Absa Bank Limited v Moore and Another

The respondents, Christina and Jacques Moore, owned a residential property in Vereeniging subject to five mortgage bonds in favour of Absa Bank Limited. While financially distressed, they were induced to participate in the so-called Brusson scheme, a fraudulent arrangement in which homeowners were misled into signing documents purportedly selling their properties to an ‘investor’ while being assured they would retain ownership. As part of the scheme, the Moores’ property was fraudulently transferred to a third party, Mr Kabini, their existing Absa bonds were cancelled, and a new bond was registered by Absa over the property in Kabini’s name. The proceeds of Kabini’s loan were misappropriated by the fraudsters, and Kabini defaulted. When Absa sought to sell the property in execution, the Moores challenged the transaction, asserting that they never intended to sell their home. The High Court set aside the fraudulent agreements, restored ownership to the Moores, and invalidated Kabini’s bond, but ordered reinstatement of the Moores’ original bonds. The Supreme Court of Appeal upheld the setting aside of the fraud but reversed the reinstatement of the original bonds. Absa sought leave to appeal to the Constitutional Court solely on the issue of reinstating its original bonds.

Leave to appeal was refused with costs, including the costs of two counsel.

The case authoritatively clarifies that, in South African law, payment by a third party— even a fraudster—can validly discharge a debtor’s obligation if accepted by the creditor. It affirms the accessory nature of mortgage bonds and rejects attempts to revive security once the underlying debt has been validly extinguished. The judgment also limits the scope of unjustified enrichment claims by financial institutions in fraud scenarios and underscores the evidentiary burden resting on banks seeking restitutionary relief.