PRECIOUS MATHYE

69964831

PVL3704
QUESTION 1
In this case study, you are requesting compensation for a payment you made
under duress on your neighbour’s behalf. The doctrine of negotiorum gestio
(managing another's affairs without a mandate), unjustifiable enrichment, and the
condictio indebiti remedy are the legal precepts that apply in this case.
The claim's legal nature is Negotiorum Gestio.
The fundamental idea behind negotiorum gestio is that one person (gestor)
oversees another's (dominus) business without that person's previous
authorisation or agreement. In this instance, by paying the truck driver to get your
car out and carry out your business, you behaved in your neighbour’s best
interests. Since the neighbour’s failure to pay for the delivery posed a direct threat
to your business, managing the neighbour’s affairs (paying for the bricks) is
regarded as necessary conduct. Therefore, the compensation claim against the
neighbour is predicated on the idea that you behaved in good faith and without
official power to safeguard your interests as well as your neighbour’s interests
indirectly.
Negotiotiorum gestio is applicable under South African law when:
1. Without the dominus' permission, the gestor acted.
2. The dominus's interests were served by the management.
3. The administration was required.
The payment you made in this instance on your neighbour's behalf meets the
following criteria:
• There was no order from the neighbour for you.
• Your neighbour’s debt to the truck driver was paid off with the payment.
• To liberate your car and enable you to get on with your business, the action
was required.
Relevant Case Law
In the case of Brooklyn House Furnishers Ltd v Knoetze & Sons 1970 (3) SA 264
(A), the court found that a person who voluntarily incurs expenses in managing
another’s affairs may be entitled to recover those expenses if the intervention was
necessary and beneficial to the other party. Similarly, your intervention benefited
your neighbour by preventing a potential dispute or liability with the truck driver.
Another relevant case is Odendaal v Van Oudtshoorn 1968 (3) SA 433 (T) where it
was held that in order to recover expenses, the management of another’s affairs
must be in line with what a reasonable person would have done in similar
circumstances. By paying the truck driver, you acted reasonably, given that your
ability to carry out your business activities was at stake.
Condictio Indebiti (Unjustified Enrichment) is one possible remedy.
You may also rely on the remedy of condictio indebiti, which is a claim to recoup
money paid under the false impression that it was due, if negotiorum gestio is not

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found to be appropriate. In this instance, you paid the truck driver under duress to
get the truck removed—not because you were supposed to pay. If your neighbour
had profited from your payment without giving you back, they would have been
unfairly wealthy.
Under condictio indebiti, you can claim:
• The amount you paid to the truck driver, as this was a debt that the
neighbour was legally obliged to pay.
• Interest on the amount of the payment caused financial harm or
inconvenience.
Conclusion
Your claim is predicated on either unjustified enrichment under condictio indebiti or
negotiorum gestio, in which you behaved in your neighbour’s best interests out of
necessity. In any scenario, you are entitled to recoup the money paid on your
neighbour’s behalf along with any additional damages—like interest, if any—that
may have resulted from the transaction. The courts are likely to rule in your favour
based on the rationale in instances like Brooklyn House Furnishers and Odendaal,
where a party that acts fairly in managing another’s affairs is entitled to repayment.

Question 2
The field of application
Its exact parameters are uncertain and under common law, it was said that this
action was a catch-all for all situations that did not fit under one of the other
actions but required a remedy. It thus developed casuistically and potentially may
be applied in the following situations:
“(a) Where a party performs, and performance was due at the time that it was
made, but where the causa for the performance has fallen away. In this form, the
actio is called the condictio ob causam fi nitam.
(b) Where the plaintiff’s property was alienated, or consumed, by somebody else.
(c) Where a bank has made payment in terms of a countermanded, or forged,
cheque.
(d) Where the ownership of property has been transferred sine causa to the other
party, but the circumstances are such that none of the other condictiones sine
causa would apply. The exact scope of such application is unclear. Stated as
above, the condictio sine causa specialis could even encompass the subsidiary
general enrichment action advocated by De Vos, although it has, to date, found no
clear application in any South African court.”
Requirements of the Condictio Sine Causa Specialis
1. The defendant alienates or consumes, in good faith (bona fide), the
property of the plaintiff/ owner.

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 2. The defendant acquires/ possesses the property/ goods based on a valid
causa, which later falls away by way of supervening impossibility; and EG-
Taking clothes to a dry cleaner and paying for them to clean the clothes. On
collection of the clothes, the dry cleaner cannot find them and declares that
the clothes are missing. The dry cleaner agrees to compensate the owner
for losing the clothes but a week later calls the owner to inform him that
they have found his clothes (the valid causa for compensation has fallen
away) and they want their money back.
3. The ownership of property is transferred sine causa/ unjustly (not based on
a promise or gift) to the other party, but the circumstances are such that
none of the other classical actions would be applicable (the so-called catch-
all cases).

QUESTION 3

Under this scenario, after the estate has already been divided among creditors (D,
E, and F) and beneficiaries (B and C), X, a creditor of the deceased (A), is
attempting to collect an outstanding obligation of R3 million. The main question
here is whether X can continue to pursue the unpaid debt and if so, from whom:
the beneficiaries (B and C), paid creditors (D, E, and F), or KLM (the estate's
attorneys).
1. Claim Against KLM (the Executors/Attorneys)
In their capacity as A's executors, KLM had an obligation to see that all legitimate
claims were resolved before transferring the estate to the beneficiaries. Before
making any distributions, executors have a fiduciary duty to properly manage the
estate and settle all debts owed to creditors.
On the other hand, creditors are also required to timely submit their claims. Even
though X's claim was not filed, KLM's distribution of the estate might be regarded
as lawful if they followed the Administration of Estates Act's standards and gave
creditors appropriate notice before filing claims. Therefore, unless KLM behaved
negligently—for example, by neglecting to inform X of the possibility of filing a
claim—X's claim against KLM may be challenging.
X might be able to recover the R3 million from KLM if carelessness is
demonstrated, but these kinds of claims usually need executors to provide
unambiguous proof of their guilt.
2. Claim Against B and C (the Beneficiaries)
Under South African law, the condictio indebiti or condictio sine causa may allow X
to reclaim the funds distributed to the beneficiaries if the estate was wrongly
distributed before all creditors were paid.
X can sue B and C, the beneficiaries, to the extent that they were unfairly enriched
since the estate's assets were divided without X's claim being resolved. Given that

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B and C got R1 million from the estate each, they may be required to reimburse X
for the outstanding balance.
This claim is based on the theory of unjustified enrichment, which holds that
someone who gets money that ought to have been used to pay creditors enriches
himself unfairly at the expense of other people who don't get paid. As a result, X is
entitled to the unpaid R3 million from B and C, up to the R1 million each that they
each got from the estate.
3. Claim Against D, E, and F (the Other Creditors)
Since D, E, and F were compensated by the estate for legitimate debts, it is
unclear whether X will be able to successfully sue them. Once a creditor's debt is
fully paid, that creditor is no longer involved in the estate, and X’s failure to lodge a
timely claim does not impose any liability on other creditors who received
payment. The legitimate claims of creditors D, E, and F were duly settled during
the estate's winding up. There isn't any inappropriate payment or enrichment of
them that would support X's claim.

4. Prescription of the Claim

The claim by X is subject to the Prescription Act 68 of 1969, which sets time limits
for the enforcement of debts. The general period for the prescription of debts is
three years from when the debt became due, meaning X must enforce its claim
within three years from the date that the debt became payable.
For X, the prescription period would likely begin from the date the estate was
finalized and distributed. If X becomes aware of the failure to submit the claim
within these three years, they must act promptly. If the three-year period lapses
without action, the claim will be prescribed, and X will lose the right to claim the
debt.
Conclusion
• KLM may be liable if they acted carelessly in administering the estate, but
without evidence of negligence, X is unlikely to succeed against them.
• Since they got money that was supposed to be used to settle X's claim, B
and C are the main targets of X's lawsuit. Under the theory of unjustifiable
enrichment, X can sue them for up to R1 million apiece.
• Since D, E, and F were justifiable creditors who received their full payment
and had no duty to X, they are not accountable.
• To prevent prescription, X's claim needs to be pursued within three years.
To maintain their claim, X must make sure that B and C take action within the
prescribed time frame and concentrate on collecting the outstanding debt from
them.

QUESTION 4

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In this scenario, B (the painter) mistakenly painted C’s house instead of A’s, due to
an address mix-up. B’s claim would centre on seeking payment for the services
rendered, but since neither A nor C contracted for this specific work, B’s legal
position must be assessed through the principles of contractual liability and
unjustified enrichment.
1. Can B Claim from A?
No, B cannot claim from A under the contract, because the contractual obligation
between A and B was for B to paint A’s house. Since B did not fulfill the terms of
the contract by painting the wrong house, B cannot demand payment under the
contract. The principle of exceptio non adimpleti contractus applies here, meaning
that a party cannot claim performance under a contract unless they have fulfilled
their obligations under the same contract.
Potential Defences for A:
No Performance: A could argue that B did not perform the agreed-upon service, as
B failed to paint A's house, thus B is not entitled to any payment.
No Fault: Since the mix-up in addresses was not caused by A, B cannot hold A
responsible for the error or payment.
2. Can B Claim from C?
Yes, B may have a claim against C, but not under a contractual basis. Instead, B
would need to rely on the principle of unjustified enrichment under the remedy of
negotiorum gestio or condictio indebiti, since C’s property was enriched by B's
services without a valid contract in place.
Unjustified Enrichment Claim: Condictio Indebiti
B’s mistake in painting C’s house, without a valid contract with C, leads to the
question of whether C was unjustly enriched at B’s expense. In this case, B may
be entitled to recover the value of the enrichment (the benefit C received) under
the action of condictio indebiti. This remedy allows a party to reclaim benefits
transferred under a mistaken belief.
Requirements for Unjustified Enrichment:
• Enrichment of C: Painting C's home made it seem better, hence it qualifies
as an enrichment.
• B became impoverished as a result of investing time, effort, and resources
on painting C's home.
• Absence of a Legal Cause: B was not required by law to paint C's house,
and C did not hire B to do this work.
• Causal relationship: Since B's activities directly benefited C's property,
there is a causal relationship between B's impoverishment and C's
enrichment in this instance.
Quantification of the Claim:

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B's entitlement to payment from C is determined by the value of the benefit that C
got, not by the entire R20,000 that was agreed upon with A. The true cost of B's
labour and materials or the realistic market cost of painting C's house can be used
to calculate this value.
C could argue that they did not seek or desire the service, which might lower the
amount B can claim. But since B enhanced the property by painting C's house
when it needed painting, B is entitled to at least the fair market value of the labour
performed.
Defences Available to C:
No Consent: C could argue that they did not consent to the work being done and
may claim they were not obligated to pay for an unsolicited service.
Benefit Disavowal: C might claim that they did not benefit from the painting or that
the benefit was minimal, reducing the value of B’s claim. However, this may be
difficult if the painting was needed and improved C’s property.
3. Is B Entitled to the Entire R20,000?
B is unable to get the whole R20,000 from A or C. Rather than the whole
contractual sum B had negotiated with A, C's claim would be restricted to the
value of the benefit obtained (i.e., the reasonable cost of painting C's house).
Unjustified enrichment is not meant to provide complete payment as if there were
a contract in existence; rather, its goal is to prohibit enrichment without cause.
Conclusion:
• B cannot claim anything from A under the contract, as B did not perform
according to the contractual terms.
• B can claim from C under unjustified enrichment, but the claim would be
limited to the reasonable value of the benefit received by C, not the full
R20,000. The amount recoverable would depend on the market value of the
work done.
• A’s defences would include a lack of performance under the contract and
no fault for the address mix-up.
• C’s defences could include a lack of consent to the painting or a reduction
in the value of the benefit if the enrichment was minimal or unwanted.

QUESTION 5
Misrepresentation is a key requirement for the doctrine of estoppel. Estoppel
prevents a party (the estoppel denier) from going back on their previous
representation when another party (the estoppel assertor) has relied on that
representation to their detriment. The core of estoppel is the idea that it would be
unfair or unjust for a party to deny a previous representation if someone else has
relied on it in good faith.
Misrepresentation as a Requirement for Estoppel

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Misrepresentation is a crucial element in establishing estoppel. Estoppel is a legal
principle that prevents a person from asserting a right or fact that is inconsistent
with a previous position or representation made by words, conduct, or silence. In
the context of estoppel, misrepresentation can take various forms, including false
statements, misleading conduct, or silence when there is a duty to speak.
Types of Misrepresentation
1. Fraudulent Misrepresentation: This occurs when a party makes a false
representation knowingly, or without belief in its truth, or recklessly as to its
truth.
2. Negligent Misrepresentation: This type of misrepresentation happens when
a party makes a statement carelessly or without reasonable grounds for
believing its truth.
3. Innocent Misrepresentation: This occurs when a party makes a false
statement honestly believing it to be true

To establish estoppel based on misrepresentation, the following elements

must be present:

• Representation: The estoppel denier must have made a

misrepresentation, either expressly or tacitly.
• Reliance: The estoppel assertor must have relied on the
misrepresentation.
• Detriment: The reliance must have caused the estoppel assertor to
suffer detriment, meaning they changed their position or took action
based on the misrepresentation.
• Reasonableness of Reliance: The reliance by the estoppel assertor
must have been reasonable in the circumstances. A key question is
whether a reasonable person in the same situation would have been
misled by the representation.
• Causality: The reliance on the misrepresentation must be the direct
cause of the detriment suffered by the estoppel assertor.

Determining Misrepresentation

To determine whether the estoppel assertor has been misled by the

misrepresentation of the estoppel denier, the following factors are considered:

A. Nature of the Representation

The court will assess whether the representation was clear, definite, and capable
of leading a reasonable person to a specific conclusion. This includes:

• Express Statements: Were there any direct verbal or written statements

that misled the assertor?

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 • Conduct or Omission: Did the estoppel denier act in a way that suggested
certain facts to the assertor, or did they fail to correct an assumption that
was being made?

Estoppel Denier's Misled Determination

In determining whether the estoppel denier has been misled by the
misrepresentation, the courts will assess the following:
• Subjective Element: The court will consider the actual state of mind of the
estoppel denier to determine if they were genuinely misled by the
misrepresentation.
• Objective Element: The court will also assess whether a reasonable person
in the position of the estoppel denier would have been misled by the
misrepresentation.
In summary
For estoppel based on misrepresentation to succeed, the estoppel assertor must
prove that they were misled by a representation from the estoppel denier, relied on
it reasonably, and suffered a detriment as a result. Courts will assess the clarity of
the misrepresentation, the reasonableness of the reliance, and the extent of the
detriment when determining whether estoppel should be upheld.
Misrepresentation need not be fraudulent, but it must be sufficiently clear and lead
to a change in the position of the estoppel assertor.

QUESTION 6
The defence of estoppel can potentially succeed against a company if a director
acted without the necessary legal authorization from the board of directors but
made it seem as if he had received authorization. This is known as "estoppel by
representation."
Estoppel by representation occurs when a party makes a representation or
statement of fact to another party, who relies on that representation to their
detriment. In this context, if a director represents to a third party that they have the
necessary authorization from the board of directors, and the third party relies on
this representation to their detriment, the company may be estopped from denying
the director's authority.
1. Apparent Authority of Directors
In the context of company law, directors are agents of the company. Their
authority to bind the company comes either from the company's constitution
(usually the Memorandum of Incorporation in South Africa) or a resolution of the
board of directors. If a director acts without the necessary legal authorization but
makes it appear as if they have such authority, the concept of apparent authority
may come into play. Apparent authority arises when:

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 • A company, through its conduct or words, leads a third party to reasonably
believe that a director has the authority to act on behalf of the company.
• The third party relies on this belief to enter into a transaction with the
company.
Even though the director may not have actual authority, the company may be
estopped from denying the director’s authority if the third party acted in good faith
and relied on the appearance of authority.
2. Requirements for Estoppel
For estoppel to succeed against a company, certain requirements must be met:
1. Representation by the Company: The company, through its directors or
employees, must have made a representation that the director had
authority to act. This representation may be made explicitly or impliedly
through the company's conduct or the director's position.
2. Reliance on the Representation: The third party must have relied on this
representation and entered into the transaction believing the director had
authority.
3. Detriment: The third party must have suffered a detriment as a result of
relying on the representation (e.g., financial loss or entering into a
disadvantageous contract).
3. Case Law Analysis
1. NBS Bank Ltd v Cape Produce Co (Pty) Ltd and Others 2002 (1) SA 396 (SCA)
In this case, the Supreme Court of Appeal (SCA) dealt with the issue of apparent
authority and estoppel in the context of corporate governance. A director of a
company entered into a contract without the board’s authority, but the third party
believed that the director had the necessary authority due to the position he held.
The court held that the company could be estopped from denying the director's
authority because the third party reasonably believed that the director had the
authority to act on behalf of the company.
The court emphasized that apparent authority arises when the company itself
creates the impression that the director has authority. If a company places a
director in a position that reasonably leads third parties to believe that the director
has the necessary authority, the company may be bound by the director’s actions.
2. Monzali v Smith 1929 AD 382
In this case, the court established that for estoppel to apply, the representation
must be such that the third party had no reasonable reason to doubt the authority
of the agent (in this case, a director). If the director's lack of authority was obvious
or if the third party should have known that the director did not have authority
(e.g., through due diligence), estoppel would not apply.
3. Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480

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Although not a South African case, this English case is often cited in South African
law on the issue of estoppel and apparent authority. In this case, a managing
director entered into a contract without express authority from the board. The court
held that because the managing director was held out by the company as having
authority, the company could not later deny his authority. The principle established
here is that if a company knowingly allows a director to act as though they have
authority, it can be estopped from denying the director's authority later on.
4. Defences Available to the Company
Even though estoppel can be raised against a company when a director acts
without authority, the company can defend itself by arguing:
• No Representation: The company may argue that it made no representation
that the director had authority, either through its actions or omissions.
• Unreasonable Reliance: The company may argue that the third party’s
reliance on the director’s apparent authority was unreasonable. For
example, if the third party had reason to doubt the director’s authority (e.g.,
the director’s conduct was suspicious or the nature of the transaction was
irregular), estoppel may fail.
• Internal Governance Rules: The company could argue that the third party
should have known that board approval was necessary for the transaction,
especially if such requirements were common knowledge in the industry or
explicitly stated in the company’s governance documents.
5. Internal Governance and Estoppel
A company's internal governance rules (such as the need for board resolutions or
specific authorizations) do not protect it from estoppel if a third party, acting in
good faith, was unaware of these rules. This is encapsulated in the Turquand Rule
(derived from the case Royal British Bank v Turquand [1856] 119 ER 886), which
provides that third parties dealing with a company in good faith are entitled to
assume that the internal requirements of the company’s governance (such as
board approvals) have been properly followed. Therefore, unless the third party
was aware or should have been aware that the director lacked authority, the
company can still be estopped from denying the validity of the transaction.
6. Conclusion
Estoppel can indeed succeed against a company where a director acted without
proper legal authority from the board but created the impression of having such
authority. For estoppel to apply:
• The company must have made a representation (express or implied) that
the director was authorized.
• The third party must have reasonably relied on this representation to their
detriment.
• The reliance must have been reasonable given the circumstances.

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If these conditions are met, the company could be estopped from denying the
director's authority. However, the company can defend itself by arguing that no
representation was made, that the reliance was unreasonable, or that the third
party should have been aware of the lack of authority. Relevant case law, such as
NBS Bank Ltd v Cape Produce Co (Pty) Ltd and Freeman & Lockyer v Buckhurst
Park Properties, provides valuable guidance on how courts assess the validity of
claims based on estoppel and apparent authority.

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