PVL 3704 ENRICHMENT LIABILITY AND ESTOPPEL 2020

SECTION B QUESTION 1 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 COOMON-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) Common law: no definition is wide enough for a general enrichment action. In Nortje en ‘n Ander v Pool 1966 the Appellate Division held that no general enrichment action existed in South African law except the existence of ad hoc extensions. By this the court meant that a general enrichment action could be developed over time but at that moment it was non-existent. In Kommissaris van Binnelandse v Willers en Andere 1994 the court did not confirm the existence of the general enrichment action that the piecemeal extensions from different decisions had accumulated. There the court emphasised that the acceptance of a general action may not be as important as was thought save that the denial may lead to occasional individual injustices. Thus, in the McCarthy case it was the court’s view that the collection of old causes from case to case resulted in the unified development of a general rule. The decision that’s changed the half a century decision that had dismissed the existence of a general enrichment action in South Africa. Blesbock case: in Roman law there was already a general doctrine against unjustified enrichment and that the time has come to recognise a general enrichment action – but this doesn’t overrule Nortjie case. Question 2 C has paid D R30 000 by cheque. A day later C instructs her bank E to countermand (stop) the cheque. Despite the countermand, E bank pays out the cheque to D when he presented the cheque and debited C’s account. C wants the debit reversed. Advise C and E about the validity of the debit and whether either of them has an enrichment claim against D. Refer to relevant case law. [10] The above scenario refers to the conditio sine causa specilis. The conditio sine causa specilis was used to set aside a stipulatio entered into without a iusta causa. Thus, where property was transferred in ownership on the ground of an existing causa and the causa later fell away the goods could be recovered with the conditio sine causa specilis. although in both cases of Govender v Standard Bank and B & H v First National Bank the court could not with succinctly formulate the scope within it can be used in South African law, it may be used under four circumstances. These are; i) Where a party performs and performance was due at the time it was made, but where the causa for the performance has fallen away. ii) Where the plaintiff’s property was alienated or consumed by somebody else. iii) Where a bank has made payment or countermanded or forged cheque. 47 iv) Where ownership of property has been transferred sine causa to the other party, but circumstances are such that none of the conditiones sine causa would lie. C can therefore has a valid enrichment claim either against E bank or the recipient of the value D. E bank also has a valid enrichment claim against D the recipient of value. Question 3 Discuss with reference to case law the actio negotiorum gestorum utilis. [10] The actio negotiorum gestorum utilis is also known as the extended management of affairs action. This enrichment action is available where the actio negotiorum contractria is not available. The exceptional circumstances where its used are; 1. The liability of a minor – where the gestor has managed the affairs of a minor. In Pretorius v Van Zyl, it was held that the minor is liable only to the extent of his enrichment. 2. The gestor acts against the prohibition – in Colonial Government v Smith the plaintiff removed explosives from the defendant’s storeroom and stored them in a safer place. The plaintiff claimed expenses incurred in connection with the storage despite protests from the defendant. The court granted the claim on the ground of unjustified enrichment of the defendant in the form of expenses saved. 3. The gestor who bona fide administers the affairs of another, thinking he is acting in his own interests. Performance by the gestor who thinks is acting in own interest enriches the defendant. In Klug and Klug v Perkin the claim was successfully litigated. 4. The gestor who mala fide acts in his own interest. – in Shaw v Kirby the plaintiff without instruction and with intention of benefitting himself, discharged certain of a debtor’s debts. Later he claimed these expenses. The court refused to grant the claim. In Van Staden X who had bought a plot from Y and paid the purchase price. The land was not yet registered in X’s name and Y’s creditors threatened to sell the land, X fearing the land would be sold paid the creditors and later claimed from Y. The court held that X’s claim could not succeed since they was no mandate in terms of which he had paid. However, in Odendaal v Van Oudtshoorn an exception was granted. (discussion page 89) Question 4 Write a critical discussion on whether patrimonial loss is a requirement in the South African law of estoppel with reference to relevant case law. [10] Basically, they are two schools of thought when it comes to the issue of patrimonial loss as a requirement for the South African law of estoppel. It was averred that the patrimonial position in which the estoppel-asserter finds himself or herself at the moment of litis contestatio must be compared with the hypothetical patrimonial position in which he or she would have been (at the moment of litis contestatio) had no false belief been created. There is prejudice if the former is at all less advantageous than the latter. DE Wet avers that the prejudice suffered must be patrimonial 48 loss. This was confirmed in Jonker v Boland Bank Pks Bpk 2000 where it was held that the type of prejudice which underlies a successful invocation of estoppel is patrimonial in nature. On the other hand, in Peri-Urban Areas Health Board v Breet NO Trollip JA discussed the concept of prejudice widely as a requirement for a successful plea of estoppel. In that case the court pointed out that the concept of prejudice encompassed detrimental action that may affect patrimonial loss or the detrimental changing of legal position. The party relying on the principle must show some kind of prejudice, even of the minimum kind just mentioned. It would appear from this approach that the requirement for prejudice is fulfilled if the estoppel-asserter proves only that he or she has changed his or her legal position by entering into a contract or what appeared to be a contract, without having to prove that he or she has incurred expense, or that he or she would have ensured that the contract was valid or that he or she could profitably have contracted elsewhere, and so on. If this is correct, it appears that prejudice simply refers to a change in a person's legal position, provided the estoppel-asserter does not or would not find himself or herself in a better position than that in which he or she would have been had the impression not been created. Incurring a debt or liability or losing a right or claim as such, without any prejudicial financial implications, will be accepted as sufficient prejudice for a successful plea of estoppel. In Mthanti v Netherlands Insurance Co the court was of the opinion that it was unnecessary to decide whether mere loss of time in the form of a delay relating to the precise time at which a case served before the court qualifies as prejudice for estoppel De Walt also pointed out that in the current state of our law no clarity exists about the content of the prejudice requirement for fraud and estoppel besides certain general tendencies included in the concept of prejudice. Question 5 Discuss the negligence requirement for a successful plea of estoppel in South African case law. [10] Test for negligence: if a reasonable person in the position of the deceiver (estoppel- denier) would have foreseen loss or prejudice to the deceived (estoppel-asserter) and would have taken steps to prevent the loss, and if the deceiver either did not foresee loss or did not take the necessary steps to prevent it, the deceiver is negligent. The negligence requirement in SA case law: Williams: The owner of a building found a purchaser for the building, but the prospective purchaser refused to buy it while it was still being leased. The lessee, thinking that his lease was due to expire on a particular day, wrote a letter to the owner expressing his intention of vacating the property by a certain date. The letter was shown by the owner to the prospective purchaser who, on the strength of it, concluded the purchase. The lessee discovered that he had made a mistake and notified the new owner of the fact. The owner applied for his eviction. The court found that the lessee was not entitled to rely on the lease: “defendant had been guilty of culpable negligence in not ascertaining the terms of his lease before signing the letter”. The lessee was negligent in not looking at his lease, and made his misrepresentation, therefore the new owner could rely on estoppel The Appeal Court has required culpa on the part of the estoppel- denier as an essential element for a successful plea of estoppel raised as a defence against the rei vindicatio of the owner of the thing claimed. 49 In Grosvenor, the judge stated that in the case of rei vindicatio there should be at least negligence on the part of the estoppel-denier. K was introduced to the respondent by P as a possible purchaser of the respondent’s motorcar. K decided to buy the motorcar but stated that he did not have his chequebook with him, having left it in Welkom. Arrangements were made for P to accompany K to Welkom and there to give K possession of the motor car as against delivery of the cheque. The respondent had lost the motor car’s license papers he gave K, a written document to explain his possession of the motor car in the event of any enquiries. The document, signed by the respondent, contained the statement that the respondent had sold the motorcar to K. The respondent carried out his side of the contract, but K’s cheque was dishonoured. K had sold the car to the appellant. The appellant pleaded estoppel against the rei vindicatio of the respondent. The Supreme Court and AD rejected this plea of estoppel. The judge held that culpa on the part of the estoppel-denier was required before the estoppel- asserter could succeed. To establish the defence of estoppel the appellant, apart from the facts in dispute, had to prove that negligence on the part of the respondent caused him to be misled into the erroneous belief that K had the right to dispose of the car. Where the plaintiff’s claim was based on the rei vindicatio. In Johaandien: J wanted to buy a motorcar from F but wished to obtain some evidence of F’ alleged ownership. F referred J to the Stanley Porter garage. In answer to J’s inquiry, the representative of the garage informed J that F had bought the motorcar under a hire-purchase agreement, that he had paid the last instalment and that the garage consequently had no further right to the car. J bought the motorcar from F. At a later stage it claimed the motorcar from J by means of the rei vindicatio. J raised estoppel on the ground of the information supplied to him by Stanley Porter. His raising of estoppel did not succeed since he could not prove negligence on the part of the garage. Majority of the AD decided that negligence as laid down in the Grosvenor case was a requirement for estoppel where it was raised as a defence against the owner’s rei vindicatio. It was required that a reasonable person in the position of the plaintiff (Stanley Porter, the estoppel-denier) should have realised that the information with which he provided the defendant (Johaandien – estoppel- asserter) was untrue or possibly untrue. In the absence of such realisation there could be no question of negligence. The defendant did not allege that the plaintiff was negligent. He submitted that it was sufficient for a successful invocation of estoppel if the party who created the impression had simply foreseen that the third party would act on the ground of his representation, and not that he was also aware of the untruthfulness of his representation. The judge rejected this argument, holding that estoppel could not succeed in the absence of proof of negligence, and that the defendant should hand over the motorcar to the plaintiff, the true owner. Minority judgement held that negligence in these particular circumstances was not a requirement, and that the defence of estoppel should be upheld. “If the misrepresentation was of such a nature that a prospective buyer could reasonably be expected to be led by the representation to buy without enquiring about the ownership of the thing, the buyer who is moved by such a misrepresentation, should be protected. • Relying on the Grosvenor case, the majority of the court said: that only when the owner makes a culpable misrepresentation will his rei vindicatio be repudiable by estoppel.