Absa Bank Limited v Moore and Another

The respondents, Christina and Jacques Moore, homeowners in Vereeniging, were in serious financial difficulty and responded to an advertisement by Brusson Finance (Pty) Ltd offering finance. They believed they were obtaining a loan secured by their home. Through fraudulent misrepresentations, Brusson induced them to sign three interrelated documents which in form reflected a sale of their property to an investor, Sunnyboy Kabini, a resale to the Moores on instalment terms, and a tripartite agreement regulating the scheme. The Moores did not intend to sell or transfer ownership of their property. Unbeknown to them, the property was transferred to Kabini, who then registered a mortgage bond in favour of Absa Bank to secure a loan. Kabini defaulted, Absa obtained default judgment and sought to execute against the property. The Moores applied for declaratory relief, interdicting the sale and setting aside the transfer and bond. The High Court found in their favour. Absa appealed to the Supreme Court of Appeal.

The appeal was dismissed with costs (including costs of two counsel). The order of the High Court was largely confirmed, with a minor amendment declaring the Moores to be the owners of the property at Erf 116, Three Rivers East Township, Gauteng.

The case is a leading authority on the effect of fraud on the transfer of immovable property and the validity of mortgage bonds in South African law. It confirms that under the abstract theory of transfer, a genuine intention to transfer ownership is indispensable, and that registration obtained through fraud is void. The judgment provides important protection for victims of property fraud schemes and clarifies that even an innocent mortgagee bank cannot acquire a real right where the mortgagor was never the owner.