PVL 3704 ENRICHMENT LIABILITY AND ESTOPPEL LATEST EXAM PACK .

PVL 3704 ENRICHMENT LIABILITY AND ESTOPPEL LATEST EXAM PACK . SECTION B QUESTION 1 DISCUSS THE NATURE AND EXTENT OF ENRICHMENT CLAIMS WITHOUT REFERRING TO ANY SPECIFIC ACTION The plaintiff is allowed to claim the amount he has been impoverished, or the amount the defendant has been enriched, whichever is the lesser. The quantum of the enrichment claim is calculated at the time the claim is instituted. The defendant is not liable for benefits that he due to his enrichment could have gained but didn’t. It must as well be noted that if the defendant’s enrichment has been reduced or extinguished before the claim has been instituted, his liability will also be reduced or extinguished. The onus to prove non-enrichment lies with the defendant. In four instances the quantum will be calculated sooner, meaning before the date of institution of the action: a. At the moment the defendant become aware of enrichment; b. At an earlier stage if the defendant should have known that the benefit wasn’t justified; c. When the defendant fell into mora; and d. An earlier date if the defendant acted mala fide. It must be noted that these exceptions do not apply in the case of minors. In quantifying the claim all positive and negative side-effects should be considered. Interest earned on money in the hands of the defendant before litis contastio cannot be claimed by the plaintiff, but after mora the plaintiff can claim mora interest. If the defendant spent the money on something he would not have done if it wasn’t for the enrichment, he can raise the defense of non-enrichment. If all or part of what he spent the money on is still of value and in his hands, he must offer the goods or the value of the goods to the plaintiff. If the goods are more valuable than the impoverishment, the difference should be paid to the defendant. QUESTION 2 A BUY’S B’S TOWNHOUSE FOR AN AMOUNT R1 000 000. THE PARTIES ARE IN FULL AGREEMENT AS TO ALL THE ASPECTS OF THE CONTRACT, BUT A FORGETS TO SIGN THE CONTRACTUAL DOCUMENTS. A PAYS B A DEPOSIT OF R100 000 AND MOVES INTO THE TOWNHOUSE. HE ALSO PAYS B AN AMOUNT OF R5000 PER MONTH AS OCCUPATIONAL RENT PENDING TRANSFER OF THE PROPERTY INTO HIS NAME, AS PER THEIR AGREEMENT. A’S CHILDREN CAUSE DAMAGE IN THE AMOUNT OF R10 000 TO THE TOWNHOUSE WHILE HAVING A PARTY ONE NIGHT. AFTER THREE MONTHS A REALISES THAT HE WILL NOT BE ABLE TO AFFORD THE BOND ON THE PROPERTY BECAUSE OF RISING INTEREST RATES AND HE APPROACHEDS YOU FOR LEGAL ADVICE. ADVISE A FULLY ON THE RIGHTS AND DUTIES OF THE PARTIES ARISING IN THE CIRCUMSTANCES 16 They could institute the condictio indebiti, which is used to reclaim unowed performance: Requirements i. Transfer of ownership ii. Payment under the impression that it was owing (error which is excusable) iii. No debt at the time The parties can claim the thing and compensation for performance, they can also reclaim the value. Willis case: company made an unowed payment to the defendant as a result of an error of law – don’t distinguish between an error of law and error of fact. Reasonableness: can the plaintiff’s mistake still be reasonable even if it was made negligently? (No gross negligence) VOID CONTRACTS If both parties performed in terms of a void contract = reclaim performance • Plaintiff prove he made the performance in the mistaken belief that the contract was valid/reasonable error and it was an error of fact or law • If he knew that the contract was void and wanted to recover performance – (condictio causa data). Alienation of Land Act – s28 If the deed of alienation is void: Buyer can recover interest and compensation for improvements Seller can get compensation for use and enjoyment of the property, get compensation for intentional or negligent damage to the property. If the deed doesn’t comply with s2 = void. He could also exercise a lien for the improvements made to the property: Enrichment lien: creates Real rights, which are operative against the whole world – the lien provides real security. (Must prove enrichment) A is also a bona fide possessor (define): Types of improvements: • Necessary: preserve the property = claim FULL AMOUNT • Useful: enhance the market value of the property • Luxurious: based on the fancy of a certain individual – it might enhance the value of the property = look at the type of improvement 17 QUESTION 3 FULLY DISCUSS ESTOPPEL AND THE CONCLUSION OF A CONTRACT. REFER TO EXAMPLES IN YOUR ANSWER Theories of contractual liability: According to the consent theory, the basis of the contract is the consent or agreement between the parties. (1) According to the declaration theory, the basis of a contract consists of corresponding statements or expressions of intent, and not necessarily the presence of actual consent. (1) According to the reliance theory, the basis and contents of a contract are constituted by the reasonable reliance that is the impression or understanding of the one party's intention, which is formed by the other party. (1) In a few cases the court was inclined, in principle, to accept estoppel as a means to hold parties to a ``contract'' in the absence of real consensus. (1) In Van Ryn Wine and Spirit Co v Chandos Bar, X, the representative of R, obtained orders for liquor from C and fraudulently represented to C that C would receive a discount if he paid cash to X. C did this, and although he received invoices stating the price of the liquor with every consignment, which differed from the price paid to X, he ignored them. R then sued C for payment of the prices as stated on the invoices. C denied that he had contracted at those prices. R averred that C was estopped from denying the existence of consent, since by receiving the invoices without comment, he had given the impression that he was contracting at the prices reflected in the invoices. R thus attempted to bind C, not in terms of the contract, but in terms of estoppel; C had created the impression that a contract did in fact exist and was now estopped from denying the existence of the contract, therefore he was bound as if there were a contract. The court held that C was not estopped from proving dissensus, since his conduct had been reasonable and without culpa. (3) In Peri-Urban Areas Health Board v Breet NO and Another 1958 (3) SA 783 (T), the court also accepted in principle that a party could be bound to a ``contract'' on the ground of estoppel where consent was absent. (2) Criticism against use of estoppel in this context: Firstly, the general requirements for estoppel are intermingled with the requirements for contractual liability and can place quite a heavy onus on estoppel raiser. Especially requirement of prejudice (and perhaps fault) could be problematic. (2) Secondly, estoppel only gives rise to the fiction of a contract and not an actual one. So, the ensuing ‘contract’ only applies inter partes and no contractual rights can be ceded to a third party. (2) Although, initially, the Appellate Division expressly indicated that estoppel may be applied in cases of dissensus - Saambou-Nasionale Bouvereniging v Friedman, in Sonap Petroleum (SA) (Pty) Ltd v Pappadogianis it rejected estoppel as a solution in such instances, albeit obiter. There seems to be little need for estoppel in this context where the reliance theory can be applied more easily and with better results. (3) 18 QUESTION 4 A HAS SOLD HIS TELEVISION SET TO B FOR R2000. THE CONTRACT STIPULATES THAT OWNERSHIP WILL ONLY PASS TO B AFTER THE LAST INSTALMENT HAS BEEN PAID. A HAS GIVEN A LETTER TO B STATING THE FOLLOWING “HEREWITH I, A, CONFIRM THAT I HAVE SOLD SONY TV SET NO TO B”. AFTER A PERIOD OF SIX MONTHS AND PAYMENT OF R1200 B WANTS TO SELL THE SET TO C AND SHOWS C THE LETTER FROM A. C WHO IS VERY CAUTIOUS, FIRST PHOMES A WHO AGAIN CONFIRMS THE SALE TO B. C BUYS THE SET FROM B FROM R1500. THEREAFTER B FAILS TO MAKE ANY FURTHER PAYMENTS TO A. A NOW CLAIMS BACK HIS TV SET FROM C WIT A rei vindication. ADVISE A WHETHER C MAY HAVE ANY POSSIBLE DEFENCES AGAINSTTHIS CLAIM, AND IF SO, WHAT THE REQUIREMENTS WOULD BE. 1. Identification This question deals with estoppel as a defence to the owner’s rei vindicatio. The elements of misrepresentation and negligence on the part of the owner are of specific relevance here. (2) 2. The law Requirements for Estoppel: 1. Misrepresentation – creation of false belief by estoppel denier. (1) 2. Fault (intent or negligence) on part of estoppel denier. (1) 3. Prejudice on part of estoppel assertor. (1) 4. Causation – the estoppel assertor must have acted to his detriment as a result of the misrepresentation of the estoppel denier. (1) 5. The raising of estoppel must be permissible in law in the circumstances. (1) A. Misrepresentation • Misrepresentation is any word or conduct that communicates an untruth. Generally, it must be a misrepresentation of fact and may consist of a positive misrepresentation or by omission where there is a legal duty to speak or otherwise act positively. (2) • Misrepresentation where owner leaves his property in possession of another. General rule: mere leaving of one’s property in possession of another does not create the impression that the latter has the right to sell the property (1 mark). Examples from case law Adams v Mocke: A authorized his driver to hire horses if his horse became disabled on the road – he hired a mule from E and left the lame horse there until the mule was returned. He sold the horse. A claimed it back and succeeded. The court stated that: ...’an owner does not lose his right of vindication unless he had so entrusted his goods under circumstances which might fairly and reasonably induce third parties to believe that the ostensible owner was the true owner or had authority from the true owner to 19 dispose of the goods. In the present case no such circumstances have been proved to exist. The fact that the plaintiff entrusted the postcart horses to his driver could lead no one reasonably to believe that he had the right to sell or exchange horses.’ (3) In Morum Bros Ltd v Nepgen, the facts were the following: A sold two horses to S, subject to a suspensive condition that, despite delivery ownership would not pass before the purchase price had been paid. After the horses had been delivered to him but before he had paid the purchase price, S sold them to a bona fide purchaser. A thereupon instituted the rei vindicatio against the second purchaser, who invoked the doctrine of estoppel, contending that A, the owner, had placed S in a position to represent himself as the owner of the horses. The court rejected this contention and ordered the defendant to return the horses to A. (3) Exception If there is evidence of title documents or a blank transfer form or something similar, representation may in fact amount to a misrepresentation, since conduct may be reasonably conducive to the false conclusion that the possessor is the owner (and may dispose of the thing). (2) In Fawdon v Lelyfeld A the owner of a racehorse leased it to B and L (not allowed to do so in terms of the Jockey Club Regulations) so a lease was drawn in the guise of a contract of sale. B and L got a false receipt for the fictitious sum of R200. They then sold the horse to Mrs. C. A claimed the horse with the Rei Vindicatio and Mrs. C used estoppel – the court found in favour of Mrs. C In Electrolux v Khota it was stated that when an owner entrusts his property to another it isn’t enough to represent that dominium has vested in the possessor. BUT if the owner gives a document of title/authority to dispose of the property such a representation is created Examples of indicia Such indicia may be the documents of title and/or of authority to dispose of the articles, as for example the share certificate with a blank transfer form annexed, as in West v De Villiers; or such indicia may be the actual manner or circumstances in which the owner allows the possessor to possess the articles, as for example the owner-wholesaler allowing the retailer to exhibit the articles in question for sale with his other stock in trade. (3) B. Fault (negligence) Negligence does not seem to be a strict requirement for estoppel, but aside from a few possible exceptions it does seem to be a requirement against the rei vindicatio of the owner. (2) Case law In Grosvenor Motors (Potchefstroom) Ltd v Douglas it was stated that in the case of rei vindicatio there must be negligence on the part of the denier – K was going to buy the respondents car; his cheque book was in Welkom. The respondent lost the car’s license papers but gave him a letter stating his possession of the car. K’s cheque was dishoured, in the meantime K had sold the car to the appellant. A pleaded estoppel against the owners Rei vindicatio – and the court rejected the plea because negligence on the part of the denier was required. The owner forfeits his right to vindicate where the person who acquires the property does so because (of the negligence of the owner) he was misled to believe that the person from whom he acquired it was entitled to dispose of it – to prove estoppel the appellant had to prove culpa on the part of the respondent 20 In Johaadien v Stanley Porter (Paarl) (Pty) Ltd J wanted to buy F’s car but wanted proof of ownership- F had bought the car on a hire purchase agreement from Stanley Porter Garage and had paid the last instalment. J bought the car. The garage later claimed the car using the rei vindicatio. J relied on estoppel but didn’t succeed as he failed to prove negligence The majority of the court held that negligence is a requirement for estoppel where it was raised as a defence to the rei vindication. The minority of the court stated that negligence wasn’t a requirement and that estoppel in this case should have been upheld. The interests of the owner and the bona fide acquirer of possession must be weighed up against each other. In Oakland Nominees (Pty) Ltd v Gelria Mining & Investment Co (Pty) Ltd it may be stated that the owner will be frustrated by estoppel upon proof of the following requirements: (i) There must be a representation by the owner, by conduct or otherwise, that the person who disposed of his property was the owner of it or was entitled to dispose of it. (ii) The representation must have been made negligently in the circumstances. (iii) The representation must have been relied upon by the person raising the estoppel. (iv) Such person's reliance upon the representation must be the cause of his acting to his detriment. • From the case law, it is therefore clear that the requirement of fault (negligence) is stated unequivocally for cases where estoppel is raised as a defence against the rei vindicatio (excluding the possible exception based on equity mentioned in the Johaadien and Oakland Nominees cases). (1)