The applicant purchased stand 237 Redcliff Township from Bryden Technical Services (Pvt) Ltd on 26 June 2007 for ZW$1.9 billion and paid in full on 28 June 2007. The seller attempted to cancel the agreement on 29 June 2007. The applicant obtained a provisional order on 11 July 2007 interdicting the seller from dealing with the property, which was confirmed on 9 September 2009, ordering transfer of the property to the applicant. The title deed bore mortgage bond endorsements by the respondent (notes of hand numbers 6669/2004, 706/2006, 324/2007, and 1705/2007). On 20 January 2010, Michael Hanyani, a director of the seller, borrowed US$19,000 from the respondent and pledged the property as security under a note of hand, despite the existing court order transferring the property to the applicant. The respondent refused to consent to cancellation of the mortgage bonds unless the applicant settled Hanyani's outstanding debt of US$6,600.
The application was granted. The court ordered: (1) The note of hand registered by the respondent on the property declared null and void and of no force or effect; (2) The respondent to surrender the deed of transfer to the applicant; (3) The respondent to consent to cancellation of notes of hand numbers 6669/2004, 706/2006, 324/2007 and 1705/2007, failing which the Deputy Sheriff was authorized to sign consent on behalf of the respondent; (4) The respondent to pay costs of suit on attorney and client scale.
Where a competent court has ordered transfer of immovable property to a purchaser, real rights in that property vest in the purchaser from the date of the order, divesting the seller of those rights. A mortgage bond registered after such court order by the seller or its representative over the property is void and of no force and effect as against the purchaser, as the mortgagor no longer possessed the power or authority to encumber the property. Section 50(1)(a) of the Deeds Registry Act empowers a competent court to order transfer of mortgaged property, and the Registrar of Deeds is obliged to obey such order notwithstanding any encumbrances. A mortgage bond based on fraudulent misrepresentation (where the mortgagor misrepresents having authority to mortgage property he no longer owns) is a nullity and nothing legal can flow from such fraud.
The court made observations that: (1) whether the applicant had prior knowledge of mortgage bonds registered before the provisional order was irrelevant to determining the validity of the note of hand registered on 20 January 2010; (2) while generally a mortgage creates a real right that adheres to property itself and can be enforceable against bona fide purchasers despite clean transfer (citing Barclays National Bank Bpk v Regstrateur van Aktes Transvaal), this principle does not override section 50(1)(a) of the Deeds Registry Act; (3) the respondent correctly sued Hanyani in the Bulawayo High Court for recovery of the outstanding debt but cannot seek satisfaction on property that did not belong to Hanyani when the mortgage bond was executed; and (4) Hanyani defrauded the respondent by pledging property he had no authority to mortgage.
This case is significant in Zimbabwean property law for establishing that: (1) a court order transferring real rights in property divests the seller of those rights and prevents subsequent encumbrances without the purchaser's consent; (2) section 50(1)(a) of the Deeds Registry Act empowers courts to order transfer of mortgaged property, which the Registrar of Deeds must obey; (3) mortgage bonds registered through fraudulent misrepresentation after a court has ordered transfer of property are void as against the purchaser; (4) the principle that "nothing legal can flow from fraud" applies to mortgage bonds; and (5) mortgagees cannot seek satisfaction of debts on property that did not belong to the mortgagor at the time the bond was executed. The case reinforces the supremacy of court orders in property transactions and the protection of purchasers against fraudulent subsequent encumbrances.