Unit 1 – General Overview

Question 1

Define the term “Enrichment”.`

Answer 1

The term enrichment is used to describe the situation which occurs when one person’s estate is increased unjustifiably at the expense of another. The term unjustified is used to indicate that the enrichment occurred without justification or any legal basis.

Question 2

Explain why UE is regarded as the third important source of obligations in SA law.

Answer 2

The law of obligations is concerned with the relationship between debtors and creditors. The 3 main sources of obligations in law consist of Contract law (where obligations are created by agreement), Law of Delict (where obligations arise by force of law upon damage or personal injury being caused by an unlawful action), and law of Unjustified Enrichment (where obligations arise in a number of different situations which fall neither under contract or delict.

Question 3

Describe the need for UE law

Answer 3

There are cases in which one person obtains assets belonging to another person in circumstances where there are no grounds for the transfer of such assets and where there is nothing to justify their retention by the receiver. In the past, there were no grounds in terms of Contract law or law of Delict in order to rectify this matter. UE is there to set the matter right.

Example 1: In accordance with the rules relating to accessio anything affixed to the land becomes part of the land and consequently the property of the owner of the land. This means that should the bona fide possessor of a farm build a house and outbuildings on that farm, all the buildings become the property of the owner of the farm and such owner is entitled to eject the bona fide possessor at any time leaving the occupier out of pocket and the owner with a property which is worth more than it had been before the improvements. There is no legal reason (no contract or delict) for the enrichment of the owner’s estate and the impoverishment of that of the occupier that would justify the retention of the enrichment by the owner. Unjustified enrichment liability is aimed at redressing this type of situation.

Example 2: all that is necessary for the transfer of ownership is delivery of a thing (res) with the intention on the part of the transferor to transfer ownership, and the intention on the part of the transferee to become the owner. This could result in, for example, a seller’s transferring ownership of the merx to the buyer in the genuine belief that the contract of sale was valid and only later learning that the contract was void and that he or she has no action for the purchase price against the buyer. Again the one party has benefited by the transfer of the property when there was no legal reason for such transfer.

It would be unfair in these examples to leave the bona fide possessor and the seller without a remedy. This would mean that they would be impoverished through no fault of their own and that the owner and the buyer would be enriched without any good cause, hence the necessity for liability on the ground of unjustified enrichment.

Question 4

Explain the sources of SA Enrichment law and the importance of the historical context of the actions in modern law

Answer 4

• Roman law texts
  a) Nam hoc natura aequum est neminem cum alterius detriment fieri locupletiorem (Because it is according to natural equity that nobody should be enriched at the expense of another)
  b) Iure naturae aequum est neminem cum alterius detriment et inuiria fieri locupletiorem (It is according to the equity of natural law that nobody should profit at the cost of another)
• It can be seen here that broadly stated all forms of profit were prohibited. Therefore there was no general liability for enrichment in Roman law. Relief was only granted in some specific circumstances.
• The enrichment actions of Roman law were received into RD law where they were developed and extended. By the 18th century a general enrichment action had become available.
• The enrichment actions of classical RD law are still available to a plaintiff in SA law. The SA courts have also recognised liability for enrichment in a number of circumstances where none of the old actions was applicable, thereby extending the scope of UE liability in SA law.
• By 1996 it was concluded that a general subsidiary enrichment action had developed in SA law which would lie in any case of UE where none of the old actions would lie.

Question 5

Name and explain the requirements for the use of an enrichment action

Answer 5

1. The defendant was enriched:
   - There must be an increase in assets
   - There was no decrease when one would have occurred
   - There is a decrease in liability which would not have occurred
   Compare the financial position at the time to the financial position he would have been in had the
   enrichment not occurred.
   • Nortjie: plaintiff found clay on the defendant’s farm = Q: did the clay enhance the
   value? Judge said that it was the presence of the clay which determined the value of
   the property = NO ENRICHMENT – BUT could be argued that knowledge of the clay is
   what enhanced its value in this case.
   • Foggit: typing lessons = moral enrichment. UNISA: enrichment means an increase of
   your estate and moral benefits shouldn’t be included.
2. The plaintiff must be impoverished:
   Amount: look at the difference between the enrichment and the impoverishment and claim the
   lesser amount. All favourable and detrimental side effects are taken into account.
3. The enrichment must have been at the expense of the plaintiff:
   There must be a CAUSAL LINK between the enrichment and the impoverishment.
   • Jester Pools: A built a pool for B in terms of a contract, the pool was built on C’s land
   – B didn’t pay. A brought an enrichment action against C. Held: C had been enriched
   at B’s expense and not A’s = No enrichment.
   • Van der Walt: C was in fact enriched at A’s expense and A’s action should have
   succeeded.
   • Buzzard Electrical: the court distinguished between 2 positions:
   a) A improves the property of the owner with no contract and A sues the owner (Jester).
   b) Owner contractors with B to improve his property and B sub contracts to A – A sues owner
   for enrichment.
   Briefly discuss the sine causa requirement for enrichment liability. (5)
4. Enrichment must have been sine causa:
   No one should be allowed to make a profit at the expense of another = must be no legal ground.
   • Van der Walt: there must be no obligation between the enriched and impoverished
   person.
   • De Vos: enrichment is unjustified where there is no legal ground for the transfer of value from one estate to another.
   • Buzzard – the owner of the property contracted with a developer to make improvements to his property and the developer then sub contracted the job, the subcontractor instituted action against the owner for undue enrichment. Held: the enrichment of the owner was unjustified, but the sub contractor should enforce his rights against the developer.
   • Singh: Santam paid for repairs done to a damaged vehicle even though the premiums weren’t up to date, Santam cancelled the policy after payment to the panel beater = enrichment wasn’t sine causa.