The law reports – March 2018

March 1st, 2018
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Heinrich Schulze BLC LLB (UP) LLD (Unisa) is a professor of law at Unisa.

January 2018 (1) South African Law Reports (pp 1 – 330); [2017] 4 All South African Law Reports December (pp 605 – 927); [2018] 1 All South African Law Reports February (pp 321 – 619); 2017 (12) Butterworths Constitutional Law Reports (pp 1497 – 1605)

This column discusses judgments as and when they are published in the South African Law Reports, the All South African Law Reports and the South African Criminal Law Reports. Readers should note that some reported judgments may have been overruled or overturned on appeal or have an appeal pending against them: Readers should not rely on a judgment discussed here without checking on that possibility – Editor.

Abbreviations:

CC: Constitutional Court

FB: Free State Division, Bloemfontein

GJ: Gauteng Local Division, Johannesburg

GP: Gauteng Division, Pretoria

SCA: Supreme Court of Appeal

WCC: Western Cape Division, Cape Town

Administrative law

Administrative action in con­tract­ual context also reviewable: In Parkscape v MTO Forestry (Pty) Ltd and Another 2018 (1) SA 263 (WCC) the first respondent (MTO) concluded a lease with the second respondent, South African National Parks (SANParks). SANParks was appointed by government to man­age South Africa’s national parks. The lease allowed MTO to clear invasive plantations on the Table Mountain National Park (the park).

The applicant, Parkscape, was a non-profit organisation dedicated to the preservation of Cape Town’s urban forests.

In managing the felling of the trees, SANParks was acting in terms of a Cabinet policy decision that all plantations on Table Mountain would, over time, be felled. The lease contained a felling schedule that could be accelerated – subject to approval by SANParks – if plantations were destroyed or partially destroyed by fire. In July 2016 SANParks approved a request by MTO for the accelerated felling of trees damaged by the mountain fires of March that year.

Shortly after MTO initiated the programme, Parkscape obtained an order interdicting the felling of the so-called Dennendal compartment of trees (near the suburb of Tokai), and a rule nisi calling on MTO and SANParks to show cause why its consent to accelerated felling should not be set aside. Parkscape was particularly concerned about the resultant loss of shade in the Tokai area of the Park. Parkscape argued that the Park was a public amenity managed by SANParks under statutory authority; that the consent to accelerate felling constituted the exercise of a public power; and that public consultation was, therefore, needed before the accelerated felling could take place.

SANParks, in turn, argued that its agreement with MTO was based on contract, and consequently, concerned matters of private law. It further argued that its agreement with MTO did not involve any public power considerations

Gamble J held that SANParks had indeed exercised a public power when it agreed to the expedited felling. The decision was governmental in nature, regulated by legislation, had immediate and direct legal consequences for both MTO and Parkscape’s members, and the balance of power was in SANParks’ favour. The decision thus constituted reviewable administrative action.

SANParks had failed to discharge its responsibilities to the public and had unlawfully breached Parkscape’s right to be informed of the true state of affairs and to be heard in relation thereto. The decision fell far short of procedural fairness.

SANParks’ decision to accelerate the felling of trees was set aside and MTO was interdicted from felling any trees in the Dennendal compartment until lawful decisions to that effect were taken.

The application was thus allowed with costs.

Contract – demand guarantee

What constitutes substantial compliance: In Lombard Insurance Co Ltd v Schoeman and Others 2018 (1) SA 240 (GJ); [2018] 1 All SA 554 (GJ) Golden Sun purchased fuel on credit from Sasol. Golden Sun requested the applicant, Lombard, to issue a demand guarantee in favour of Sasol. In exchange, Golden Sun executed a counterindemnity in favour of Lombard, for which the respondents (the sureties) stood surety. The guarantee provided that Lombard had to pay the guarantee on the receipt by it (as guarantor), at Sasol’s own address, of Sasol’s (as beneficiary) written demand, which demand would state that an amount of up to R 60,5 million was then due and payable by Golden Sun (as client) to the beneficiary. Golden Sun was placed under liquidation.

Two demands for payment were made by Sasol with which Lombard duly complied.

Lombard launched the present application against the sureties for payment under the counterindemnity after unsuccessfully demanding payment from Golden Sun. The sureties opposed the claim. They argued that Sasol’s demands did not comply with the terms of the guarantee in that they did not take place at Sasol’s address; but at that of Lombard. As a result, so they argued, Lombard was under no obligation to pay Sasol under the guarantee, and therefore neither Golden Sun nor the sureties were liable to indemnify Lombard in respect of its payment.

The core issue was the degree of compliance required in the case of demand guarantees, that is, whether strict compliance was called for, or whether substantial compliance was sufficient.

Maier-Frawley AJ pointed out that the issue at stake was a question of some debate in both English and South African law.

The core issue to be determined was simply whether there was compliance with the terms of the guarantee under consideration. That involved determining what the relevant terms actually required, being a matter of interpretation, on the basis and in the manner laid down, inter alia, in Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA). More particularly, it was necessary to interpret the terms of the guarantee in their contractual context, regard being had to the commercial purpose of the particular provisions and the provisions of the guarantee as a whole, while bearing in mind the inherent features of a demand guarantee.

The essential requirement giving rise to liability under a demand guarantee was the receipt by the guarantor of a demand containing a statement confirming that a debt was due and payable by the client. That occurred in this case, notwithstanding the demand not having being made at Sasol’s address. As such, there was sufficient compliance with the terms of the Sasol guarantee, and the applicant was entitled to claim against the sureties based on the counter-indemnity.

The sureties were thus ordered to pay Lombard an amount of R 54,8 million, plus interest and costs.

Criminal law – prosecution

Decision to discontinue prosecution: The facts in Zuma v Democratic Alliance and Others 2018 (1) SA 200 (SCA); [2017] 4 SA All SA 726 (SCA) date back to 2007. Shortly after the applicant, who subsequently became the President of South Africa, Jacob Zuma, was elected president of the African National Congress (the ANC), Zuma was indicted on criminal charges including racketeering, corruption, money-laundering and fraud. The prosecuting team wanted the indictment served as soon as possible, without regard to political considerations, but the Acting National Director of Public Prosecutions at the time (the ANDPP), Mokotedi Mpshe, (on his version of events) was persuaded by Leonard McCarthy, at the time the Director of Special Operations (the DSO), to hold service over until after the ANC’s elective conference.

Suffice it to mention that the National Prosecuting Authority (NPA) later decided to discontinue the prosecution. In 2016 the High Court, on review, set aside the NPA’s decision following a rationality challenge by the first respondent, the Democratic Alliance (the DA).

In Zuma and the NPA’s consolidated applications for leave to appeal against the High Court’s decision, both the applicants conceded, shortly after the hearing commenced, that the NPA’s decision to discontinue the prosecution was flawed, in particular that it was irrational. They further conceded that Mpshe had incorrectly invoked s 179(5)(d) of the Constitution and s 22(9) of the National Prosecuting Authority Act 32 of 1998 (the NPA Act) in reviewing his own decision to prosecute, when that section only authorised him to review decisions to prosecute of other directors of public prosecution.

The crisp issues before the SCA were to assess whether these concessions by the two applicants, were correctly made and whether there were additional reasons to set aside the decision to discontinue the prosecution.

Navsa ADP held that the recordings on which Mpshe relied in justifying the decision to discontinue the prosecution, even if taken at face value, did not encroach on the propriety of the investigation of the case against Zuma or the merits of the prosecution itself. Collectively, the conversations neither showed a grand political design, nor was there any indication of clarity of thought on the part of the relevant NPA officials about how either former President Mbeki or Zuma would be decisively advantaged or disadvantaged by the service of the indictment on either side of the ANC elective conference time line.

The manner in which the affidavits were drawn and the case conducted on behalf of the NPA was inexcusable. The exclusion of the prosecution team from the final deliberations leading up to the decision to discontinue the prosecution appeared to have been deliberate, and was in itself irrational.

In reviewing his own decision to institute criminal proceedings against Zuma, and ultimately making the decision to terminate the prosecution, Mpshe wrongly invoked and relied on s 179(5)(d) of the Constitution and s 22(2)(c) of the NPA Act. These provisions deal with the review by an NDPP of a decision of a DPP and were inapplicable. Thus, the concessions on behalf of Zuma and the NPA that, on that basis, the decision to terminate the prosecution was liable to be set aside, was correctly made.

The application for leave to appeal was granted, but both appeals were dismissed with costs.

Delict

Element of unlawfulness: In Pro Tempo Akademie CC v Van der Merwe 2018 (1) SA 181 (SCA) the appellant (the defendant) was the owner of a school. It planted saplings in the school’s playground. Alongside the saplings, as supports, the defendant erected steel posts, which protruded 60 cm out of the ground. The respondent’s (the plaintiff) son, 13, during a cricket game, leaned or sat on one of these, and was impaled, injuring his rectum and bladder.

The plaintiff successfully sued for her son’s damages. The defendant appealed to the SCA. The issue was whether the defendant’s action in erecting the steel posts was wrongful.

Navsa ADP held that it was indeed wrongful. In this regard it pointed out that the action was positive, and resulted in physical injury. The defendant created the danger.

In Transvaal Provincial Administration v Coley 1925 AD 24 the Appellate Division had recognised a duty to prevent danger on similar facts. In the Coley case the defendant erected wooden stakes to protect trees in an area where children usually played. A girl fell on one of the sticks which resulted in her eye having to be removed. The court in that case held that ‘a prudent and careful man, who gave his mind to the matter as such a person would naturally do, should have foreseen that the sticks with such sharp projections in [an area] where children would naturally play, were a source of danger to very young children and sooner or later might result in injury.’ The court had regard to the notorious fact that children, by nature, are impulsive.

In the Pro Tempo case the court further held that teachers were under a duty to prevent harm to children in their care and children had a constitutional right to appropriate care when removed from their families.

It concluded that the defendant, which was a school for children with learning disabilities, knew of the plaintiff’s son’s hyperactivity. It failed to take steps to prevent foreseeable harm to children using the playground.

The appeal was thus dismissed with costs.

 

Liability for omission: In Van Vuuren v Ethekwini Municipality 2018 (1) SA 189 (SCA) the appellant’s (the plaintiff) eight year old son, John, used a water slide in one of the respondent municipality’s (the defendant in the court a quo) pools at the beachfront in Durban. While John was sliding, he was pushed or bumped by a child sliding behind him, causing him to lose his balance at the slide’s exit. As a result, John bumped his face on the bottom of the pool. His alleged injuries included a fracture of his jaw and loss of teeth that required surgical intervention.

At the time, there was no municipal official controlling access to the slide or supervising its use. The slide itself was restricted for the use of under-12s, with a municipal bylaw making it an offence for anyone above that age to enter or use it.

The plaintiff sued the defendant for her and John’s damages, but her action was dismissed by the High Court. On appeal to the SCA, the crisp issues were whether the defendant’s failure to control access to and to supervise the slide was wrongful.

Navsa ADP pointed out that the defendant created the risk of harm by providing the pool and slide. It was common cause that any potential users of the slide would be immature and undisciplined. Public policy required the prevention of chaotic use of the slide, such as pushing, sliding in groups or intentional colliding with other users.

In considering the defendant’s potential liability, the court considered the constitutional norm of the best interests of children.

The court reasoned that the imposition of a duty of care would not result in ‘an abdication of parental control’ or ‘an intolerable financial burden’. It would further also not extend to all facilities controlled by the defendant.

The court concluded that the defendant’s omission was negligent and it was, therefore, held liable for any damage the plaintiff could prove were owed to her or John.

The appeal was upheld with costs.

 

No delictual remedy for procedurally unfair debarment under PAJA: In Odinfin (Pty) Ltd v Reynecke 2018 (1) SA 153 (SCA) the appellant (the defendant in the court a quo) Odinfin, was an authorised financial services provider (FSP) in terms of the Financial Advisory and Intermediary Services Act 37 of 2002 (the FAIS Act).

While the respondent (the plaintiff in the court a quo) Reynecke, was still employed by Odinfin, he attended an induction programme with Nedbank with whom he was seeking employment. Reynecke failed to disclose this to Odinfin. When the true facts came to Odinfin’s knowledge, it initiated disciplinary proceedings against Reynecke. The alleged misconduct by Reynecke was dishonesty and/or competing with employer and/or conflict of interest.

Reynecke gave written notice of termination of his employment and did not attend the disciplinary hearing. He was found guilty of misconduct and, without notice, he was debarred by Odinfin in terms of s 14(1) of the FAIS Act.

This caused Reynecke’s then employer, Nedbank, to dismiss him. Reynecke later obtained the review and setting-aside of the debarment, an administrative action, on the ground that Odinfin had failed to give him notice and a hearing before doing so.

Reynecke then instituted a delictual action for damages, alleging Odinfin was obliged to give him notice and a hearing, before disbarring him. The High Court upheld his claim. On appeal to the SCA, the issue was whether non-compliance with s 3 of the Promotion of Administrative Justice Act 3 of 2000 (PAJA) was delictually wrongful.

On appeal, Tsoka AJA held that the answer to the present dispute turns not on the provisions of the FAIS Act, but on the provisions of PAJA itself. There is nothing in PAJA to suggest that the Legislature intended there to be a delictual remedy for non-compliance with its provisions in general or its provisions relating to procedural fairness in particular.

On the contrary, PAJA deals with at some length with the rights of an aggrieved person affected by unfair administrative action, namely judicial review in terms of s 6 and the remedies provided for in s 8. Here Reynecke exercised his right of judicial review and obtained an order setting aside Odinfin’s procedurally unfair action.

The fact that PAJA does not afford a delictual remedy for damages does not necessarily mean that unjust administrative action will not be delictually wrongful if there was a breach of the statute pursuant to which the administrative action was taken and if such statute on a proper interpretation confers a delictually remedy.

Reynecke did not allege that there was a breach of the FAIS Act. And even if there had been a breach of s 14 of the FAIS Act, it (the FAIS Act) does not envisage a delictual claim for damages. The primary aim of s 14 is not to protect the interests of employed representatives such as Reynecke, but to advance the public good.

The imposition of liability for damages would have a ‘chilling effect’ on the performance by FSP’s of their statutory duty imposed by s 14 and on the administration of the FAIS Act.

Where the decision-maker (here: Odinfin) has acted dishonestly or corruptly, the court will impose liability. However, courts are slow to find that statutes accord delictual remedies for mere negligence in performing an administrative duty.

The appeal was thus upheld with costs.

Financial services

Effect of disbarment of a financial advisor by the employer FSB: In Financial Services Board v Barthram and Another 2018 (1) SA 139 (SCA) the respondent, Barthram, was employed by Discovery. After Barthram purported to terminate his employment with Discovery and joined the employ of Old Mutual, Discovery found evidence, which prompted it to notify the Financial Services Board (the FSB) that Barthram ‘did not comply with the requirements of the FAIS [Financial Advisory and Intermediary Services Act 37 of 2002 (the FAIS Act)] for continued appointment as a representative of [Discovery]’. In its notice to the FSB, Discovery marked with an ‘X’ the block labelled ‘honesty and integrity’ as the reason for the withdrawal of Barthram’s authority to act.

Barthram successfully lodged an urgent application for an interim order to have his debarment lifted. In subsequent review proceedings the court a quo dismissed Barthram’s application. It further held that a distinction should be drawn between what is contained in s 14(1) and 14A of the FAIS Act. The court a quo held that the effect of s 14(1) is that the debarred representative ‘can no longer represent that particular financial services provider’. The effect of a debarment in terms of s 14A, in turn, precludes the debarred representative from rendering financial services on behalf of any FSP.

On appeal to the SCA the Registrar for Financial Service Providers (the Registrar), contended that the High Court erred in its finding that the effect of a debarment of Barthram by Discovery in terms of s 14(1) was that he was only precluded from rendering financial services to the public on behalf of the latter. Barthram, in turn, appealed against the dismissal of his application to have his debarment lifted.

Ponnan JA held that the FAIS Act requires an authorised FSP such as Discovery not just to be authorised and licensed by the Registrar, but also to exercise oversight in respect of the initial and continuing fitness of its chosen representatives.

The FSP, having gone through a vetting process at the hand of the Registrar, is eminently suited to subject its representatives to a similar initial vetting and thereafter to exercise oversight of them. A debarment of a representative in terms of s 14(1) is complete when the FSP has withdrawn the representative’s authority to act on its behalf and has removed such person’s name from its own register in terms of s 13(3).

The court held that the court a quo has misinterpreted the legal effect of a debarment in terms of s 14(1) in holding that it precludes the representative only in respect of the debarring FSP. A representative that no longer has the fitness and propriety or competency requirements poses a risk to the investing public generally. A representative who is debarred in terms of s 14(1) is thus debarred on an industry-wide basis from rendering financial services to the investing public.

However, so the SCA reasoned, Discovery failed to follow the principles of procedural fairness required in reaching its decision to debar Barthram. Discovery had failed to honour the audi alteram partem rule during a meeting between Barthram and two Discovery employees. Barthram was not afforded the opportunity to represent himself or to present his case.

Barthram’s debarment was therefore invalid and the appeal was dismissed with costs.

 

Implied/express duty on service provider to exercise reasonable skill and care: The facts in Oosthuizen v Castro (Centriq Insurance Co Ltd as Third Party) [2017] 4 All SA 876 (FB) were as follows: Castro (the defendant) was a financial services provider (FSP). Oosthuizen’s (the plaintiff) husband passed away and she inherited an amount of money. She decided to invest an amount of R 2 million of the money, and requested the defendant to advise her in that regard. The defendant advised her to invest the money in the Sharemax investment scheme. It is trite that she lost the capital amount of her investment.

The plaintiff sued the defendant for damages. She alleged that the defendant had failed to act honestly and fairly in her interests in recommending the Sharemax investment scheme. She alleged further that the defendant had failed to exercise the degree of skill, care and diligence to be expected of an authorised financial services adviser furnishing investment advice.

The defendant, in turn, claimed indemnity from the third party insurer (the insurer). The insurer, however, denied its liability under the policy, because, so it argued, the defendant’s behaviour fell into the insurance policy’s exclusion clause.

The exclusion clause provided that the insurer ‘shall not indemnify [the defendant in respect of] any loss arising out or any claim made against them … arising from or contributed by depreciation (or failure to appreciate) in value of any investments … or as a result of any actual or alleged representation … provided by the [defendant] as to the performance of … such investments’.

As a result, the court dealt in detail with the question of what exactly Castro did, and what exactly was excluded from cover in the insurance policy.

Daffue J listed the following aspects which required his consideration: First, the duties of a financial advisor or broker such as the defendant; and, secondly, the rules of construction of contracts in general and insurance contracts in particular.

In dealing with the first aspect, the court referred to extensive authority on the subject of the duties of a FSP. Generally, a provider of financial services will be under an implied if not express contractual duty to exercise reasonable care and skill in carrying out the services required of him. The standard of care and skill will be, at least in most respects, that to be expected of a like provider engaged to provide the relevant services.

The court pointed out that the defendant was aware that the plaintiff was in a vulnerable position and was anxious about not losing any of her investment. There were sufficient red flags around the investment scheme to require that he proceed with caution in advising the plaintiff. His poor advice was indicative of lack of skill, care and diligence and was not commensurate with the exorbitant commission received by the defendant.

With regard to the second aspect, namely that of the third party action against the insurer, the court held that the insurer had placed too much emphasis on the wording of the exclusion clause and in doing so, disregarded the purpose of the insurance contract entered into between defendant and the insurer. The insurer had undertaken to indemnify the defendant against losses arising out of any legal liability arising from claims first made against the defendant and reported during the period of insurance for breach of duty in connection with his business by reason of any negligent act, error, or omission, committed in the conduct of the defendant’s business. The exclusion clause had to be interpreted restrictively so that it made business sense in the eyes of both insurer and insured.

The defendant was ordered to pay the plaintiff the capital amount of R 2 million and interest as set out in the court order. The third party was ordered to indemnify the defendant against the defendant’s liability to plaintiff, subject to the limitations referred to above.

 

Nature of proceedings before Enforcement Committee: In Pather and Another v Financial Services Board and Others 2018 (1) SA 161 (SCA); [2017] 4 All SA 666 (SCA) the court was asked to consider the nature of proceedings before the Financial Services Board’s (FSB) Enforcement Committee (EC). The facts were that the Directorate of Market Abuse (the DMA) conducted an investigation in terms of s 83(1) of the Securities Services Act 36 of 2004 (the Act) into the two appellants. The first appellant, Pather, was the Chief Executive Officer of the second appellant, Ah-Vest Ltd.

The DMA investigation concluded that the two appellants contravened s 76 of the Act. The matter was referred to the EC of the FSB where ‘it was established on a balance of probability that Pather authorised the manipulations’ of [the second appellant’s] books. The EC imposed various administrative penalties in the amount of R 3 million on the two appellants.

The two appellants lodged a review application with the GP. They argued that the EC had incorrectly applied the civil standard of proof and that the EC should have applied the criminal standard of proof (that is, ‘beyond reasonable doubt’). Their application was dismissed.

On appeal to the SCA, Ponnan JA held that the powers of the EC and the Appeal Board are limited to the imposition of a monetary penalty. In proceedings before the EC, neither the police nor the prosecutorial authority is involved. That the facts underpinning the complaint can as well give rise to a criminal offence does not alter the nature of the complaint before the EC.

In proceedings before the EC, there is no formal accusation of a breach of the criminal law. The proceedings are initiated by way of a complaint by the DMA to the EC, not a criminal charge. The proceedings before the EC do not lie within the criminal sphere and cannot be classified as being criminal in nature.

Section 104 of the Act provides that ‘if a panel is satisfied that a respondent has contravened or failed to comply with the Act’, it must impose an ‘administrative penalty’. The civil standard of proof thus applies to proceedings before the EC. However, the civil standard of proof does not necessarily mean a bare balance of probability. The more serious the allegation, or the more serious the consequences if the allegation is proved, the stronger must be the evidence before we should find the allegation proved on the balance of probabilities.

Finally, the court confirmed that the constitutional protection to ensure that administrative decisions may be reviewed in a court on grounds of unlawfulness, procedural unfairness or unreasonableness, is regulated in terms of s 33 of the Promotion of Administrative Justice Act 3 of 2000, and not in terms of s 35(3) of the Constitution.

The appeal was thus dismissed with costs.

Prescription

Date on which debt becomes due: In Trinity Asset Management (Pty) Ltd v Grindstone Investments 132 (Pty) Ltd 2018 (1) SA 94 (CC); 2017 (12) BCLR 1562 (CC) the facts were as follows: On 1 September 2007 the respondent, Grindstone, borrowed an approximate R 3,05 million from the appellant, Trinity. The loan capital was immediately claimable from Grindstone, but it was a term of the agreement that it would only become payable once Grindstone had received the written demand and the notice period has expired.

Clause 2.3 of the agreement provided that: ‘The Loan Capital shall be due and payable to the Lender within 30 days from the date of delivery of the Lender’s written demand’.

On 19 September 2013 Trinity enquired from Grindstone when the latter would pay the outstanding debt. On 9 December 2013, Trinity, by service of the sheriff, delivered a letter of demand on Grindstone. No payment was forthcoming. Instead, Grindstone denied liability on the basis that the debt had prescribed.

In the WCC, Trinity applied for a provisional order of liquidation of Grindstone. The High Court held that the debt of Grindstone had been extinguished by prescription and, by reason thereof, dismissed Trinity’s application.

In a split decision, the SCA confirmed the High Court’s decision that the clause in question did not contain a clear indication that prescription would be postponed.

On appeal to the CC the case was decided by majority decision of six to five, mainly on the interpretation of the relevant clause and not the applicable principles. The minority decision relied heavily on the reasoning by the minority in the SCA on the interpretation of clause 2.3 of the agreement.

The majority per Cameron J held that prescription started on the day that the loan was advanced and the parties’ written agreement did not postpone it. The minority judgment placed undue significance on the term ‘due’ in the clause in deciding whether the parties intended to postpone prescription.

The court referred to a long line of earlier SCA decisions in which the court had interpreted the meaning of ‘due’ in s 12(1) of the Prescription Act 68 of 1969. On the basis of these decisions the court held that the concept of ‘due’ means that ‘there has to be a debt immediately claimable by the creditor or, stated in another way, there has to be a debt in respect of which the debtor is under an obligation to perform immediately’. Thus, prescription cannot begin to run against a creditor before his cause of action is fully accrued.

A loan payable on demand is thus due immediately on conclusion of the contract unless there is a clear contrary agreement between the parties that it will become due at a later stage. The fact that payment was due 30 days after demand makes no difference to the fact that the debt is due immediately for purposes of the Prescription Act. The creditor has the exclusive power to demand that performance be made any time after the agreement.

In the present agreement, the word ‘due’ was used in different contexts and it clearly indicated that the parties had no intention to postpone prescription.

Ultimately, it is a question of fact whether the parties intended demand to be a condition precedent for the debt to be ‘due’. Each case has to be decided on its own fact.

The appeal was accordingly dismissed with costs.

Unjust enrichment – payment made in error

Prove of excusability of error not always a requirement: In Yarona Healthcare Network (Pty) Ltd v Medshield Medical Scheme [2017] 4 All SA 705 (SCA) the respondent, Medshield, was a medical scheme registered in terms of the Medical Schemes Act 131 of 1998 (the Act). It sued the appellant, Yarona, for payments allegedly made in the bona fide and reasonable, but mistaken belief that they were owing. It was averred that Yarona was unjustifiably enriched by the payments and Medshield correspondingly impoverished. Medshield’s relied on the condictio indebiti.

Rogers AJA held that it is not every mistake which entitles the mistaken party to recover payment. The onus rests on the claimant to prove the excusability of the error. Having regard to each of the payments made to Yarona, the court found that other than for one of the payments, it could not be said that they were excusable.

Faced with that reality, Medshield argued that the requirement of excusability should be relaxed in the case of medical schemes. The court dismissed Medshield’s argument. Healthcare is a matter of fundamental importance to everyone. Medical schemes provide a way of ensuring as far as possible that people have access to adequate healthcare. Members of medical schemes are particularly vulnerable to abuse. Many of them earn modestly. If the funds which should be administered for their benefit are abused, they stand not only to lose moneys deducted from their earnings but to have their access to health care jeopardised. The persons charged with the administration of the scheme can be viewed as representatives standing in a similar position to executors, trustees and liquidators. In that light, although Medshield had failed, in respect of all but one of the payments, to prove that such payments were made as a result of excusable error, its right to recover them by way of the condictio indebiti was not barred.

Yarona, in turn, contended that Medshield was required to prove not only that Yarona was enriched by the amounts claimed but also that such enrichment occurred at Medshield’s expense, that is, that Medshield was impoverished by the amounts claimed. Since Yarona received unowed moneys, its enrichment was presumed and it bore the onus to plead and prove loss of enrichment, which it did not do. It argued however, that Medshield failed to prove its impoverishment, as it had benefited from the services rendered by Yarona.

The court rejected Yarona’s argument. It held that whenever a mistaken payment was made, Medshield was impoverished by the relevant amount. For Yarona to seek to rely on any enrichment caused by its having rendered services to Medshield, it should have instituted a condictio against Medshield by way of a counterclaim.

The appeal was thus dismissed with costs.

Other cases

Apart from the cases and topics that were discussed or referred to above, the material under review also contained cases dealing with: Administrative law, civil procedure, company law, contempt of court, criminal law, environment, funding of political parties, immigration, labour law, mineral law, personal injury and privacy and dignity.

This article was first published in De Rebus in 2018 (March) DR 36.

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