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[2019] ZAGPPHC 329
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Leta v Bennet and Others (23639/2015) [2019] ZAGPPHC 329 (30 July 2019)
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG DIVISION, PRETORIA)
Case number: 23639/2015
Heard on: 18
June 2019
Date of judgment: 30 July 2019
In the matter between:
BETTY MISENGA LETA
Applicant
and
TRAVIS
BENNET
First
Respondent
OMEGA
PROPERTY GROUP (PTY) LTD
Second Respondent
SA
HOMELOANS (PTY)
LTD
Third Respondent
CHANGING
TIDES 17 (PTY)
LTD
Fourth Respondent
THE
SHERIFF PRETORIA
EAST
Fifth Respondent
THE
REGISTRAR OF DEEDS, PRETORIA
Sixth Respondent
JUDGMENT
SWANEPOEL AJ:
[1] Applicant seeks an order that a
sale agreement in respect of the sale of an immovable property, and
the transfer of ownership
of the property to first respondent
pursuant to the agreement be set aside on the grounds of fraud. First
respondent is the owner
of the property situate at Erf 558
Murrayfield Ext 1, Pretoria, having allegedly purchased the property
from applicant on 12 June
2014. Second respondent is the estate agent
who allegedly brokered the sale. Third respondent is the
administrator of the South
African Homeloan Guarantee Trust (“the
trust”). The trust financed first respondent’s purchase
of the property
and holds a mortgage on the property as security for
the loan. Fourth respondent is the sole trustee of the trust.
Applicant
seeks the setting aside of the transfer of the property,
and tenders payment of the sum of R 1 108 893.82 to first
applicant,
in restitution of the monies which she received pursuant
to, what she alleges, was a fraudulent transaction. The relief sought
does not concern second, fifth and sixth respondents in any material
fashion.
[2] Applicant is in her words, the
victim of a scam similar to the infamous Brusson financing scheme.
Brusson provided “loans”
to property owners who were made
to believe that they were borrowing money and putting up their
properties as security for
the loan. The fraud that lay at the center
of the scheme was that the victims were made to believe that they
would not lose ownership
of their properties. Under that
misapprehension, the victims signed sale agreements selling their
properties to so-called “investors”.
The scheme resulted
in many hundreds of victims losing their homes.
[3] During 2014 applicant found
herself in financial difficulty, and having seen an advertisement
which offered a loan payable within
10 days, she telephoned the
person named in the advertisement. That person was the first
respondent. She told first respondent
about her financial woes, and
when he heard that her home was not bonded, he offered to lend her
between 70% and 100% of the value
of the property, with the property
serving as security for the loan. The interest rate was set at 20% of
the borrowed sum.
[4] Applicant alleges that she thought
that a “loan against the house” was similar to a pawn
transaction, in which one
borrows money, putting up (for instance) a
vehicle as security, but one is still allowed to drive the vehicle.
Applicant decided
to borrow R 1 million, which would attract interest
of R 200 000.00. She intended to use the money to erect a number
of residential
units which she would rent out, and she envisaged that
the rental on the units would enable her to service the loan. As will
emerge
hereunder, the “loan” escalated to over R 1.7
million, of which applicant stood to receive just over R 1.2 million.
[5] On 8 June 2014 first respondent
sent applicant an email in which he outlined the proposed terms of
the agreement. The relevant
portions of the email read as follows:
“
We
address you at the instance of you needing financing against your
property
The deal will be
done at R 1 719 500.00
Repayment which is due and payable
one month in advance is R
16 753.73
You are still the owners of the
property and it won’t be sold to anyone. You will be required
to pay the monthly instalments,
rates and keep the property in good
order………
The R 1 719 500.00 will
cost you R 16 753.73 which you will pay until we refinance an
sell the property back to you
at whatever the bond amount is at that
stage, the deal will be done over a period of 30 months, but at most
the deal back to you
will take 5 to 8 months at most. Megabond home
loans and property finance (Pty) Ltd, my in-house finance company
will make sure
you get a homeloan of R 1 719 500.00, or
whatever the bond amount is at that time.”(sic)
[6] There is no explanation why the
loan escalated from the original amount sought by applicant,
somewhere between R 200 000.00
and R 300 000.00, to an
amount approaching the market value of the property which had been
purchased for R 2.2 million. Whatever
the reason though, it seems
that a substantial portion of the “loan” was intended for
first and second applicants’
pockets.
[7] Once the general terms of the
agreement were settled upon, applicant was asked to sign several
documents. The first, dated 12
June 2014, was a document headed
“OFFER TO PURCHASE”. It provided for the sale of the
property to first respondent
at a purchase price of R 1 800 000.00
( a deposit of R 80 500.00 in cash and the balance by way of a
mortgage bond).
Occupational rent would be payable by the purchaser
at the rate of R 16 753.73 per month. The document was replete
with references
to “the purchaser” and “the
seller”. It stated that the property was sold voetstoots, and
that transfer
costs would be payable by the purchaser. The agreement
provided for second respondent to receive commission of R 110 000.00
for its services as estate agent. All in all, the agreement was a
typical sale agreement.
[8] Applicant produced a receipt dated
20 June 2013 (which I assume should read “2014”), in
which she acknowledged receiving
the deposit of R 80 500.00 in
cash. On 26 June 2014 applicant signed a lease agreement in respect
of the property for a thirty-month
period commencing on 1 August
2014, at a monthly rental of R 16 753.73. The lease
agreement terminated on 1 February
2017, on which date the
applicant as lessee had to repurchase the property.
[9] On 11 July 2014 a further R
500 000.00 was paid to applicant by the conveyancing attorneys.
Out of those monies applicant
paid R 110 000.00 to first
respondent “
so that he could pay the attorney’s fees
for the registration of the loan
.” A further R 530 271.00
was later paid to applicant, and R 188 622.82 was paid to third
parties on her behalf.
Applicant alleges that a total of R
1 218 893.22 was paid to her instead of the agreed sum of R
1 275 600.00
(after deduction of first and second
respondent’s cut). She alleges that, due to her not having
received the full loan amount,
she never made any repayments towards
the alleged loan whatsoever.
[10] On 8 July 2014 applicant signed a
number of documents relating to the transfer of the property. The
first is a document headed:
“
INSTRUCTION
TO REGISTER TRANSFER
TO: VELILE TINTO
CAPE INC.
TRANSFER OF ERF 685 MURRAYFIELD EXT
1 TOWNSHIP TO TRAVIS AVERY JUSTIN BENNETT”
[11] Applicant also signed two
affidavits confirming certain personal details. In an attempt to
obtain bridging finance pending
the finalization of the transaction
applicant also signed a “Discounting Agreement” which
resulted in her being paid
in advance of the registration of
transfer. Under applicant’s name on the front page of the
agreement are four boxes, one
of which must be checked to identify
the person signing the agreement. Applicant was identified as being
the “seller”.
[12] The property was transferred to
first respondent on 5 November 2014. Applicant alleges that
during December 2014 she
telephoned one Bazil Naidoo an employee of
the second respondent. It was during this call she says, that she
found out that she
had unwittingly sold the property, instead of
merely putting it up as collateral for a loan. Applicant states
that first
respondent had misled her into believing that she would
remain owner of the property. She had never intended to sell the
property,
and had signed the documents in the mistaken belief that
they were simply there to formalize the loan agreement.
[13] First respondent raised the money
to pay applicant by taking a loan from fourth respondent, but did not
pay the agreed upon
monthly instalments. On 6 November 2015 judgment
was granted in fourth respondent’s favour for payment of the
sum of R 1 763 454.98,
plus interest and costs. In the
meantime applicant had apparently sought legal advice, and had been
told that her prospects of
success in setting aside the sale were
dismal. She was advised rather to obtain a home loan in order to
repurchase the property
from first respondent, which she was
ultimately unable to do. During July 2017 applicant became aware of
the ABSA Ltd v Moore-judgment
(to which I refer hereunder), which she
says gave her hope that she could recover her home. That led to the
urgent application
interdicting the sale of the property in
execution, and to this application to set aside the entire
transaction.
IS THIS A BRUSSON-TYPE SCAM?
[14] The Brusson scheme displayed
somewhat different distinguishing features if compared to this
transaction. The Brusson agreements
comprised of three components.
Firstly, the investor and the victim signed a sale agreement whereby
the victim sold his/her home
to the investor. Secondly, the investor
immediately resold the property to the victim in terms of a deed of
sale whereby the victim
undertook to repay the “loan”
amount in instalments. The third component was an agreement between
the three parties
to the transaction, the victim, Brusson, and the
investor. The profit for Brusson lay in the fact that the money
raised by way
of a mortgage bond was split between Brusson and the
investor, and a portion was paid to the victim to keep him or her
happy. Brusson
received monthly payments from the victim in repayment
of the loan, and it guaranteed the obligations of the investor
towards the
financial institution that provided the loan. Brusson
administered the entire transaction.
[15] In
Ditshego and others v
Brusson Finance (Pty) Ltd
[2010] ZAFSHC 68
(22 July 2010)
(at
par 28) the Court was confronted with a classic Brusson scam, and it
identified the essential elements of the scam as follows:
15.1 A third
party, the investor, “purchases” the victim’s
property, but does not truly
intend to do so;
15.2 The
victim does not intend selling the property and does not lose
occupation thereof;
15.3 The
investor pays nothing and stands to lose nothing if anything goes
wrong;
15.4 Brusson
arranges everything, receives payments, effects payments to the bank,
and in the event of default
by the victim, Brusson ends up owning the
property;
15.5 The
victim of the scam “sells” the property for far less than
the market value, and immediately
buys it back for R 42 000.00
more;
15.6 The R
42 000.00 accrues mostly to Brusson with a small portion going
to the victim.
[16] In
Ditshego
the
Court, in considering the test to be applied to determine the essence
of a contract, referred to the
dictum
in
Maize Board v
Jackson
2005 (6) SA 592
(SCA) at 596
with approval:
“
The true
enquiry in a matter such as this is to establish whether the real
nature and the implementation of these particular contracts
is (sic)
consistent with their ostensible form. In pursuit of that enquiry one
must strive to ascertain, from all the relevant
circumstances, the
actual meaning of the contracting parties. It therefore becomes
necessary to examine in greater detail the agreements
in question and
the manner in which they were implemented.”
[17] The Court found that all three of
the agreements should be considered together, instead of in
isolation. When so considered,
the Court held that the transactions
were simulated and amounted to an unlawful
pactum commissorium.
The Court set aside the transactions, and ordered that the
property should be transferred to applicants.
[18] In
Radebe and another v The
Sheriff for the District of Vereeniging [2014] ZAGPJHC 228 (25
September 2014)
the Court found that the Brusson agreements
were tainted by fraud which vitiated consent. It held (at par. 20)
that the requirements
for transfer of immovable property were
twofold, firstly, delivery by registration of transfer of ownership,
and secondly, the
existence of a ‘real agreement’ of
which an essential part was the intention on the part of the
transferee to transfer
ownership, and the intention of the transferor
to acquire ownership. If there is any defect in the real agreement,
then ownership
does not transfer.
[19] The same scheme was the subject
of the dispute in
Moore and another v The Sheriff for the
District of Vereeniging and others [2014] ZAGPJHC 230
. The
Court applied the principle enunciated by the Supreme Court of Appeal
in
Nedbank Ltd v Mendelow
2013 (6) SA 130
(SCA)
, where
it was held:
“
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.”
[20] The court
a quo
made the
point that at the heart of the applicants’ claim (for a
declarator that the agreements were unlawful and for restitution
of
the property) was the fact that applicants never intended to transfer
ownership of the property, and were misled into believing
that they
would remain owners. The court held that the agreements were
consequently invalid and ordered the restitution of the
property to
applicants. The court also ordered that five previously registered
mortgage bonds in favour of the bank, that had been
cancelled upon
the property being transferred to the investor, should be reinstated.
[21] On appeal to the Supreme Court of
Appeal, (
ABSA Bank Ltd v Moore and another
2016 (3) SA 97
(SCA)
) the Court held that the Brusson transactions were not
simulated in the normal sense of the word. The victims of the scam
were
not trying to disguise their contracts as something that they
were not. Rather, they were hoodwinked into believing that the true
nature of the transaction was such that they would not lose ownership
of their properties, nor did they ever intend to transfer
ownership.
They were the victims of a fraud. Both the sale agreement and the
resulting transfer of ownership were therefore of
no effect. The
Court confirmed the order of the court
a quo
that the Moores
were the owners of the property. However, the Court found that the
order reinstating the mortgage bonds had no
basis in law, and thus it
set aside that part of the order.
[22] On further appeal to the
Constitutional Court (
Absa Bank Ltd v Moore and another
[2016]
ZACC 34
)
the Court held that it was correct that the
agreements were invalid not for simulation but for fraud. The Moores
had no intention
to transfer ownership of the property, and the
resulting transfer could not convey valid title to the investor. Due
to the fact
that the sale agreement was invalid, the mortgage bond
registered pursuant thereto was also invalid.
[23] It is against the aforesaid
background that one should consider this case. Applicant’s
counsel submitted that the agreement
in the instant matter was
identical to the agreements in the Brusson scam. I disagree. There
are a number of distinguishing factors.
Firstly, the deal was not
brokered by a third party, but by the “purchaser”
himself. In the Brusson scheme the victim
and the third party signed
a deed of sale selling the property back to the victim at the same
time as they signed the sale agreement
selling the property to the
investor. That was not the case in this matter. Here the parties
entered into a 30-month lease, after
which the applicant could elect
to repurchase her property. There are therefore substantive
distinguishing features between the
two scenarios.
[24] A further point of departure from
the Brusson transactions was that the Brusson victims, to one extent
or another, started
repaying the “loans” to Brusson.
Brusson would in some cases make a few payments to the bank, but
invariably the payments
would cease and the bank would foreclose on
the property. However, despite the obvious differences between the
Brusson scheme and
the current matter, the core question is still
whether applicant was the victim of a fraud which led her to believe
that she was
not relinquishing ownership of her property.
[25] On a perusal of the exhibits in
this matter one is astounded that anyone in these circumstances could
be misled into believing
that they were entering into anything other
than a sale agreement. However, that is what seems to have happened
in the Brusson
transactions. Hundreds of victims were duped into
believing the fraud that they would continue to own their property,
despite having
signed agreements which clearly recorded that they
were selling their properties.
[26] The crux of this matter is
therefore still whether applicant, despite the evidence to the
contrary, was duped into believing
a lie. On the face of it, she had
no reason to believe that she would remain owner of the property. She
signed documents that freely
used the words “sale”,
“seller”, and “purchaser”. Applicant signed
transfer documents to transfer
ownership of the property, and she
entered into a lease agreement in respect of the property which
contained the provision that
she had to repurchase the property after
30 months.
[27]
Applicant’s version is essentially uncontradicted. The
conveyancing attorneys’ Pretoria correspondents, before
whom
applicant signed the transfer documents, stated in a letter that
applicant knew that she was transferring ownership of the
property.
This statement was not made under oath, is devoid of context, and I
take no cognizance thereof. First respondent did
not file papers, and
third and fourth respondents cannot dispute her version of events,
save by pointing out possible contradictions
or inherent
improbabilities. Applicant’s version is thus the only version
before me, and must be considered against the objective
evidence.
[28] Simply perusing the vast majority
of the exhibits would lead one to believe that applicant could not
possibly have believed
that ownership would not be transferred. A
number of documents alerted applicant to the fact that she was
selling the property
and not simply borrowing against it.
[29] Applicant’s version of
events is not particularly convincing. It is understandable that she
would want to borrow a few
hundred thousand rand to erect residential
units on her property, hoping to generate an income. Why then, would
the loan amount
suddenly escalate to over R 1.7 million, an amount
close to the market value of the property (which had been purchased
for R 2.2
million)? Once applicant had received the money, she did
not make a single repayment on the loan. She says that she had
received
short payment of approximately R 56 000.00 on the loan
and therefore she refused to make any repayments. That explanation is
unconvincing. If she truly believed that she had been short-paid, one
would have expected her to demand payment of the alleged
shortfall. I
find it strange that, knowing that she had an obligation to repay
more than R 1.2 million (and that within 30 months),
she never made
any attempt to do so.
[30] A further aspect of concern is
applicant’s version regarding the terms of repayment of the
loan. On her own version,
she had to repay more than R 16 000.00
per month, which, as a person who was already under such financial
strain that she
had to approach a loan shark to raise funds, she
would have been hard pressed to do. At that rate the loan could not
have been
repaid within 30 months. Her nebulous explanation that at
some stage, once the residential units had been erected, she would
increase
the monthly repayment to either R
42 000.00 or R 50 000.00 per month is unsatisfactory.
[31] There are therefore many aspects
of applicant’s case that raise questions. The difficulty I have
though in rejecting
applicant’s version out of hand, is to be
found in the first email that first respondent addressed to applicant
dated 8 June
2014 which is quoted above. This email set out the
structure of the deal as first respondent saw it. It specifically
stated that
first respondent would remain the owner of the property,
and that the property would not be sold to anyone. There is a further
passage in the same email that provides an undertaking that “we”
would refinance the property at whatever the bond amount
was at the
time when the property was resold to applicant. Those passages are
contradictory, but the question remains whether the
belief was
created in applicant’s mind that the property would remain
hers. If that was truly her belief, then applicant
could not have had
the intention to transfer ownership to first respondent, and the
property must be returned to her.
[32] I believe that the truth lies in
an email dated 11 March 2016, sent by applicant sent to third
respondent. The purpose of the
email was to seek third respondent’s
assistance in resolving the property dispute, and she wanted to state
her version of
events. She started off by saying that she had signed
a deed of sale “
by ignorance with the person who is now the
new legal owner of ‘my’ property
”. The
significant part of the email, in my view, is where applicant stated
the following with reference to the representations
made to her by
first and second respondents:
“
They told
me that loan I took will be payed (sic) by their company and I’ll
be repaying monthly
until
I take back ownership of the house
.
I realized later on that what I signed at the attorney’s office
is not what I signed with them via email….. Namely
Mr. Travis
buying the house via homeloans SA at 1.8 mill”
(my
emphasis)
[33] Applicant went on to state that
first respondent was refusing to resell the property to her and she
requested third respondent
to do so. The main concern that applicant
had at that stage was that first respondent had placed the property
in the market and
was selling it for R 2.4 million, whilst she had
only received R 1.2 million. Applicant did not say that she had
believed that
the property would remain hers, or that it should never
have been transferred to first respondent, which would have been the
obvious
position to take had that been her belief at the time. In my
view the email is a clear indication that when she signed the
agreement
applicant knew that the property would be transferred to
first respondent, but she held the belief that it would be resold to
her
at some future stage. This is, in my view, where the current
matter is distinguishable from the Brusson scam. In the latter, the
victims never had the intention of effecting transfer of ownership in
the first place. In this matter, applicant knew that she
was
transferring ownership of the property, but she had the expectation
that at some stage in future she could elect to repurchase
the
property at whatever the bond amount was at that point in time.
[34] My interpretation of applicant’s
email of 11 March 2016 would explain why applicant would sign
numerous documents that
pointed unequivocally to the agreement being
for the sale of land. It would also explain why applicant remained in
the property
for some years: she had the belief that she could at
some point repurchase the property. It furthermore explains why there
was
no definite repayment plan, because, even if applicant could not
repay at a rate that would result in the loan being settled within
30
months, she would still be entitled to raise a bond to repay the loan
at whatever it was at the time when she made the election
to
repurchase the property. This is also consonant with the lease
agreement which specifically stated that after 30 months applicant
would have to repurchase the property.
[35] It is significant, in my view,
that before applicant found out about the Moore judgment, her
understanding of the agreement
(as expressed in her emails) was that
she was selling the property with a view to repurchasing it at a
later stage. Only after
she heard of the Moore judgment did the
version emerge that she had never intended to sell the property nor
relinquish ownership
thereof.
[36] Applicant was not misled
regarding the true nature of the transaction. Applicant intended to
enter into a sale agreement and
to transfer ownership of the
property, and effect was given to her intention and to the true
nature of the transaction. In the
circumstances, the application must
fail.
[37] Fourth respondent filed a
counter-application to the effect that applicant should be ordered to
pay to fourth respondent whatever
proceeds she had received from
first respondent pursuant to the allegedly void agreement and
transfer. In argument fourth respondent’s
counsel submitted
that its claim was based on unjustified enrichment. I am not
convinced that the claim is good in law, but because
of the view that
I take on the main application, I do not have to make a finding
thereon.
[38] In the circumstances I make
the following order:
38.1
The application is dismissed;
38.2
Applicant shall pay the costs of the application.
J.J.C. Swanepoel
Acting Judge of the High Court,
Gauteng
Division, Pretoria