THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable

Case No: 20719/2014

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 116, Three Rivers East
Township 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 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. 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 Egret Ave, Three Rivers East,
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 116, Three Rivers East
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

SUPREME COURT OF APPEAL OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT
OF APPEAL

FROM

The Registrar, Supreme Court of Appeal

DATE

26 November 2015

STATUS

Immediate

Absa v Moore  [2015] ZASCA 171

Please note that the media summary is intended for the benefit of the media
and does not form part of the judgment of the Supreme Court of Appeal.

The Supreme Court of Appeal today handed down judgment dealing with the
consequences of a fraudulent scheme run by Brusson Finance (Pty) Ltd
(Brusson) to which many consumers and banks have fallen victim. A number
of divisions of the High Court have been faced with questions as to the validity
of contracts signed by unwary people who have been misled as to their effect,
and of mortgage bonds obtained by ‘owners’ of property party to the scam.

In this matter, the court below held that contracts induced by fraudulent
misrepresentations made by Brusson were invalid, and that a mortgage bond
registered over property fraudulently registered in favour of Absa Bank (the
Bank), fell to be set aside.  This court dismissed an appeal against that
judgment.

The Moores owned a home in Vereeniging. In 2009 they ran into financial
difficulty and could not pay bond instalments in respect of five bonds
registered against their property in favour of  the Bank.  They also could not

pay other debts. The Bank would not advance further funds to them because
of their bad credit rating. They chanced upon an advertisement placed by
Brusson offering easy finance (loans) provided that consumers had properties
to secure loans. The called a Brusson office and received faxed documents to
be signed in order, they thought, to procure a loan from Brusson. The
documents had not been filled in.

A few days later they went to a Brusson office and asked about the effect of
the documents. It was explained that they needed to sign the papers in order
to obtain a loan from Brusson and that their property would be subject to a
bond as security for the loan. They signed the documents believing that was
their effect. In fact, the documents purported to be a sale by the Moores of
their property to a Mr Kabini,  a resale to them by Kabini, the price being
payable in instalments, but Kabini reserving ownership of the property until
the price was paid in full, and a tripartite agreement between Brusson, Kabini
and the Moores which required the Moores to pay monthly instalments  and
administrative fees to it and not to Kabini.

Shortly thereafter Kabini applied for a bond over the property of the Moores,
which he had apparently bought from them and to whom it was purportedly
transferred. The Bank granted a loan of R480 000 to Kabini and registered a
bond over the property.

The Moores were required to pay monthly instalments to Brusson, which they
believed to be repayment of the loan to them of some R157 000. But they
could not afford these payments and others. They consulted a debt counsellor
who applied on their behalf for a debt review under the National Credit Act 34
of 2005 to the Magistrates’ Court Vereeniniging. The court order allowed the
Moores to pay Brusson a lesser amount each month.

When Brusson’s attorney threatened them with legal action because they
were in arrears, they consulted an attorney who wrote to the National Credit
Regulator explaining their plight, and asking for advice on how to deal with

Brusson. He referred to a decision of the Free State High Court that had
found that contracts entered into with Brusson, similar to those between it and
the Moores, were simulated and invalid. The Moores took no further steps to
clarify their position because they could not afford to pay legal fees.

In March 2011 the Bank obtained a default judgment against Kabini who was
in default of his obligations under the bond registered in his name, and the
court declared the property in Vereeniging specially executable. The Moores
did not know of this until May 2013 when they received a letter (addressed to
Kabini) from an entity known as Resque Financial Solutions advising that their
property was to be sold in execution. They then approached the Legal
Resources Centre (LRC), which had advised other victims of the Brusson
scam. The LRC, on behalf of the Moores, brought an urgent application to
prevent the sale, and later applied for orders that the contracts between the
Moores were invalid, that the bond registered in favour of the Bank was also
invalid, and that the property be restored to the Moores.

The Gauteng Division found that the contracts between Brusson, the Moores
and Kabini were all invalid, and that the bond in favour of the Bank, registered
in Kabini’s name should be set aside, subject to the Moores paying to the
Bank what it had received from Brusson and registering a bond in favour of
the Bank. The court, following several other decisions, considered that the
contracts were simulated and thus invalid.

On appeal, the SCA found that the contracts were not simulated in the sense
that all parties had attempted to disguise the real nature of their transactions.
But they were induced by the fraudulent misrepresentations made by
Brusson: the Moores had never intended to sell their property to Kabini, and
buy it back in terms of an instalment sale agreement. They had intended to
borrow money from Brusson and to provide security for repayment by granting
a bond over the property. The sale to Kabini was invalid, and the transfer of
the property to Kabini was invalid because they had not had the requisite
intention to pass ownership. And since Kabini was not the owner of the
property, the bond over it registered in favour of the Bank was likewise invalid.

The SCA upheld the order of the Gauteng Division that the contracts and the
bond granted by Kabini were invalid, but set aside the order requiring the
Moores to register a bond in favour of the Bank and to repay to it what it had
received from Brusson. The court did not have the power to make a contract
between the Bank and the Moores.