Redundant or relevant? The law of unjustified enrichment

April 1st, 2015

By Nokubonga Fakude

Unjustified enrichment and the action of the unauthorised administrator are legal principles that have become redundant in our law, as opposed to legal doctrines capable of survival.

In this article, I will discuss:

• How unjustified enrichment, for practical purposes, should not be recognised as an independent cause of action, separate from the law of contract and the law delict and, in certain circumstances, criminal law and property law.

• The Roman Dutch Condictiones as infiltrated into our law of unjustified enrichment, in light of the fact that there is no general enrichment action recognised in our law.

• Why the actio negotiorum gestio (action of the unauthorised administrator) has no place in South African law.

Justice is a concept of moral rightness based on rationality and fairness. Its aim is to balance the interests of individuals and provide restitution where necessary. Aristotle makes a distinction between distributive justice and cumulative justice. Distributive justice assigns wealth and benefits to individuals, it is then left to cumulative justice to remedy any interference with such fair distribution of wealth. Therefore, breach of contract, delict, crime and ‘unjustified enrichment’ are interferences sought to be remedied through cumulative justice.

Unjustified enrichment

Unjustified enrichment is where one person receives a benefit or value from another at the expense of the latter without any legal cause for such receipt or retention of the value or benefit by the former. Therefore the elements that should be present before liability can be found under unjustified enrichment are –

• enrichment of the defendant;

• impoverishment of the plaintiff;

• a connection between such enrichment and impoverishment;

• no legal justification for such enrichment and impoverishment; and

• ‘absence of any other remedy in law’.

With reference to the averments of Ernest J Weinrib in his book Corrective Justice (Oxford: Oxford University Press 2012) at 11, the transfer of value or a benefit under unjustified enrichment with regard to the enrichment and expense requirement, establishes the required relationship between the transferor and transferee (ie, enrichment has been moved from the plaintiff to the defendant). These requirements are dependent on each other in order to establish liability and are structured by immediacy in the ambit of liability; immediacy in the transfer and in the relationship between the parties involved, preventing liability from being too remote or too restrictive. It is on this remoteness that I submit that liability under unjustified enrichment is not a clear and practical cause of action.

The condictio indebiti

This action applies in the case of payments made under duress and payments or transfers made erroneously. The requirements for this action are –

• transfer must have taken place;

• transfer must have taken place without any legal obligation for the transfer;

• transfer was made in the belief that the transfer was due, or it must have been made under duress or by a person of limited legal capacity;

• this action is only available against the recipient of value or transfer only and no one else.

In my opinion, this action is not necessary in our law. Any person who attains and retains value in the manner set out above should be guilty of the criminal offences of intimidation and theft. Intimidation is defined in s 1(1)(a) – (b) of the Intimidation Act 72 of 1982, as amended, and includes acts of unlawfully compelling or inducing any person of a particular nature, class, kind or persons in general to do or abstain from doing any act or to assume or to abandon a particular stand point. Theft consists of unlawfully appropriating moveable corporeal property belonging to another with the intent to deprive the owner permanently of the property. Therefore, the rules of criminal law should apply in the recovery of the property or value in question.

The condictio causa data causa non secuta

This action is used where property has been transferred and the purpose of the transfer has fallen away. This occurs in instances where the transfer was subject to a modus and then the modus is later disregarded. Alternatively, where transfer took place on the basis of an assumption that a particular event will take place in future, and that event does not take place. With this in mind, I make the following two submissions:

• Firstly, in the case of the modus, where the claim is based on a transfer that took place following the cancellation of a contract, it seems to be generally accepted that the claim should be brought by way of contract and not unjustified enrichment. (Louis F van Huyssteem Contract law in South Africa (Netherlands: Kluwer Law International BV 2010) at 76 – 79). In Baker v Probert [1985] 2 All SA 263 (A) at para 12 the court held that ‘cancellation of a contract for breach is not a condictio … that the claim is to be regarded as a distinct contractual remedy’ (my italics).

• Secondly, the conception of an assumption of a future event appears to be a suspensive condition in terms of a contract and, therefore, should be regulated by the law of contract and not the law of unjustified enrichment.

The condictio ob turpem vel iniustam causam

This action is used when performance was rendered in terms of an illegal agreement in that its conclusion, performance or object is contrary to the law or against good morals and public policy. The aim of this action is to allow the aggrieved party who is barred by the void agreement to bring a claim on the basis of the ‘void agreement’. With this in mind, it is worth mentioning that the law will not usually assist an individual who has been engaged in an illegality, except in cases where public policy dictates otherwise – this is also in terms of par delictum rule.

In Henry v Branfield 1996 (1) SA 244 (D), a case concerned with the conclusion of an oral contract in contravention of s 2(1) of the South African Exchange Control Regulation 1961, the court held that payment in terms of this agreement could not be reclaimed in that the court ought not enforce a contract that perpetrates illegal acts. Furthermore, the par delictum rule should not be relaxed where such relaxation will signal any encouragement to break the law.

In addition, there is doubt within the law of unjustified enrichment, as to the necessity of such an action particularly pertaining to the restitution of value that was transferred in terms of an illegal agreement. If the illegal agreement is void, it cannot give rise to any obligations. Therefore, the transfer failed to fulfil an obligation, as there was no obligation to begin with, on which the transfer was made. Therefore, this falls within the sphere of the condictio indebiti, making the condictio ob turpem vel iniustam causam redundant.

As for those transfers made under duress or undue influence which, under the law of unjustified enrichment, should be brought through this action:

• Where such undue influence or duress is aimed at eliciting the other party into entering into a contract in terms of which performance or value is to be transferred, then a claim based on this should be brought on the basis of law of contract, (ie, rescission of the contract). This was recognised as a ground for rescission by the Supreme Court of Appeal in Plaaslike Boeredienste (edms) BPK v Chemfos BPK 1986 (1) SA 819 (A).

• Where undue influence or duress was aimed at eliciting transfer, not by way of a contract, then a claim based on this ground must be brought by way of the law of delict, as this is wrongful and blameworthy conduct with resultant loss causally linked to the conduct of the defendant (Broodryk v Smuts No 1942 TPD 47).

The condictio sine causa specialis

According to Wille’s Principles of South African law 9th ed (Juta: Cape Town 2007) at 1055, this action is mainly applied in circumstances where none of the other above mentioned condictiones can find application. It is also used where value is transferred for a valid cause, which cause later falls away. In South African law, there are three instances under which this action will find application:

• Where a party performs in terms of a contract and a supervening impossibility makes it such that the other party’s obligation is extinguished. A feasible solution in this case would be for the inclusion of a force majeure clause in every contract that parties conclude. With such inclusion in the contract, the parties cannot claim that the event was entirely unforeseen or avoidable. Therefore, rules of contract law apply. Alternatively an arbitration clause can give an arbitrator the power of amiable compositeur. As amiable compositeur, the arbitrator has the power to handle the particular circumstances by judicious departure from the strict law without creating a precedent.

• Where the property of the plaintiff has been consumed or alienated by someone else, here the laws of property apply; the plaintiff may make use of the rei vindicatio. To succeed with the rei vindicatio, in terms of Chetty v Naidoo 1974 (3) SA 13 (A), the plaintiff must prove that he or she was in lawful control of the thing at the time of the institution of the action.

• Where the bank made payment in terms of a countermanded or forged cheque. These cases should be treated as forgery, uttering or fraud respectively. Also taking into account whether the bank in these cases has been indemnified or not.

A general enrichment action

One of the most problematic areas of the law of unjustified enrichment is the absence of a general enrichment action. This principle was reiterated in Nortje en ’n Ander v Pool NO 1966 (3) SA 96 (A) where the majority of the court held that there is no general enrichment action, and that there is no evidence of the existence of a general enrichment action under Roman Dutch law. In McCarthy Retail LTD v Shortdistance Carriers CC 2001 (3) SA 482 (SCA), the court held that when a general enrichment action is finally recognised in South African law it should be subsidiary to the traditional enrichment actions (as discussed above). What appears to be a problem here is the lack of legal certainty caused by the absence of such general enrichment action, which is one of the reasons I submit that unjustified enrichment has no place in our law and is not a solid doctrine on which remedies should be sought.

Action of the unauthorised administrator

The gist of this principle is that the Gestor (administrator) administers the affairs of the Dominus (owner) without the latter’s consent but in the interest of the latter. This is, however, not an enrichment action, it is an independent source of obligations. Ernest J Weinrib in his abstract Corrective Justice (op cit) at 11 submits that for value to move, the enriching action must be directed at what belongs to the defendant, if the purpose of the action is directed at what belongs to the plaintiff, value remains with the plaintiff although the action brought a benefit to the defendant. In other words value has been entangled with the entitlements of the defendant.

Lord Chief Baron Pollock stated: ‘One cleans another’s shoes; what can the other do but put them on? …’ Therefore service cannot be rejected without rejecting the thing owned in its entirety (Weinrib at 17). Thus in these circumstances demanding restitution of a benefit or value would mean compelling the owner to make restitution for the value of shoes he owns whose condition were changed without his consent. Entanglement in this case means that the benefit has been integrated into the entitlements of the defendant and just like the cleanliness in the shoes in the above example, cannot be severed from the shoes, so will a benefit that has been entangled with the entitlements of the defendant.

Therefore, the only instance that the defendant can be held liable with regard to an entangled benefit is when he has accepted it as non-donative. In opinion, ‘non-donative’ requires conduct: (a) Commission (in that the defendant knowingly accepts a benefit that he is neither entitled to neither receive nor retain). Proving the presence of conduct by commission in this regard will be a question of fact, taking into account all surrounding circumstances. Therefore acting (b) wrongfully and (c) causing loss or ‘damage’ to the plaintiff, this satisfies the requirements for a delict, and a claim should be brought by way of a delictual claim. Where the benefit remains disintegrated with the entitlements, the defendant must make restitution in terms of public policy, failure of which will result in a delict.

Section 39 of the Constitution provides that: ‘When interpreting the rights in the Bill of Rights, a court, tribunal or forum –

(a) …

(b) must consider international law; and

(c) may consider foreign law’.

With this is mind, it is worth taking into account that English law, which influences South Africa’s procedural law, does not recognise the actio negotiorum gestio as part of its legal system. In the English case of Nicholson v Chapman Eyre (1793) 2 H BI 254 (Court of the Common Pleas) the court stated that a general right of recovery under this action will encourage ‘willful attempts of ill-designing people to turn floats and vessels adrift, in order that they may be paid for finding them’. It is by these submissions that I tender that the actio negotiorum gestio does not have a place in our law.


The law of unjustified enrichment and the action of the unauthorised administrator are unnecessary remedies in our law. From what I have submitted above, the two actions lack legal certainty. Our current laws of property, delict, contract and criminal law are sufficient to provide legal remedies for the circumstances illustrated above.

Nokubonga Fakude LLB (UJ) is a candidate attorney at Mauritz Breytenbach Attorneys in Johannesburg.

This article was first published in De Rebus in 2015 (April) DR 36.