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Quartermark Investments

6 February 2014

Quartermark Investments (Pty) Ltd v Mkhwanazi & another (768/2012) [2013] ZASCA 150 (01/11/2013)

The headnote reads as follows:
Contract – Sale of immovable property – induced by fraud – null and void – no intention on the part of the owner to transfer ownership – ownership does not pass despite registration – rei vindicatio available even if raised mero motu by the court if facts in support thereof appear in the papers – accords with the principle of legality

Facts in brief
The respondent had run into arrears on her mortgage bond and her property had been attached by her bank. She approached an agent of the Appellant for a loan and signed certain documents without being given an opportunity to read them. She was given to understand that these were loan documents, but they were in fact a sale of land agreement, an agreement of lease and a power of attorney authorising transfer of the property. She only discovered at a later stage, that the appellant had taken transfer of the property.

The Appeal
The two main issues on appeal were –

  1. whether the respondent had made out a case of fraudulent misrepresentation; and
  2. whether the High Court was correct in directing that the property be transferred to Ms Mkhwanazi despite her failure to tender restoration of the benefit she had received under the agreements.

Theron JA (Maya, Bosielo, Pillay and Petse JJA concurring) was satisfied that the respondent had been induced to sign the documents by fraudulent misrepresentations and was therefore entitled to rescind the contract.

He also found that a party that proceeds by way of the rei vindicatio need not tender restitution of what had been received pursuant to a contract sought to be set aside, because the cause of action is complete without such tender. Restoration of the benefit received may be the subject of a separate claim for unjust enrichment.

The appeal against the judgment of Spilg J in the South Gauteng High Court was accordingly dismissed with costs.

Full judgment

Summary reproduced from the February 2014 Risk Alert Bulletin

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