PVL3704_ STUDY PACK QUESTION AND ANSWER.

PVL3704_ STUDY PACK QUESTION AND ANSWER. Enrichment Liability And Estoppel. What is the appropriate enrichment action that B must institute against the bank (C) according to case law? 1 The condictio sine causa. 2 The condictio indebiti. 3 The condictio causa data causa non secuta. 4 The condictio ob turpem vel iniustam causam. 5 The actio negotiorum gestorum contraria. (2) Question 16 Indicate which one of the following is not a requirement for a valid reliance on estoppel: 1 There must have been a misrepresentation of intention. 2 Prejudice on the part of the person relying on the estoppel. 3 The person denying estoppel must have made the misrepresentation culpably in the case of vindication. 4 Causation: the prejudice must have been the result of the misrepresentation. 5 The reliance on estoppel must be allowed by law. (2) Question 17 Which case demonstrates that in certain circumstances the entrusting of one’s property to another person amounts to a representation that the holder is the owner or entitled to dispose of the property? 1 Baumann v Thomas 1920 AD 428. 2 Fawdon v Lelyfeld 1937 TPD 339. 14 3 Hauman v Nortjé 1914 AD 293. 4 Van Ryn Wine & Spirit Co v Chandos Bar 1928 TPD 417. 5 Union Government v National Bank of SA Ltd 1921 AD 121. (2) The following facts are relevant for questions 18 to 22: A has sold his painting by artist X to B for R 20,000. The contract stipulates that ownership will only pass to B after the last instalment of R 2,000 has been paid. A has given a letter to B stating the following: “Herewith I, A, confirm that I have sold a painting by artist X to B.” After a period of six months and payment of R 12,000, B gives the painting to C, a dealer in art. B wants to sell the painting when he has paid for it. He requests C to obtain possible offers for the painting from the public which must be referred to B for consideration. B also shows C the letter from A. C sells the painting to D without B’s consent for R 15,000 after telling D that he (C) is the owner. Thereafter, B fails to make any further payments to A and C is sequestrated. A wants to claim the painting from D. Question 18 If A wants to claim the painting from D which one of the following is the appropriate action for A to use? 1 The condictio sine causa. 2 The condictio indebiti. 3 The rei vindicatio. 4 The condictio ob turpem vel iniustam causam. 5 A delictual action for fraud. (2) Question 19 Which statement(s) is(are) correct? (a) A has committed a misrepresentation to C by giving the letter to B, which A should have realised that B could abuse. (b) B has committed a misrepresentation to C by giving the letter to C and failing to inform C that he (B) was not entitled to sell the painting until he had fully paid forit. (c) C has committed a misrepresentation to D by failing to disclose to D that he (C) does not have authority to sell the painting. (d) D has been deceived as to the ownership of the painting. (e) All of the above. 1 (a) and (c). 2 (b) and (c). 3 (a), (b) and (c). 4 (d). 15 5 (e). (2) Question 20 Which statement(s) reflect(s) the position in regard to fault and estoppel? (a) D must allege and prove negligence on the part of A when A claims the painting. (b) Negligence on the part of A is irrelevant because B was negligent in leaving the painting with C. (c) Negligence on the part of A is irrelevant because C acted intentionally when he sold the painting to D. (d) Fault is usually required for a successful reliance on estoppel in such circumstances. (e) Negligence on the part of A is irrelevant because D was intentionally misled by C. 1 (a). 2 (b) and (c). 3 (a) and (d). 4 (b), (c) and (e). 5 (e). (2) Question 21 Indicate which statement is relevant in regard to detriment and estoppel. 1 A suffers prejudice because he is without the painting and he has not been fully paid by B. 2 B suffers prejudice because C has defrauded him. 3 C suffers prejudice in that he received less for the painting than what it was worth. 4 D suffers prejudice in that he has paid for a painting tainted by fraud. 5 All of the above. (2) Question 22 Which statement most correctly indicates the outcome of the matter? 1 D will successfully plead estoppel against A because A was negligent. 2 D will not successfully plead estoppel against A because D himself acted intentionally. 3 D will successfully plead estoppel against A because A’s misrepresentation was the proximate cause of D’s prejudice. 4. D will not successfully plead estoppel against A because A’s misrepresentation was not the proximate cause of D’s prejudice, but rather the fraud of C. 5 1 and 3. (2) 16 Question 23 Which statement regarding the basis of estoppel is incorrect? 1 Estoppel has been regarded as a doctrine of the law of evidence. 2 Estoppel has been regarded as a sui generis remedy. 3 The basis of estoppel has been regarded as the exceptio doli. 4 The protection of good faith has been regarded as the basis of estoppel. 5 The law of quasi-contract has been regarded as the basis of estoppel. (2) Question 24 Choose the incorrect statement. 1 In Fawden v Lelyfeld 1937 TPD a plea of estoppel succeeded. 2 In Grosvenor Motors (Potchefstroom) Ltd v Douglas 1956 3 SA 420 (A) a plea of estoppel did not succeed. 3 In Johaadien v Stanley Porter (Paarl) (Pty) Ltd 1970 1 SA 394 (A) a plea of estoppel succeeded. 4 In Morum Bros v Nepgen 1916 CPD a plea of estoppel did not succeed. 5 In Adams v Mocke 23 SC 722 a plea of estoppel did not succeed. (2) Question 25 Estoppel is most similar to which theory? 1 The declaration theory. 2 The will theory. 3 The information theory. 4 The reception theory. 5 None of the above. (2) Total section A [50] SECTION B We provide a general indication at each question what the answer relates to. QUESTION 1 Discuss the requirement that the defendant must have been enriched. (10) Answer See Study Guide 01, par 2.2 Discuss the following in you answer: • Forms of enrichment. 17 • Time of enrichment. • Of what must enrichment consist. • Test for enrichment. • Examples of enrichment (and non-enrichment). QUESTION 2 [10] In McCarthy Retail Ltd v Shortdistance Carriers CC 2001 (3) SA 482 (SCA) para [9] the court said: “We now know from the hard print that there is a common-law basis for the acceptance of a general enrichment action, at least one of a subsidiary nature. In this respect the decision of the majority in Nortje’s case has been shown by the then largely dormant authority to be clearly wrong”. Critically discuss this statement with reference to relevant case law. (10) Answer See Study Guide, Study Unit 14 Discuss the following in you answer: • Common law position. • Brief discussion of Nortje v Pool 1966 (3) SA 96 (A). • New case law moving in direction of recognition of a general enrichment action: McCarthy Retail Ltd v Shortdistance Carriers CC 2001 (3) SA 483 (SCA) First National Bank of SA Ltd v Perry NO 2001 (3) SA 960 (SCA) Kudu Granite Operations (Pty) Ltd v Caterna Ltd 2003 (5) SA 193 (SCA) • General conclusion. QUESTION 3 [10] X is an employee of Company Y. X is paid a monthly salary of R30 000,00 which is payable at the end of the month. During July 2016 X receives a very lucrative offer from Company Z provided he can start work immediately. X does not return to his employment with Y after20 July 2016. Y now refuses to pay X anything for his employment during July 2016. Briefly advise X whether he has any claim against Y, and if so discuss the nature of the claim as well as the amount that he can claim. (5) Answer See Study Guide 1, par 13.3 Discuss the possible claim of an employee for partial remuneration after absconding with reference to case law. [5] QUESTION 4 Write a critical discussion on negative misrepresentation (misrepresentation by omission) within the context of estoppel. Refer to relevant case law. (10) Answer See Study Guide 2, par 3.2.3 Discuss the following in you answer: 18 • General principle. • English law. • De Wet’s view. • When does the duty to speak or act exist? • Examples. • LAWSA paragraph 656. QUESTION 5 [10] A takes his car to B, who sells second-hand cars, to have his car valued. The car is parked on B’s showroom floor where it is left for three days. In this period one of the sales staff, X, who believed the vehicle to be part of the stock, sold the vehicle to C for cash. A now claims the vehicle from C with a rei vindicatio. Advise C with reference to relevant case law. (10) Answer See Study Guide 2, pars 3.2.4 and 4.2 Discuss the following in you answer: • Identification. • General requirements for estoppel. • Misrepresentation where owner leaves his property in possession of another. • Discussion and examples of indicia. • Examples from case law where estoppel succeeded and where it did not. • Fault (negligence): general principle. • Discussion of case law: Grosvenor Motors (Potchefstroom) Ltd v Douglas 1956 (3) 420 (A) Johaadien v Stanley Porter (Paarl) (Pty) Ltd 1970 (1) SA 394 (A) Oakland Nominees (Pty) Ltd v Gelria Mining & Investment Co (Pty) Ltd 1976 (1) SA 441 (A) • Agent for sale or factor. • Application to facts and conclusion. 19 20 2019 – SEMESTER 1 1.1 ANSWERS TO ASSIGNMENT 1 Question 1 Discuss the general requirement that the defendant’s enrichment must have been at the expense of the plaintiff. Refer in your answer to case law. (15) Answer See Study Guide 1 par 2.2.3, page 21ff and par 8.2.2, page 81ff. (a) Discussion of the causal link requirement and provision of relevant examples. (2) (b) Discussion of the indirect enrichment problem: (i) Explanation of the problem. (2) (ii) Discussion of the view of De Vos (Study Guide 1, page 21). (2) (iii) Discussion of Gouws v Jester Pools (Pty) Ltd 1968 (3) SA 563 (T). (2) (iv) Discussion of Buzzard Electrical v 158 Jan Smuts Avenue Investments 1996 (4) SA 19 (A). (2) (v) Discussion of a right of retention and Brooklyn House Furnishers Ltd v Knoetze & Sons 1970 (3) SA 264 (A). (2) (vi) Discussion of ABSA Bank Ltd t/a Bankfin v Stander t/a CAW Paneelkloppers 1998 1 SA 929 (C). (3) (vii) Motivated exposition of your own view. (2) [max 15] Question 2 A has sold uncut diamonds to B for an amount of R10 000,000 in contravention of statutory law. B has paid the amount, but before the diamonds could be delivered, the money was confiscated by the police during a raid at A’s house. Advise B on the availability of an enrichment action to reclaim the R10 000,000. Refer in your answer to case law. (10) 21 Answer If you receive a similar type of question in the exams, you should follow the following steps in answering the question: (a) You first need to identify the correct unjustified enrichment action. If necessary, explain why another enrichment claim cannotbe used. (2) (b) Then discuss the relevant requirements for a successful claim under the action and any defences against such a claim. It is important here to refer to any relevant case law. (6) (c) Apply the requirements of the claim to the facts provided. (1) (d) Make a definite conclusion on the question asked. (1) (a) Identifying the correct action: In this case the contract between the parties is an illegal contract because it is prohibited by law. The contract therefore is void from the outset. When a contract is void from the outset there are two enrichment actions that come into play: the condictio indebiti if the contract is void due to reasons other than illegality; and the condictio ob turpem vel iniustam causam if the contract is void due to illegality. The latter is the appropriate action. In general, see Study Guide 1 par 3.4, page 35ff and par 5.4, page 56ff. (2) (b) Requirements for the action and defences against it: See par 5.4 and onwards of your Study Guide for the requirements. Discuss each of the requirements: (i) Payment of money or transfer of property. (1) (ii) In terms of an illegal agreement. Explain when an agreement will be regarded as illegal and that no contractual action will be available in such cases. (2) (iii) Restriction of the par delictum rule. Explain what the rule encompasses and how it is applied. Also discuss the judicial discretion created in Jajhbay v Cassim 1939 AD 537. (3) (iv) Tender to return any money or goods received. (1) (c) Applying the rules to the facts: (i) The contract is illegal in terms of statutory law. (1) (ii) Both parties are turpi personae (morally blameworthy) as they were aware of the illegality of their contract. (1) (iii) Neither party has a contractual claim against the other party because the agreement is illegal and unenforceable. (1) (iv) Is there any reason to relax the par delictum rule in these circumstances? Probably not, but you may present a different reasoned argument. (1) 22 (d) Conclusion: B has no contractual claim against A for delivery of the diamonds. Also, B will not be successful with the condictio ob turpem vel iniustam causam against B on the basis of unjustified enrichment if the par delictum rule is strictly applied. B may be successful if the court is lenient and exercises its discretion by relaxing the rule. However, on the grounds of public policy, it is highly unlikely that a court will be inclined to help a person who comes to court with “dirty hands” and this seems to be the case here. Furthermore, in light of the confiscation of the money, the possibility that any form of enrichment has fallen away is not relevant where no action lies in the fist place. (2) [max 10] 1.2 ANSWERS TO ASSIGNMENT 2 The correct answer to each of the questions below is the one that is blocked and highlighted. Brief explanations are given as to why each choice is right or wrong. Revert to the relevant part of Study Guide 1 if you still do not understand why a certain choice is the correct option. Questions 1 to 3. The following facts are relevant for questions 1 to 3. A has demanded payment from B of an amount of R50,000 which he believes B is owing. B has checked its records and has paid the amount in the bona fide belief that the amount is owing in terms of their contract. Unbeknown to B, his bookkeeper, C had already paid the amount a week earlier by way of an electronic funds transfer in to the account of A. At the time of the second payment A's account was overdrawn in the amount of R30,000 and was therefore in credit of R20,000 after the payment. A has taken R15,000 out of his account to pay his employees their monthly wages. He has also paid R10,000 for a luxury weekend after realising that his account was in credit. Answer: These questions deal with the condictio indebiti and its requirements. The claim cannot be delictual because A's misrepresentation was innocently made. The claim can also not be based on the contract, because there had already been payment which extinguished the duty to pay in terms of the contract. Evaluate further the answers against the requirements of the condictio indebiti. Here the one party made a bona fide payment that was not owing and under circumstances that were excusable, partly because the mistake was induced by A's misrepresentation. See further Study Guide 1 par 3.4, page 35ff. Question 1 Which statement best explains the nature of B’s claim against A? 1. B has a claim against A based on delict for a fraudulent misstatement. 2. B has contractual claim against A based on their contract. 3. B has an enrichment claim against A based on the condictio causa data causa non secuta. 5. B has no claim against A because he paid the amount voluntarily. 4. B has an enrichment claim against A based on the condictio indebiti. 23 Question 2 Answer: A's enrichment took place at the expense of B because B was the person who in law is regarded as the one who made the payment, even if C physically made the payment. At the time of the payment, the duty to pay had already been extinguished – the payment therefore cannot be in terms of the agreement, even if B thought so. The enrichment is not unlawful because A's conduct was not delictual in nature. The bank made payment in terms of its agreement with B and is therefore entitled to debit B's account. Accordingly, the bank was not impoverished. Consider whether all the other requirements for enrichment liability and the condictio indebiti have been complied with. See further Study Guide 1 par 3.4, page 35ff. Which statement regarding the requirements for an enrichment action is correct? 2. A has been enriched at the expense of C, who made the payment. 3. A's enrichment is not unjustified as there was a contract between A and B. 4. A's enrichment is unlawful because he made a demand for payment at a time that it was not due. 5. B has been impoverished at the expense of the bank. Question 3 Answer: A was initially enriched by an amount of R 50,000 on receipt of the money. The fact that his overdraft was extinguished does not diminish his enrichment as his debts have decreased by R 20,000. The payment of the wages also does not cause his enrichment to diminish as those are expenses he would have had in any event. The cost of the luxury holiday, however, does constitute an extinction of his enrichment, as he would probably not have made these expenses if his account had not been in credit. There is no indication on the facts provided that A should have realised that he was enriched. See further Study Guide 1 par 2.3, page 28ff and par 3.4, page 37ff. Which statement best explains the calculation of the enrichment claim? 1. B can claim an amount of R50,000 from A with an enrichment action. 2. B can only claim R20,000 from A because his account was overdrawn and the bank received the benefit of the other R30,000. 3. B can claim nothing as A has not been unjustifiably enriched at his expense. 4. B can claim only R25,000 because the rest of the enrichment amount has been spent on the wages and A's holiday. 1. A has been enriched at the expense of B. 5. B can claim only R40,000 because the rest of the enrichment amount has been lost on the luxury holiday. 24 Question 4 Answer: Have another look at the requirements for the condictio indebiti. Unlawfulness is not a requirement. For the condictio indebiti it is required that the impoverished party must have made a payment that was not owing as a result of an excusable mistake. See further Study Guide 1 par 3.4, page 35ff. In order to be successful with a claim based on the condictio indebiti, the plaintiff must prove the following fact(s) or requirement(s): 1. That the impoverished party made a payment that was not due. 2. That the enrichment was unlawful. 3. That the mistake of the impoverished party was excusable. 5. 1 and 2 and 3 are correct Question 5 Answer: In the case of countermanded cheques the appropriate action is the condictio sine causa specialis. Where a contract is terminated due to breach, the action ground is contractual and not in enrichment. Where one is dealing with illegal contracts, the appropriate action is the condictio ob turpem vel iniustam causam. In instance number 5 the correct action is the condictio sine causa. Payments under duress are specifically dealt with under the conditio indebiti. See further Study Guide 1 par 4.6, page 50ff. In which one of the following circumstances can the condictio indebiti be used? 1. Where a bank has made payment in terms of a countermanded cheque. 3. Where a contract is rescinded due to a breach of contract. 4. Where a party has made an undue payment in terms of an illegal contract. 5. Where a party has made payment which is due but where the cause for the payment later falls away. Question 6-7 The following facts are relevant for Question 6 and 7. X has concluded a contract with Y to build a tennis court at a cost of R40,000 on the property it is renting from Z in Pretoria. It can be shown that the value of the property has increased by R20,000 due to the improvement. X has disappeared before paying Y for the work done. Y now wants to lodge a claim against Z, the owner of the property. 4. 1 and 3 are correct. 2. Where a party knowingly makes a payment that is not due, but under duress and protest. 25 Answer: This case deals with indirect enrichment. Have another look at the decisions in Gouws v Jester Pools and Buzzard Electrical. In the Gouws case it was decided that Y only had a contractual claim against the lessee, X and no enrichment action against the owner, Z. Note also that Gouws would constitute a binding precedent in Pretoria. In the Buzzard Electrical case this issue was left undecided by the Appellate Division. See further Study Guide 1 par 2.2.3, page 21ff. Question 6 Which statement best explains the ground on which and the amount that Y can claim? 1. Y has an enrichment claim against Z for an amount of R40,000. 2. Y has an enrichment claim against Z for an amount of R20,000. 4. Y has an enrichment claim against Z for R40,000. 5. Y has an enrichment claim against X for R 20,000. Question 7 Which statement best explains the authority on which you based your answer in question 6? 2. In terms of the decision in Gouws v Jester Pools (Pty) Ltd 1968 3 SA 63 (T) it was held that Y has a claim against Z because Z had been enriched at his expense. 3. The decision in the Gouws case was confirmed in Buzzard Electrical v 158 Jan Smuts Avenue Investments 1996 4 SA 19 (A) 4. The decision in the Gouws case was rejected in Buzzard Electrical v 158 Jan Smuts Avenue Investments 1996 4 SA 19 (A) 5. The decision in the Gouws case was confirmed in Brooklyn House Furnishers Ltd v Knoetze & Sons 1970 3 SA 264 (A) Question 8 G has noticed that his neighbour's (H) stud bull is seriously ill. The neighbour is currently on a hiking trip in Nepal and cannot be reached. G has called out a veterinary doctor to attend to the bull and has paid all his bills as well as for the medication. The total cost was R12,000. Despite the treatment the bull has died. Which statement best explains the basis of G's possible claim against H? 3. Y has a contractual claim against X for R40,000. 1. In terms of the decision in Gouws v Jester Pools (Pty) Ltd 1968 3 SA 63 (T) it was held that Y has no claim against Z because Z had not been enriched at his expense. 26 Answer: In this case G does not have to rely on an enrichment claim, because in that case he would have no claim as the neighbour is not enriched any longer. G can rely on the real action for tending to another's property, namely the actio negotiorum gestorum contraria. In terms of this action he can reclaim all expenses reasonably made in the attempt to preserve his neighbour's property. See further Study Guide 1 par 8.1, page 76ff. 1. G has no claim against H because the bull has died and the expenses have been wasted. 2. G has an enrichment claim against H for his expenses as necessary expenses. 4. G has a claim against H in terms of the actio negotiorum gestorum utilis for R12,000. 5. G's claim against H in terms of the actio negotiorum gestorum contraria will fail because the bull died. Question 9 G has noticed that his neighbour's (H) stud bull is seriously ill. The neighbour is currently on a hiking trip in Nepal and cannot be reached. G has called out a veterinary doctor to attend to the bull and has paid all his bills as well as for the medication. The total cost was R12,000. Despite the treatment the bull has died. G is a meddlesome neighbour and H has previously warned him not to do anything on his farm under any circumstances, but rather to call K, if G should notice any problem. G did not bother to call K. Which statement best explains the basis of G's possible claim against H? Answer: In this case G cannot rely on the true actio negotiorum gestio because he has acted against the express instructions of his neighbour. He can only rely on the actio negotiorum gestorum utilis, which is a true enrichment action. Because the bull died, the neighbour is no longer enriched. See further Study Guide 1 par 8.2.2, page 79ff. 2. G has an enrichment claim against H for his expenses as necessary expenses. 3. G has a claim against H in terms of the actio negotiorum gestorum contraria for R12,000. 4. G has a claim against H in terms of the actio negotiorum gestorum utilis for R12,000. 5. G's claim against H in terms of the actio negotiorum gestorum contraria will fail because the bull died. 3. G has a claim against H in terms of the actio negotiorum gestorum contraria for R12,000. 1. G has no claim against H because the bull has died and the expenses have been wasted. 27 Question 2 Question 10 Which statement correctly explains the possession or occupation of another's property? Answer: A bona fide occupier's possession is always unlawful. A possessor always occupies as if it is the owner, not as a lessee. See further Study Guide 1 par 9.2.2, page 88ff. 1. A bona fide occupier is someone who lawfully occupies the immovable property of another person. 2. A bona fide occupier is someone who lawfully occupies the immovable property of another person as if he is the owner thereof. 3. A bona fide possessor is someone who lawfully occupies the property of another person as if he is the owner thereof.