursuit of the enquiry, one
must strive to ascertain, from all of the relevant circumstances,
the
actual meaning of the contracting parties.’ This court referred
to an earlier decision in Michau v Maize Board
2003 (6) SA 459
(SCA)
para 4, and the authorities cited there, which have held over decades
that parties may not conceal the true nature of their
transaction.
See, more recently, Commissioner for the South African Revenue
Service v NWK Ltd
2011 (2) SA 67
(SCA) paras 40-55; Roshcon (Pty) Ltd
v Anchor Auto Body Builders CC & others
2014 (4) SA 319
(SCA)
paras 22-37; and Commissioner, South African Revenue Service v Bosch
& another
2015 (2) SA 174
(SCA) paras 38-41, in all of which the
principles dealing with simulated transactions are discussed in
depth.
[26] In cases dealing with the Brusson
scam the courts have by and large held the transactions to be
simulated. But I consider that
they are not. The Moores and other
victims of the scam certainly did not intend to disguise their
contracts as something they were
not. On the contrary: they were
hoodwinked as to the nature of the transactions. They believed them
to serve some other purpose
entirely. The Brusson transactions,
certainly the ones before the Free State High Court and the court a
quo, were not simulated
in the sense in which that term is properly
used. The question is whether they were rendered invalid as a result
of a fraud perpetrated
on the victim client. And the further question
is what the victim clients really intended to achieve by contracting
with Brusson
and so-called investors.
[27] The distinction is an important
one. Where a transaction pursuant to which property is to be
transferred is simulated –
where all parties intend to disguise
the true nature of the transaction – the transferor and
transferee may well intend to
transfer ownership. And since a valid
transaction is not required for a transfer to be effected, the
transfer itself may not be
impeached. I shall deal with the legal
principles when considering the Moores’ understanding of their
contracts with Mr Kabini
and Brusson and accordingly their intention.
Suffice to say for the moment that it is only where the parties do
not intend to change
the ownership of the property, but have been
misled into purporting to do so, or for some other reason that
vitiates their intention
to transfer property, such as undue
influence or duress, that the transfer will be of no effect.
[28] That was appreciated by Nicholls J
in Radebe (above) where she held that the clients had not intended to
transfer ownership
of their property and that the so-called
transferee could not validly register a bond over that property. The
court a quo followed
the reasoning in Radebe but also considered that
the contracts between the Moores, Brusson and Mr Kabini were
simulated. I now
turn to the analysis of the facts by Chohan AJ.
The findings of the court a quo
[29] As I have said, Chohan AJ found
that the contracts between the Moores, Mr Kabini and Brusson were
simulated and thus void.
This despite his view that the result was
‘difficult to reconcile’ with certain facts. These were
that (a) the offer
to purchase in express terms provided for the
transfer of the property to the purchaser, although Mr Kabini’s
name did not
appear on the document that the Moores signed; (b) the
Moores would have signed the relevant transfer documents to enable
the Registrar
of Deeds to transfer their property to Mr Kabini (the
judge remarked that the papers were silent on this point, but in fact
they
were not); (c) the Moores required a loan of only R220 000
whereas the purchase price of the property was R686 000; (d) there
were
five bonds over the property and the Moores ceased paying the
Bank; (e) the papers did not disclose the market value of the
property
when the agreements were concluded; (f) the papers did not
disclose whether the Moores had continued to pay rates and service
charges;
(g) when the Moores applied for a debt review they
identified their debt to Brusson as a bond; and finally, (h) when the
Moores
received the notice of attachment on 26 August 2011 they took
no steps to ascertain why their property was being attached.
[30] Several of these findings are
quite simply wrong. It is true that the agreement with Mr Kabini,
signed before it was completely
filled in, was headed ‘offer to
purchase’. But Mrs Moore explained in her founding affidavit
that the Brusson representative
had told them that the documents
simply served to give Brusson security over the property for
repayment of the loan. She said:
‘While we were at Brusson House,
Brusson explained to us that the documents we were signing were just
to confirm that the
property was being provided as security for the
loan. In particular, no one explained that the agreements were for
the sale of
the property. I also did not take independent advice at
the time, since I was desperate and grateful for the financial
assistance
provided by Brusson and believed that the representations
given by Brusson were correct.
[We] did not understand that we were
concluding a sale of our property. We believed that Brusson was
assisting us in obtaining a
loan. If it had been made clear to us
that in order to secure the loan, we had to sell our property to a
third party, we would
never have entered into the transaction.
[We] signed the documents because of
what was explained to us, namely that the documents pertain to our
request for a loan.’
The Bank did not counter these
averments. They stand uncontradicted and must be accepted.
[31] The Moores also explained that
they had never seen a conveyancer or instructed one to transfer their
property. They thus did
not understand how the transfer occurred.
Again, the Bank put up no evidence to controvert this. Not even the
conveyancer’s
evidence was put to counter this. The judge a quo
thus erred in finding that it was inconceivable that they had not
signed documents
authorizing the transfer.
[32] As to the difference in the
amounts required by the Moores (R220 000) and the ‘price’
of the property (R686 000),
Mrs Moore explained that they required
R145 000 to pay off their debt to the Bank. They had other debts to
pay off. They in fact
received R157 651 from Brusson. They did not
realize the ‘price’ Mr Kabini allegedly paid was R686
000.
[33] The Moores’ version of why
they no longer paid the Bank in respect of the five bonds formerly
registered over the property
is consistent with what they believed
had happened: Brusson had paid off those bonds, and registered one in
its favour as security
for the amount of the loan made to them by it
– R157 651. They were required to pay bond instalments to
Brusson instead.
It was these instalments that they could not pay
monthly, and which triggered their application for debt review. And
so it was
also quite understandable that their debt to Brusson was
reflected by the debt counsellor as a ‘bond’ when they
applied
to court for a debt restructuring. None of this was denied by
the Bank and so again any adverse inference that the court a quo drew
was unjustified. Further, they were never called upon by the Bank to
say whether they had continued to pay rates and service charges.
The
fact that they said nothing about this is thus irrelevant.
[34] The issue on which the Bank places
most store is that the Moores failed to do anything after they
received the notice of attachment
in August 2011. This is not
adequately explained by the Moores. But it will be recalled that when
they received the letter from
Brusson’s attorney in July 2010,
they instructed an attorney who responded by writing to the National
Credit Regulator asking
for advice on how to proceed. There is no
evidence to suggest that they must have continued to believe that
there was a problem
that needed to be resolved.
[35] The Bank argues on appeal that the
findings of the court a quo were not taken into account sufficiently
by the court itself
when it concluded that the transactions were
simulated. It ‘artificially devalued’ the correct factual
findings. However,
the findings were, as I have said, unwarranted
given the absence of evidence put up by the Bank to show that the
averments made
by the Moores were wrong. The Bank’s argument
that those averments were inherently improbable is also untenable.
The Moores
explained just how it happened that they became a victim
of the Brusson scam. They were induced to enter into the contracts by
fraudulent misrepresentations made by Brusson.
The transfer of the property and the
validity of the bond in favour of the Bank
[36] The court a quo found that the
transfer was nonetheless invalid, and that the bond was also invalid
given that the Moores had
not intended to transfer their property to
anyone, let alone Mr Kabini. It relied in this regard on Nedbank v
Mendelow
2013 (6) SA 130
(SCA) where I held (paras 13 and 14):
‘This court has recently
reaffirmed the principle that where there is no real intention to
transfer ownership on the part
of the owner or one of the owners,
then a purported registration of transfer (and likewise the
registration of any other real right,
such as a mortgage bond) has no
effect. In Legator McKenna Inc & another v Shea & others
[2010 (1) SA 35
(SCA) paras 21 and 22] Brand JA confirmed, first,
that the abstract theory of transfer of ownership applies to
immovable property,
and second, that if there is any defect in what
he termed the ‘real agreement’ – that is, the
intention on the
part of the transferor and the transferee to
transfer ownership of a thing respectively – then ownership
will not pass despite
registration. Thus while a valid underlying
agreement to pass ownership, such as a sale or donation, is not
required, there must
nonetheless be a genuine intention to transfer
ownership. This principle was unanimously approved in Commissioner of
Customs and
Excise v Randles, Brothers & Hudson Ltd
[1941 AD 369]
and has been followed consistently since then.
However, if the underlying agreement is
tainted by fraud or obtained by some other means that vitiates
consent (such as duress or
undue influence) then ownership does not
pass: Preller & others v Jordaan
[1956 (1) SA 483
(A) at 496.]’
[37] I referred also to Meintjies NO v
Coetzer & others
2010 (5) SA 186
(SCA) para 9 and Gainsford &
others NNO v Tiffski Property Investments (Pty) Ltd & others
2012
(3) SA 35
(SCA) paras 38 and 39. To these must be added Quartermark
Investments (Pty) Ltd v Mkhwanazi & another
2014 (3) SA 96
(SCA)
paras 21-25. These cases all confirm the same fundamental legal
principle: where the so-called transferor does not intend
to transfer
ownership the registration has no effect.
[38] The court a quo thus correctly
held that Mr Kabini had not acquired ownership of the property. The
question that remains is
whether the mortgage bond registered to
secure the Bank’s loan to him is also invalid. It is clear from
the decisions referred
to above that the bond also has no effect. Mr
Kabini was not the owner. He had no property to bond. And the court a
quo correctly
held that the bond was also invalid. That was the
finding also of Nicholls J in Radebe, referred to earlier.
[39] The Bank argued on appeal that
even if Mr Kabini was not the owner of the property he had
nonetheless intended to register
a bond over the property. But that
is of no relevance. He simply did not have the legal capacity to
register that bond over that
property. He could not grant a real
right in property that he did not own.
[40] The Bank contends that it should
not be left without legal recourse as it too is the innocent victim
of a scam. It also argues
that the Moores should not benefit from the
fact that their property will be bond-free, if we find that the bond
is invalid, especially
given that they were in some way to blame for
their predicament. In my view all parties were innocent victims of a
fraudulent scheme.
The order of the court a quo
[41] The Bank argues that if we find
that the bond is invalid, we should at least refine the order made by
the court a quo, and
order the Moores to pay what they have tendered
to pay to the Bank, against registration of a bond securing that
amount. It will
be recalled that the order was that the Moores were
entitled to restitution of the property subject to the reinstatement
of the
five bonds over it and payment by the Moores of the amount
they received from Brusson, less any of the payments that they made
to it. That order, the Bank argues, should be made subject to time
limits.
[42] However, I do not understand on
what basis the order in question was made. The Bank did not ask for
such relief in the event
that the bond in its favour was found to be
invalid. And this court cannot make a contract between the Bank and
the Moores. We
cannot order that the Moores pay an amount that they
did not owe to the Bank, nor that they register a bond over their
property
in favour of the Bank. There is no longer any contractual
nexus between these parties. The court a quo simply did not have the
power to make a contract for the parties. Thus even though the Moores
did not cross-appeal against that order this court cannot
uphold it.
[43] The Bank still has a claim for
repayment of the loan against Mr Kabini, albeit unsecured. And it may
also have a claim against
the conveyancer responsible for the
registration of the bond in the first place.
Section 15A(1)
of the
Deeds Registries Act 47 of 1937
provides that a conveyancer who
prepares a document for the purpose of registration in a deeds
registry, and who signs the prescribed
certificate required in order
to do so, ‘accepts by virtue of such signing the
responsibility, to the extent prescribed by
regulation for the
purpose of this section, for the accuracy of those facts’
mentioned in the document.
Regulation 44A
of the regulations sets out
the particulars which the conveyancer must provide and repeats the
statement that he or she is responsible
for the facts certified.
Rescission of the default judgment
[44] Finally, the court a quo ordered
that the default judgment and order as to executability granted to
the Bank against Mr Kabini
should be set aside. The Bank argued
before the court a quo that the Moores had no locus standi to apply
for the rescission of
the judgment and order against Mr Kabini. It
has not pressed this argument on appeal. Chohan AJ correctly found
that in terms of
Rule 42(1)(a) of the Uniform Rules of Court, the
Moores were entitled to apply for rescission of the default judgment.
The rule
reads:
‘The court may, in addition to
any other powers it may have, mero motu or upon the application of
any party affected, rescind
or vary –
(a) An order or judgment erroneously
sought or erroneously granted in the absence of any party affected
thereby; . . .’
The Moores were quite obviously parties
affected by the judgment, and, had the court asked to make the order
been aware of the true
facts it would most certainly not have granted
it. (See, most recently, on the circumstances in which an application
for rescission
under rule 42(1)(a) will be granted Minnaar v Van
Rooyen NO
[2015] ZASCA 114.)
[45] However, the Bank’s further
argument, pressed on appeal, was that the Moores should be precluded
from obtaining rescission
of the default judgment because of their
delay in seeking the relief. Despite knowing of the writ of
attachment in August 2011
they took no steps to set the default
judgment aside until May 2013 when they were advised that their
property was to be sold in
execution of Mr Kabini’s debt. The
Bank accepts that in deciding whether to rescind a default judgment
the court has a discretion,
but contends that the two-year delay was
unreasonable and inexcusable.
[46] As a matter of fact, as I
mentioned earlier, the Moores learned of the existence of the default
judgment and proposed sale
in execution only in May 2013. They had
before then, on receiving the notice of attachment, taken steps by
instructing an attorney
who wrote to the National Credit Regulator.
That they thereafter did nothing may be worth criticizing. But it was
up to the Bank
to show why it was entitled to sell in execution the
property of the Moores when it had taken the default judgment against
Mr Kabini:
it had to show that it had the right to take default
judgment in the first place.
[47] In any event, a court, when
exercising a discretion to rescind an order given by default, must
weigh against the delay the
prospect of success of the application.
The prospect of the Moores’ success was strong, and there was
no reason to preclude
them from obtaining the rescission that they
sought.
[48] Although I consider that the costs
order made by the court a quo (that each party would bear its own
costs) was unjustified,
there is no cross-appeal against it and the
Moores accept that it should stand.
[49] In the result the appeal is
dismissed with the costs of two counsel, where so employed, save that
para 3 of the order is replaced
with:
‘The applicants are the owners of
the property situate at Erf [1…..], [T….. R…..
E……] Township
IR Gauteng.’
C H Lewis
Judge of Appeal
APPEARANCES
For Appellant: A Gautschi SC (with
him G W Amm)
Instructed by: Lowndes Dlamini,
Sandton
Matsepes, Bloemfontein
For Respondent: W Trengove SC (with
him P M P Ngcongo) (Heads of Argument also prepared by O Ben-Zeev)
Instructed by: Legal Resources
Centre, Johannesburg
Webbers, Bloemfontein