Unjust Enrichment in South African Law: Rethinking Enrichment by Transfer 9781472561374, 9781849462235

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ACKNOWLEDGEMENTS This book grew out of my DPhil thesis at Oxford, and while I hope that the ideas first put forward there appear here in a more mature and fully realised form, I owe a continuing debt to my supervisors, Andrew Burrows and Tony Honoré, and to my examiners, Reinhard Zimmermann and Robert Stevens, for their intellectual guidance and support during my time as a doctoral student and in the years since. I would also like to thank my colleagues at the University of Cape Town for their encouragement and for helpful comments on many of the ideas set out below, and in particular Danie Visser and Robin Evans-Jones, who have been great academic role models and good friends despite disagreeing with much of what is written here. In addition, I owe a large debt of thanks to those who assisted in the production of the book: to Richard Hart and his team, in particular Tom Adams, Mel Hamill and Rachel Turner, for their patience and great professionalism, and to a series of excellent and long-suffering research assistants, Leo Boonzaier, Max Taylor and Jean Wilke. I am also extremely grateful to the University of Cape Town and National Research Foundation of South Africa for funding my research. Third, section V(B) of Chapter Six is based on an article which first appeared in the Restitution Law Review (‘Restitution of Extra-Contractual Transfers: Limits of the Absence of Legal Ground Analysis’ (2006) 14 Restitution Law Review 93), while section VI of the same chapter draws on my and Danie Visser’s contribution to Exploring Private Law, edited by Elise Bant and Matthew Harding (H Scott and DP Visser, ‘The Impact of Legal Culture on the Law of Unjustified Enrichment: the Role of Reasons’ in E Bant and M Harding (eds), Exploring Private Law (Cambridge, Cambridge University Press, 2010). I am grateful to the Marenex Press and to Cambridge University Press for their permission to reproduce in part these earlier publications. Finally, love and thanks are due to my friends and family for their support during the period of more than ten years in which I wrote first the thesis and then the book: in particular, to my parents, Douglas and Gillian; my husband, Stephen; and my son, Theodore, who kept me company during the last year of writing.

1 Introduction I  Enrichment Liability in the Civilian Tradition Roman law admitted a range of actions that we would today recognise as actions arising from enrichment, central among which was the condictio. In its classical form, the condictio was a debt action which formed part of the older, more formal ius civile rather than the newer, more flexible ius honorarium. As a debt action, it was used to effect the restitution of money or goods which had come into the property of the defendant from that of the plaintiff and which it appeared he ought to restore: ‘si paret eum dare oportere’.1 On the other hand, it was abstract in the sense that the written formula did not specify the causa debendi, the reason for the indebtedness, but merely the fact of the debt. It was this abstractness which enabled the condictio to be extended beyond its core applications to other ‘compa­ rable forms of indebtedness’.2 In its contractual incarnations, the condictio was used to secure the repayment of a loan – the unilateral, real contract of mutuum – or to enforce a promise – the unilateral, verbal contract of stipulatio. However, the condictio was applied also in situations analogous to these: for example, where the plaintiff had mistakenly attempted to discharge a debt which did not in fact exist: here, the plaintiff did not intend to make a loan (mutuum) but to repay one.3 Thus, in classical law it was used to enforce a range of obligations, whether arising from contract, from a wrong, or indeed ‘by some special right from vari­ ous types of causes’.4 No attempt appears to have been made to further delimit this third, miscellaneous category of obligations.5 In Justinian’s Digest the classical applications of the condictio were parti­ cularised as a number of specific actions, according to the substantive reasons for  Gaius, Institutes 3.91.   D Liebs, ‘The Roman Condictio’ in N MacCormick and P Birks (eds), The Legal Mind: Essays for Tony Honoré (Oxford, Clarendon Press, 1986) 165 ff. 3   G 3.91. 4  Justinian, Digest 44.7.1 pr (Gaius, Golden Words, Book 2) (Watson’s translation). 5  For a recent account in English of contemporary German scholarship regarding the classical Roman condictiones, see DP Visser, Unjustified Enrichment (Cape Town, Juta, 2008) 230–46. Although certain German scholars of the mid-twentieth century took the view that a unifying concept could be found in the absence of a causa (cause, reason, ground or basis) for the retention of the bene­fit in ques­ tion, this view has recently been called into question by Susanne Hähnchen, Die causa condictionis Ein Beitrag zum klassischen römischen Kondiktionenrecht (Berlin, Duncker & Humblot, 2003) 99 ff. As she points out, the classical jurists did not typically engage in abstract reasoning of this kind. 1 2

2

Introduction

liability.6 These included the condictio indebiti, to recover a transfer not owed;7 the condictio causa data causa non secuta, to recover a transfer made in order to achieve a specific future purpose that failed;8 the condictio ob turpem vel iniustam causam, to recover transfers made for an immoral or illegal purpose;9 and the residual condictio sine causa (specialis), which lay in a range of circumstances, for example, where a fuller had paid compensation to a customer for lost clothes which subsequently turned up.10 Justinian included some of these condictiones along with a number of other actions in his category of obligationes quasi ex contractu, ‘obligations arising as if upon a contract’.11 Although some of the actions identified by Justinian as arising ‘as if upon a contract’ were based on what would later be recognised as unjustified enrichment, this category was essentially a mis­ cellany of heterogeneous cases.12 On the other hand, this category did not include other cases, such as the defence provided to the mistaken improver of property against the owner’s vindicatio for the cost of materials and labour,13 which would now be classified as arising from unjustified enrichment. As early as the second century AD, the classical jurist Pomponius had stated that, ‘by the law of nature it is fair that no-one become richer by the loss and injury of another’.14 But no attempt appears to have been made to connect this broad moral precept with Justinian’s category of quasi-contract, or indeed with the individual condictiones. In fact, a general doctrine of enrichment liability emerged only in the seven­ teenth century, in the writings of Hugo Grotius.15 It was Grotius who for the first time recognised enrichment – ‘baet-trecking’ – as a distinct cause of action within the law of obligations.16 According to Grotius, such obligations arose where someone derived a benefit from another’s property ‘without legal title’ (zonder vorige recht-gunninge), that is, ‘without antecedent gift or other

6   See generally R Zimmermann, The Law of Obligations: Roman Foundations of the Civilian Tradition (Cape Town, Juta, 1990) 838–51. 7   D 12.6. 8   D 12.4. 9   D 12.5. 10   D 12.7. The case of the fuller is discussed at D 12.7.2 (Ulpian, On the Edict, Book 32). 11   See Justinian, Institutes 3.27.1–6 and D 44.7.5 pr–3 (Gaius, Golden Words, Book 3). 12   It included actions arising from negotiorum gestio, guardianship (reciprocal claims between tutor and pupil), common ownership and co-inheritance (specifically the claim of a co-heir or legatee against the heir), as well as the claim to recover an amount not owed (the condictio indebiti). 13   eg J II.1.30. 14   D 12.6.14 (Pomponius, On Sabinus, Book 21) and D.50.17.206 (Pomponius, Various Readings, Book 9) (Watson’s translation). 15   J Scholtens, ‘The General Enrichment Action That Was’ (1966) 83 South African Law Journal 391, 394–95; W De Vos, Verrykingsaanspreeklikheid in die Suid-Afrikaanse Reg, 3rd edn (Cape Town, Juta, 1987) 72–74; Zimmermann, Law of Obligations, n 6 above, 885–86; Robert Feenstra, ‘Grotius’s Doctrine of Unjust Enrichment as a Source of Obligations: Its Origin and its Influence in Roman-Dutch Law’ in E Schrage (ed), Unjust Enrichment: the Comparative Legal History of the Law of Restitution, 2nd edn (Berlin, Duncker and Humblot, 1999) 197, esp 200–7; J Du Plessis, ‘Towards a Rational Structure of Liability for Unjustified Enrichment: Thoughts from Two Mixed Jurisdictions’ (2005) 122 South African Law Journal 142, 143–46; Visser, Unjustified Enrichment, n 5 above, 27–33. 16   Hugo Grotius, Inleydinge tot de Hollandsche Rechtsgeleertheid 3.30.



Enrichment Liability in the Civilian Tradition

3

contract’.17 According to this general principle, an action lay to recover what had unwittingly been paid as a debt when in fact there was none: the condictio indebiti.18 Similarly, an action lay to recover something given ‘without lawful cause’ (zonder rechtelicke oorzake), for example, where something was given in expectation of a marriage and the marriage did not take place: the stock exam­ ple of the condictio causa data causa non secuta.19 Thus, for Grotius, it seems that the individual condictiones at least could be understood as expressions of the ‘without legal title’ principle. In fact, there are some indications that Grotius recognised also a species of general enrichment action organised around the wider ‘lawful cause’ concept.20 However, he does not appear to have attempted to give any specific content to this wider concept. Nor did the other Roman-Dutch Institutional writers take the matter much further. Although they discussed the discrete enrichment actions of the Roman law, many of which were subject to incremental development, they did not attempt to systematise these rules.21 Typically, the account of these actions given by Johannes Voet in his Commentarius Ad Pandectas is much fuller than that of Grotius, but it tracks very closely the structure and content of Justinian’s Digest; Voet did not explicitly recognise the existence of a discrete body of rules dealing with the reversal of unjustified enrichment, nor did he offer any definition of enrichment liability. On the other hand, there is evidence that during the seven­ teenth and eighteenth centuries, the Hooge Raad (Supreme Court) of the prov­ inces of Holland and Zealand applied a species of general enrichment action similar to that hinted at by Grotius in his Inleiding.22 Reports of these decisions were collected by the judge Cornelius van Bijnkershoek in his Observationes Tumultuariae, and later by Willem Pauw (Observationes Tumultuariae Novae), but these works were published only during the course of the twentieth century, too late substantially to influence the development of the South African law.

  ibid 3.30.1 and 2 (Lee’s translation).   ibid 3.30.4.   ibid 3.30.15 and 16. Grotius records also a third application of the general principle, the condictio promissi sine causa or claim to recover that promised ‘without lawful cause’, ‘that is without gift or other contract’. See ibid 3.30.12. 20  ibid 3.30.18. Scholtens, Feenstra and Visser argue that Roman-Dutch law admitted a species of general enrichment action, subsidiary to existing instances of liability but available to give effect to the general principle in cases where the plaintiff would otherwise have been left without a remedy: Scholtens, ‘The General Enrichment Action That Was’, n 15 above, 395; Feenstra, ‘Grotius’s Doctrine of Unjust Enrichment as a Source of Obligations’, n 15 above; Visser, Unjustified Enrichment, n 5 above, 28–33. De Vos, however, argues that Grotius is simply referring in 3.30.18 to the condictio sine causa in its specialised form: De Vos, Verrykingsaanspreeklikheid, n 15 above, 71–74. 21   Feenstra draws attention to the exception of Ulrik Huber who, like Grotius, attempted to frame a general enrichment action: Feenstra, ‘Grotius’s Doctrine of Unjust Enrichment as a Source of Obligations’, n 15 above, 222–28. For an overview of the Roman-Dutch law of enrichment, see De Vos, Verrykingsaanspreeklikheid, n 15 above, ch II. 22  Feenstra, ‘Grotius’s Doctrine of Unjust Enrichment as a Source of Obligations’, n 15 above, 228–35. 17 18 19

4

Introduction

II  Enrichment Liability in South African Law The South African law of enrichment evolved directly from this Roman-Dutch substrate. Although the nineteenth and early twentieth centuries saw considerable further development in the individual enrichment actions of the ius commune, the first attempt at a systematic treatment of the subject came only in 1958, when Wouter De Vos published the first edition of Verrykingsaanspreeklikheid in die Suid-Afrikaanse Reg (Enrichment Liability in South African Law).23 Under the influence of the German and Swiss civil codes,24 he argued that the general princi­ ples of enrichment liability could be stated as follows: (i) the defendant must be enriched; (ii) this enrichment must be at the expense of the plaintiff; (iii) the enrichment must be unjustified (ongeregverdig) or sine causa.25 According to De Vos’s account, where these requirements were satisfied an enrichment claim would lie: either one of the traditional enrichment actions or, failing that, a sub­ sidiary general action, provided that no additional rule of law precluded it.26 As will be discussed further below, De Vos’s theorisation of the subject was clearly incomplete. Apart from anything else, his concept of ‘unjustified’ enrich­ ment lacked sufficient content to act as a controlling generalisation in novel cases. Nevertheless, De Vos’s work undoubtedly had the potential to trigger a more crit­ ical, expansive approach to the subject than had previously prevailed. Regrettably, the publication of the first edition of Verrykingsaanspreeklikheid was followed less than a decade later by the decision of the Appellate Division in Nortjé en ’n ander v Pool NO, in which the existence of any general enrichment action was denied.27 Although this decision appears to have been driven by relatively specific fears regarding the dangers of uncontrolled liability rather than by scepticism as to the very existence of a general principle against unjustified enrichment, nevertheless it gave rise to a period of stagnation in the South African law. The judicial convic­ tion that enrichment liability was limited to existing ius commune claims, even if subject to incremental development, tended to discourage attempts at systemati­ sation also. However, the decision of the Supreme Court of Appeal in McCarthy Retail Ltd v Shortdistance Carriers CC in 2001 has largely reversed this conserva­ tive stance.28 Although the case was decided under the rubric of the bona fide   W De Vos, Verrykingsaanspreeklikheid in die Suid-Afrikaanse Reg (Cape Town, Juta, 1958).   Du Plessis, ‘Towards a Rational Structure of Liability for Unjustified Enrichment’, n 15 above, 150 n 41. 25   De Vos, Verrykingsaanspreeklikheid, n 15 above, ch VII, esp 328–29. De Vos did not list the impov­ erishment of the plaintiff as one of the requirements of liability, but he did recognise the existence of a ‘loss-cap’: the plaintiff could claim either his enrichment or his impoverishment, whichever was the lesser. 26   A further principle required that if the plaintiff ’s cause of action was comprised within one of the existing actions he was obliged to proceed under that head. Thus, the plaintiff could not evade the effect of any additional rules regulating these existing actions by proceeding under the subsidiary gen­ eral action. De Vos, Verrykingsaanspreeklikheid, n 15 above, 358–61. 27   Nortjé en ’n ander v Pool NO 1966 (3) SA 96 (A). 28   McCarthy Retail Ltd v Shortdistance Carriers CC [2001] ZASCA 14, 2001 (3) SA 482 (SCA).  23 24



Enrichment Liability in South African Law

5

occupier’s claim for improvements, Schutz JA, who delivered the main judgment, both explicitly recognised the general principles formulated by De Vos and made it clear that when next a deserving case arose which could not be accommodated under one of the existing enrichment actions, a subsidiary general action would be recognised.29 Thus, the McCarthy judgment has created an environment in which theorists of enrichment liability can debate not only the extension of liabil­ ity to new cases but also the rationalisation of existing rules according to the fun­ damental principles underlying the subject. This implicit challenge has been taken up by Daniël Visser in Unjustified Enrichment, published in 2008, and more recently by Jacques Du Plessis in The South African Law of Unjustified Enrichment.30 Probably the most significant fea­ ture of these accounts is their proposal for the South African law of enrichment of an internal structure essentially modelled on the Wilburg/Von Caemmerer tax­ onomy of German law:31 claims are divided between those in respect of enrich­ ment by transfer (modelled on the German Leistungskondiktion);32 those in respect of imposed enrichment, comprising enrichment through expenditure on anoth­ er’s property and enrichment through expenditure as a result of managing the affairs of another;33 and those in respect of enrichment by invasion of rights.34 This neo-civilian approach is an appropriate one for South African law, given that German and South African law share a common historical root: the principal dis­ tinction between enrichment by transfer and enrichment ‘in another way’ which informs the Wilburg/Von Caemmerer model broadly reflects the traditional civil­ ian distinction between the condictiones and other enrichment claims. Once such a taxonomy is adopted, it becomes possible to move beyond the patchwork of the uncodified ius commune; to introduce a degree of abstraction and systematisation into South African law without seeking to suppress its complexities. However, the particular actions of the Roman and Roman-Dutch law remain at the centre of the modern South African law of enrichment.35 Of course, it is the causes of action epitomised by these claims which survive, rather than the original Roman forms of action themselves: the condictiones comprise the most commonly occurring and therefore the primary causes of action in the civilian law of enrichment, both ancient and modern.36 Nevertheless, in Visser’s words, ‘In South African law . . . it is not so much a question of the forms of action ruling us from their graves, but that they have never died’.37 For example, Visser argues   ibid paras [8]–[10] (Schutz JA).   J Du Plessis, The South African Law of Unjustified Enrichment (Cape Town, Juta, 2012). 31   See, eg, Visser, Unjustified Enrichment, n 5 above, 64–85. 32  ibid chs 4–9; Du Plessis, The South African Law of Unjustified Enrichment, n 30 above, chs 3–7. 33  Visser, Unjustified Enrichment, n 5 above, ch 10; Du Plessis, The South African Law of Unjustified Enrichment, n 30 above, chs 8–10. 34  Visser, Unjustified Enrichment, n 5 above, ch 11; Du Plessis, The South African Law of Unjustified Enrichment, n 30 above, chs 11–12. 35   McCarthy Retail v Shortdistance Carriers, n 28 above, paras [8]–[10]. 36  R Evans-Jones, Unjustified Enrichment, vol 1, Enrichment by Deliberate Conferral: Condictio (Edinburgh, W Green & Son, 2003) para 1.03. 37  Visser, Unjustified Enrichment, n 5 above, 4. 29 30

6

Introduction

that enrichment by transfer should comprise not only the deliberate conferral of money or goods by one person on another but also the deliberate conferral of services.38 This view is compelling, supported as it is both by comparative law and by arguments of principle. Yet the condictiones have since classical Roman law been limited to the transfer of money and goods and this limitation, associated with the original Roman form of action, persists in modern South African law.39 Thus, the nominate condictiones of Justinian’s Digest continue to serve as the principal means by which enrichment by transfer is reversed in modern South African law. There is the condictio ob turpem vel iniustam causam, for recovering money or property conferred for an illegal or immoral purpose;40 the condictio causa data causa non secuta, for recovering a transfer of money or property made in order to achieve a specific future purpose that has failed;41 and the residual condictio sine causa specialis, which lies in a range of cases: on the one hand, to accom­ modate difficult three-party cases where the other condictiones are inappropriate, such as mistaken payments by banks to customers’ payees;42 on the other hand, its most important application, the condictio ob causam finitam, lies in modern law to recover performance rendered under a contract which fails for supervening impossibility.43 To these ancient transfer actions South African law has added various more modern innovations: for example, the action for work done or ser­ vices rendered imperfectly in terms of a contract which is subsequently can­ celled.44 There is also debate among contemporary enrichment theorists regarding the classification of certain other claims: whereas some regard the claim to recover performance rendered under a contract voidable for misrepresentation, compul­ sion, undue influence or minority as a contractual action, Visser at least argues that these are instances of enrichment liability.45 However, it is undoubtedly the 38  Visser, Unjustified Enrichment, n 5 above, 222–25; Du Plessis, The South African Law of Unjustified Enrichment, n 30 above, 63–65. 39  Visser, Unjustified Enrichment, n 5 above, 223; Du Plessis, The South African Law of Unjustified Enrichment, n 30 above, 62–63. South African law has since the early twentieth century taken an abstract approach to the transfer of ownership, in the sense that the transfer of ownership occurs inde­ pendently of the validity of the transaction in pursuance of which that transfer takes place. See, eg, PJ Badenhorst, JM Pienaar and H Mostert, Silberberg and Schoeman’s The Law of Property, 5th edn (Durban, LexisNexis Butterworths, 2006) 74–76; H Mostert and A Pope (eds), The Principles of the Law of Property in South Africa (Cape Town, Oxford University Press, 2010) 192–94. 40  Visser, Unjustified Enrichment, n 5 above, ch 7; Du Plessis, The South African Law of Unjustified Enrichment, n 30 above, ch 6. 41  Visser, Unjustified Enrichment, n 5 above, ch 8; Du Plessis, The South African Law of Unjustified Enrichment, n 30 above, ch 5. 42  Visser, Unjustified Enrichment, n 5 above, 335–80; Du Plessis, The South African Law of Unjustified Enrichment, n 30 above, 229–36. See B & H Engineering v First National Bank of SA Ltd 1995 (2) SA 279 (A). 43  Visser, Unjustified Enrichment, n 5 above, 478–501; Du Plessis, The South African Law of Unjustified Enrichment, n 30 above, 224–25. See Kudu Granite Operations (Pty) Ltd v Caterna Ltd 2003 (5) SA 193 (SCA). 44  Visser, Unjustified Enrichment, n 5 above, 552–59. 45   ibid 101–13, drawing on arguments initially presented in ‘Rethinking Unjustified Enrichment’ [1992] Acta Juridica 203, 211–25. Against: S Miller, ‘Unjustified Enrichment and Failed Contracts’ in R Zimmermann, DP Visser and K Reid, Mixed Legal Systems in Comparative Perspective: Property and Obligations in Scotland and South Africa (Oxford, Oxford University Press, 2004) 437, 460–66. Similar



A Law of Unjustified Enrichment?

7

condictio indebiti, literally ‘the claim to recover something not owed’, that is the most significant of the actions that lie to recover enrichment by transfer. Whereas the others are specific, dedicated to particular factual complexes, the condictio indebiti is general: it is triggered by the absence of indebtedness per se. Indebtedness itself arises from several determinate causes, contract and statute being the most prominent. It follows that an action founded on the absence of indebtedness has a very wide potential range indeed. Indeed, it is the closest approximation to the German Leistungskondiktion to be recognised within the uncodified civilian tradition.

III  A Law of Unjustified Enrichment? My account thus far has evaded a key analytical question, one which still remains to be resolved in South African law. This pertains to the meaning of De Vos’s third requirement, that the enrichment of the defendant be unjustified or sine causa. According to De Vos himself, enrichment is in general unjustified where there is no conclusive legal justification for the displacement of value or the con­ tinuation of such displacement from one estate to the other.46 He doubts whether it is possible to formulate the absence of legal ground requirement any more pre­ cisely than that.47 More recently, Visser has put forward the view that all the ele­ ments of the enrichment action applicable in a given situation together determine whether that enrichment is unjustified. Each new instance of liability requires a fresh judgement of value or policy.48 There is no single, all-encompassing crite­ rion to determine whether enrichment is justified or not.49 However the position is different when it comes to enrichment by transfer in particular. In an influential article published in 1966, JC van der Walt proposed a more specific conception of the legal ground concept, at least insofar as the condictio indebiti is concerned, maintaining that ‘enrichment is in principle sine causa if there is no obligatory relationship [verbintenisregtelike verhouding] between the enriched and impoverished parties on the basis of which the enriched party could claim the transfer of the benefit’.50 This view may have been too narrowly formulated: as De Vos himself pointed out, it excludes a range of other kinds of legal grounds in the arguments have been raised concerning the restitution of performance rendered under contracts can­ celled due to breach. See now also Du Plessis, The South African Law of Unjustified Enrichment, n 30 above, 68–94. 46   De Vos, Verrykingsaanspreeklikheid, n 15 above, 353. See also JC Sonnekus, Unjustified Enrichment in South African Law, JE Rhoodie (trans) (Durban, LexisNexis, 2008) 76–92, who appears to follow the analysis of De Vos. 47   De Vos, Verrykingsaanspreeklikheid, n 15 above, 355. 48  Visser, Unjustified Enrichment, n 5 above, 174–75, drawing on ‘When is Enrichment Justified’ in C Nagel (ed), Gedenkbundel vir JMT Labuschagne (Durban, LexisNexis Butterworths, 2006) 163. 49  Visser, Unjustified Enrichment, n 5 above, 174. 50   JC Van der Walt, ‘Die Condictio Indebiti as Verrykingsaksie’ (1966) 29 Tydskrif vir Hedendaagse Romeins-Hollandse Reg 220, 222 (my translation).

8

Introduction

form of grounds provided by law, such as valid wills, court orders, and certain forms of original acquisition of ownership, or the removal of liability through extinctive prescription.51 Yet a revised version of this argument has been put forward more recently by Jacques Du Plessis: whatever it means to describe enrichment in general as unjustified or without legal ground, in the context of enrichment by transfer in particular, the term ‘legal ground’ refers to the existence of an objectively-deter­ mined relationship of indebtedness between the parties, and the absence of such a ground renders a transfer recoverable in principle without more.52 Other require­ ments for recovery may of course be imposed over and above the absence of a legal ground in this sense: for example, the requirement that the plaintiff in a condictio ob turpem vel iniustam causam must not be tainted with illegality, or that the plaintiff in a condictio indebiti was genuinely mistaken. Specific factors of this kind are, how­ ever, extrinsic to the question whether the enrichment is unjustified or not.53 Visser, on the other hand, has proposed a more nuanced approach to the ‘unjustified’ concept in the context of enrichment by transfer, in keeping with his understanding of the wider meaning of the concept. In his early work he argued that the true basis of liability under the condictio indebiti was prestasiedoelmislukking or ‘failure of the purpose of the performance’.54 Where the plaintiff had transferred a benefit to the defendant for a particular purpose, for example to pay a debt, and that purpose had failed, the benefit was for this reason recoverable.55 In Unjustified Enrichment, Visser builds on this idea in proposing ‘failure of the purpose of the transfer’ as a species of algorithm or thinking-tool for use through­ out the law of enrichment by transfer. The failure of the purpose of the transfer does not provide a conclusive reason for restitution in itself,56 but it does render the transfer at least prima facie unjustified in the broader sense identified above.57 In other words, the failure of the purpose of the plaintiff’s performance is not an invariable requirement for recovery, but it does offer a useful tool or technique for generating preliminary conclusions. Most transfers are made in discharge of 51   De Vos, Verrykingsaanspreeklikheid, n 15 above, 355. See also Du Plessis, ‘Towards a Rational Structure of Liability for Unjustified Enrichment’, n 15 above, 150; The South African Law of Unjustified Enrichment, n 30 above, 56. 52   Du Plessis, ‘Towards a Rational Structure of Liability for Unjustified Enrichment’, n 15 above, 150–52, 176–77. 53   See generally Van der Walt, ‘Die Condictio Indebiti as Verrykingsaksie’, n 50 above, 227–28; Du Plessis, ‘Towards a Rational Structure of Liability for Unjustified Enrichment’, n 15 above, 159, 177, as well as the more cautious view expressed in The South African Law of Unjustified Enrichment, n 30 above, 53–54, 65–66; Sonnekus, Unjustified Enrichment, n 46 above, 77–80. See also the fifth requirement for liability under the subsidiary general enrichment action proposed by De Vos, namely, that there must be no additional rule of law precluding recovery: Verrykingsaanspreeklikheid, n 15 above, 355. 54  DP Visser, Die Rol van Dwaling by die condictio indebiti: ’n Regshistoriese Perspektief met ‘n Regsvergelykende Ekskursus (Dr iur thesis, University of Leiden, 1985); ‘Die Grondslag van die Condictio Indebiti’ (1988) 51 Tydskrif vir Hedendaagse Romeins-Hollandse Reg 492. 55   This argument is based on German Roman law scholarship of the mid-twentieth century, and on the work of Fritz Schwarz in particular: Die Grundlage der condictio im klassichen römischen Recht (Munster, Bählau, 1952). See Visser, Die Rol van Dwaling, n 54 above, ch 1; ‘Die Grondslag van die Condictio Indebiti’, n 54 above, 493–98; Unjustified Enrichment, n 5 above, 230–41. 56  Visser, Unjustified Enrichment, n 5 above, 230, 252–53. 57   ibid 229–53, especially 252.



The Reanalysis of Enrichment by Transfer

9

liability, although Visser acknowledges also a range of other purposes, as in the context of the condictio causa data causa non secuta. This means that the absence of a relationship of indebtedness between the parties will generally give rise to restitution without more.58 On the other hand, considerations such as causative mistake on the part of the transferor might form part of the overall explanation as to why enrichment ought to be restored (indeed, mistake is often the reason why the plaintiff’s attempt to discharge his liability has failed). But once again, such factors are not to be treated as requirements for liability. Rather, it remains open to the plaintiff to adduce alternative reasons to mistake as to why the enrichment of the defendant is unjustified in the broader sense.59 According to Du Plessis’s preferred approach, purely subjective factors such as mistake are intrinsically irrelevant to this inquiry. Whenever a transfer is made in discharge of liability, then as the name of the action itself suggests, the mere absence of a valid contract or other legal obligation or relationship of indebtedness underly­ ing the transfer renders it recoverable in principle. According to Visser’s algorithm, on the other hand, such factors may have a continuing role to play as alternative or secondary explanations for the cause of action triggered in the first instance by the failure of the purpose of the transfer. But that role is at best a subsidiary one: Visser does not regard subjective factors as analytic­ally significant in themselves.60 Analyses of this kind hold out much attraction to South African lawyers as a means of ratio­ nalising the restitution of enrichment by transfer in general and the condictio indebiti in particular. However, as this book seeks to demonstrate, the analyses proposed by Du Plessis and Visser do not accurately reflect the true analytical structure of the modern South African law of enrichment. Even Visser’s flexible analysis does not go far enough. This is because these analyses simply do not take sufficient account of specific reasons for the restitution of transfers.

IV  Unjust Enrichment: the Reanalysis of Enrichment by Transfer Even in classical Roman law, the condictio indebiti was denied in cases where the payer knew that the sum paid was not owing.61 It has been argued that the classical   ibid 274–75.   See ibid 187, where this point is explicitly spelt out.  Visser explicitly acknowledges that, ‘to restructure this part of South African enrichment law [enrichment by transfer] completely on the basis of failure of purpose is perhaps a bridge too far’. See Visser, Unjustified Enrichment, n 5 above, 230. He does, however, argue that the mistake requirement which currently dominates the condictio indebiti should be abandoned: Visser, Unjustified Enrichment, n 5 above, 324–31. 61   eg D 12.6.1.1 (Ulpian, On the Edict, Book 26): ‘If someone mistakenly pays what is not owed he can recover by this condictio, but if he pays knowing that the money is not owed, the payment is not recoverable’. 58 59 60

10

Introduction

error requirement was a ‘negative’ one, in the sense that it was for the defendant to prove knowledge once the plaintiff had shown that the transfer which he had made had in fact not been owing.62 On other hand, certain other texts in the Digest suggest that proof of mistake was positively required in order to found recovery.63 At least by the time of Justinian mistake had certainly come to be regarded as one of the elements of liability under what was now labelled the condictio indebiti, an element requiring to be positively proved by the plaintiff in each case.64 As a result, throughout the European ius commune the condictio indebiti has been understood to require positive proof of mistake.65 This positive mistake requirement having been universally acknowledged in Roman-Dutch law,66 it was applied by the vari­ ous colonial courts of Southern Africa during the nineteenth century,67 and remains a requirement for success in modern South African law.68 For example, in ABSA Bank Ltd v Leech and others NNO, the Supreme Court of Appeal held that, ‘in order to succeed [in the condictio indebiti] the respondents had to prove that a payment was made in the mistaken belief that it was owing’.69 In fact, the recep­ tion of this requirement into South African law appears clearly from the addi­ tional requirements that the mistake be one of fact rather than law,70 and that it be excusable.71 In Willis Faber Enthoven (Pty) Ltd v Receiver of Revenue,72 decided by the Appellate Division in 1992, the mistake of law rule was abrogated but the excusability requirement affirmed in respect of mistakes of both fact and law.73 Thus, it appears that mistake, at least, constitutes a positive requirement for recovery under the South African condictio indebiti. Not only is the plaintiff’s mis­ take part of the chain of events leading to a transfer unsupported by a relationship of indebtedness (Du Plessis), or the failure of the purpose of his transfer, namely to discharge a liability (Visser); according to South African law, it is one of the necessary ingredients for a claim in restitution. Moreover, as I will seek to demon­   See eg Zimmermann, Law of Obligations, n 6 above, 849–51.   eg D 22.3.25 pr (Paul, Questions, Book 3): ‘He who alleges that he has paid an indebitum must prove that he paid it through fraud on the part of the recipient or some just cause of ignorance, and unless he show this, he cannot recover’. 64   eg Zimmermann, Law of Obligations, n 6 above, 849–51. 65  Visser, Die Rol van Dwaling, n 54 above, chs 2 and 3. See also G Dannemann, The German Law of Unjustified Enrichment and Restitution: a Comparative Introduction (Oxford, Oxford University Press, 2009) 171–72 on the requirements of the condictio indebiti. 66   eg Grotius, Inleydinge, n 16 above, 3.30.6; Johannes Voet, Ad Pandectas 12.6 n 6. See De Vos, Verrykingsaanspreeklikheid, n 15 above, 69–71; Visser, Die Rol van Dwaling, n 54 above, ch 4. 67   Port Elizabeth Divisional Council v Uitenhage Divisional Council (1868) 1 Buch 221, a decision of the Cape Supreme Court, appears to be the earliest example. 68   See eg De Vos, Verrykingsaanspreeklikheid, n 15 above, 171–209; Visser, Unjustified Enrichment, n 5 above, 290–95; JG Lotz (updated FDJ Brand), ‘Enrichment’ in The Law of South Africa, vol 9, 2nd edn (Durban, LexisNexis Butterworths, 2005) para [212]. 69   ABSA Bank Ltd v Leech and others NNO [2001] ZASCA 65, 2001 (4) SA 132 (SCA) para [8] (Streicher JA). 70   See eg Rooth v State (1888) 2 SAR 259. See further Chapter 2 at II(B)(i). 71   See eg Divisional Council of Aliwal North v De Wet (1890) 7 SC 232. See further Chapter 2 at II(B) (ii). 72   Willis Faber Enthoven (Pty) Ltd v Receiver of Revenue 1992 (4) SA 202 (A) 224 (Hefer JA). 73   See further Chapter 3 at III. 62 63



The Reanalysis of Enrichment by Transfer

11

strate in the chapters that follow, South African law recognises a number of other applications of the condictio indebiti where another factor or reason takes the place of mistake. First, the condictio indebiti has been explicitly applied to cases where the transfer was made with full knowledge of the facts but under some form of compulsion. Secondly, there is a body of case law in which the condictio indebiti lies to recover transfers made by minors and other persons of limited capacity, regardless of mistake. It appears that all these factors – mistake, compulsion and minority together with certain other forms of incapacity – are treated by the South African courts as positive requirements for restitution, in addition to the absence of a relationship of indebtedness between the parties. How are these specific factors explained by proponents of the absence of legal ground approach? In fact, none of the theorists discussed above denies them. The role of compulsion as an alternative ground for the condictio indebiti in addition to mistake is explicitly acknowledged by De Vos.74 All three factors are acknow­ledged by Sieg Eiselen and Gerrit Pienaar in their casebook.75 Visser, who treats both mis­ take and compulsion in detail under the rubric of the condictio indebiti76 and deals with the restitution of minors’ transfers in the context of his account of failed con­ tracts, is at pains to deny any attempt to replace the South African law with German law, or ‘implant German concepts into our law’.77 Similarly, Du Plessis has said of the absence of legal ground approach which he proposes that, ‘it has to be admitted that this type of analysis is not descriptive of the current law, which, due to its uncodified civilian background, and some common law influence, still regards error and compulsion as positive considerations influencing the success of the condictio indebiti’.78 The condictio indebiti is discussed by him under the general head­ ing, ‘Enrichment Arising from a Transfer that Failed to Fulfil an Obligation’, with mistake and compulsion featuring in one of the subsections. Nevertheless, as we have seen, all share a common assumption that the law would be improved if these factors were to be abandoned or relegated to mere background circumstances. However, this book poses the question whether the South African law of enrich­ ment by transfer might not be better explained by an analysis which takes seriously the phenomena described in the previous paragraphs. So far, the only explanation offered by enrichment theorists to the courts and to students of enrichment has been to regard the positive mistake, compulsion and incapacity requirements as mere accidents, casualties of an uncodified legal system which are extrinsic to the true basis of liability.79 But another choice is open to us: that is, to adopt a different   De Vos, Verrykingsaanspreeklikheid, n 15 above, 172.   S Eiselen and G Pienaar, Unjustified Enrichment: a Casebook, 3rd edn (Durban, LexisNexis, 2008) 107–30. 76  Visser, Unjustified Enrichment, n 5 above, chs 5 and 6 and 546–51. 77   ibid 229. 78   Du Plessis, ‘Towards a Rational Structure of Liability for Unjustified Enrichment’, n 15 above, 170–71. See also Du Plessis, The South African Law of Unjustified Enrichment, n 30 above, 129–51. 79   eg Du Plessis, ‘Towards a Rational Structure of Liability for Unjustified Enrichment’, n 15 above, 165–66 and now The South African Law of Unjustified Enrichment, n 30 above, 168–74; Visser, Unjustified Enrichment, n 5 above, 330. Similar criticisms have been made of the mistake requirement 74 75

12

Introduction

analysis, one organised at least in part around positive reasons for restitution. Such an analysis would treat these factors as part of the explanation for restitution; as a reason, if not the reason, for recovery. The restitution of unjust enrichment in modern English law is founded on just such an analysis. According to the prevailing consensus, the principle against unjust enrichment finds expression at a lower level of generality in four ‘ques­ tions’: Has the defendant been benefited or enriched? Was the enrichment at the claimant’s expense? Was the enrichment unjust? Are there any defences upon which the defendant can rely?80 The question then arises as to the content of these various elements, particularly the notion of ‘unjust’. Even if one separates restitu­ tion for wrongs out from the law of unjust enrichment, leaving only the ‘autono­ mous’ unjust enrichment which roughly corresponds to the civilian category,81 the principle against unjust enrichment is still one that operates at an exceedingly high level of generality. In 1985, Peter Birks proposed a taxonomy in terms of which each individual ground or ‘unjust factor’ is assigned to one of a number of categories according to the nature of the reason for restitution upon which it relies.82 The secondary principles inherent in these categories are capable of medi­ ating the very broad idea of unjust enrichment in that they restate that idea at a lower level of generality. According to Birks’ original thesis, there were three cat­ egories of unjust factors.83 Of these categories, two survived in the mature theory:84 factors vitiating voluntariness and policy-motivated factors.85

recognised in the context of the Scottish condictio indebiti: see, eg, R Evans-Jones, ‘Some Reflections on the condictio indebiti in a Mixed Legal System’ (1994) 110 South African Law Journal 759, and now Unjustified Enrichment, n 36 above, vol 1 71–75. 80   See, eg, G Virgo, The Principles of the Law of Restitution, 2nd edn (Oxford, Oxford University Press, 2006) 9; A Burrows, E McKendrick and J Edelman, Cases and Materials on the Law of Restitution (Oxford, Oxford University Press, 2007) 71; Lord Goff of Chieveley and G Jones, The Law of Restitution, 7th edn (London, Sweet & Maxwell, 2007) 16–17; A Burrows, The Law of Restitution, 3rd edn (Oxford, Oxford University Press, 2011) 27. See also the judicial recognition of these ‘questions’ in Banque Financière de la Cite v Parc (Battersea) Ltd [1999] 1 AC 221 (HL) 227 (Lord Steyn) and in subsequent cases. But cf the revised structure adopted in C Mitchell et al (eds), Goff and Jones: the Law of Unjust Enrichment, 8th edn (London, Sweet & Maxwell, 2011) para 1–09 and the justifying grounds listed in chs 2 and 3. 81   As argued by Peter Birks, ‘Misnomer’ in W Cornish et al (eds), Restitution: Past, Present and Future (Oxford, Hart Publishing, 1998) 1 and later in Unjust Enrichment, 2nd edn (Oxford, Oxford University Press, 2005). 82   P Birks, An Introduction to the Law of Restitution, revised edn (Oxford, Clarendon Press, 1989). 83   ibid ch 4. 84   The second category looked to the ‘unconscientious receipt’ of the benefit by the defendant, and it follows that the first two categories were, respectively, claimant- and defendant-sided. However, the defendant-sided unity later collapsed, following the demise of Birks’ theory of free acceptance. See in particular the criticisms advanced by A Burrows, ‘Free Acceptance and the Law of Restitution’ (1988) 104 LQR 576 and The Law of Restitution, n 80 above, 334–37. Also Virgo, The Principles of the Law of Restitution, n 80 above, 121–24. 85   This principal division continues to be recognised by exponents of the unjust factors analysis: see, eg, Virgo, The Principles of the Law of Restitution, n 80 above, ch 6; Burrows, The Law of Restitution, n 80 above, 86.



The Reanalysis of Enrichment by Transfer

13

The first category reflects the idea that the impoverished party did not mean to transfer the benefit in question: that its conferral was in some sense involuntary. Mistake occupies a central position within this family of unjust factors. According to Birks’ approach, mistake is itself the plaintiff’s cause of action: the vitiation of his intent in making the transfer is the reason why it must be returned.86 The pres­ ence of a valid contract, statutory obligation or other relationship of indebted­ ness, such as a judgment debt, has the effect of blocking restitution.87 However, according to prevailing orthodoxy, this is simply a defence (or a range of defences) by means of which the recipient can defeat this prima facie claim. It enjoys no analytical significance in itself.88 Other unjust factors falling within the sub-­ category of ‘impaired’ or ‘vitiated’ intent are compulsion and, for Birks and Andrew Burrows, personal disadvantage or human incapacity, categories which include minority.89 Here too, it is the compulsion or disadvantage itself which furnishes the reason for the restitution of the benefit. In Birks’ characteristic phrase, at its simplest the plaintiff is saying, by way of establishing a claim to an enrichment received by the defendant, ‘I did not mean you to have it’.90 Subsequent accounts separate out also cases of ‘no intent’ or absence of intention within the first category of unjust factors: for Graham Virgo and Burrows the unjust factor of ignorance belongs here,91 as arguably does juristic incapacity.92 Finally, there is ‘qualified’ intent: this sub-category contains the unjust factor of failure of consideration, which refers primarily to the failure of a promised counterperformance in return for the rendering of a benefit to the recipient, but com­ prises also the failure of a non-promissory condition as to the future.93 By

86  Birks, An Introduction to the Law of Restitution, n 82 above, 146–73; Virgo, The Principles of the Law of Restitution, n 80 above, ch 8; Burrows, The Law of Restitution, n 80 above, ch 9. 87   The seminal decision in this respect is Barclays Bank Ltd v WJ Simms Son and Cooke (Southern) Ltd [1980] 1 QB 677, 695. See, more recently, Test Claimants in the Franked Investment Income Litigation v Revenue and Customs Commissioners [2010] EWCA Civ 103, paras [175]–[184], and generally Virgo, The Principles of the Law of Restitution, n 80 above, 172–76, 667–72. But cf Deutsche Morgan Grenfell plc v IRC [2006] UKHL 49, [2007] 1 AC 558. 88  But cf Burrows, The Law of Restitution, n 80 above, 88–91; R Stevens, ‘Is there a Law of Unjust Enrichment?’ in S Degeling and J Edelman (eds), Unjust Enrichment in Commercial Law (Sydney, Thomson Reuters, 2008); G Virgo, ‘Demolishing the Pyramid: the Presence of Basis and Risk-Taking in the Law of Unjust Enrichment’ in A Robertson and Tang Hang Wu (eds), The Goals of Private Law (Oxford/Portland, OR, Hart Publishing, 2009); C Mitchell et al, Goff and Jones: the Law of Unjust Enrichment, n 80 above, para 1–09 and the discussion of justification grounds in chs 2 and 3. 89   Regarding compulsion, see Birks, An Introduction to the Law of Restitution, n 82 above, 173–203; Virgo, The Principles of the Law of Restitution, n 80 above, ch 9. Regarding minority, see Birks, An Introduction to the Law of Restitution, n 82 above, 216–18 (part of the wider category of personal dis­ advantage, which in turn forms part of inequality); Burrows, The Law of Restitution, n 80 above, 311– 14 (part of the wider category of human incapacity). cf Virgo, The Principles of the Law of Restitution, 387. 90  Birks, An Introduction to the Law of Restitution, n 82 above, 140. 91  Virgo, The Principles of the Law of Restitution, n 80 above, ch 7; Burrows, The Law of Restitution, n 80 above, ch 10. 92  Virgo, The Principles of the Law of Restitution, n 80 above, 387, 397–99. 93  Birks, An Introduction to the Law of Restitution, n 82 above, ch 7; Virgo, The Principles of the Law of Restitution, n 80 above, ch 12; Burrows, The Law of Restitution, n 80 above, ch 14.

14

Introduction

contrast, the third category – policy-motivated unjust factors – contains those cases where restitution is independent of any involuntariness on the part of the claimant: ‘where the law judges that a given policy objective is best pursued by ensuring that there is restitution of the value in question’.94 This category com­ prises illegality as well as the exaction of money ultra vires, recognised as a new unjust factor in Woolwich Equitable Building Society v Inland Revenue Commissioners:95 the principle of legality itself required that money exacted ultra vires be restored.96 Burrows assigns also ultra vires payments by a public authority (a species of juristic incapacity) to this category.97 The policies underlying restitu­ tion in this case will be explored further in Chapter 5. It is my purpose here to subject the condictio indebiti of South African law to the analysis outlined above: an analysis based on unjust factors. Once again, the pattern of application of this condictio in modern law suggests three principal unjust factors: mistake, compulsion and incapacity (comprising both minority and other forms of juristic incapacity), a series roughly corresponding to Birks’ original sub-category of vitiated or impaired intent. As we have seen, South African orthodoxy teaches that the absence of a relationship of indebtedness between the parties is in principle the reason for the restitution of transfers. I argue instead that while the absence of a relationship of indebtedness is indeed a necessary condition for the restitution of enrichment by transfer, it is not a suffi­ cient one. It follows that this is a book about the consequences of invalidity, or perhaps more broadly non-liability, within the South African law of enrichment by transfer. It must be emphasised that in dealing with those cases classified as instances of the condictio indebiti, this book takes as its focus those cases in which the invalidity thesis is strongest. It does not deal in any detail with easy cases of enrichment by transfer, where the requirements of a particular condictio or other enrichment claim clearly point to an unjust factor. Thus, it is not directly concerned with the restitu­ tion of performance rendered under contracts voidable for misrepresentation, compulsion, undue influence or minority. This is because it is clear that the unjust factors triggering the restitution of performance in those cases are mistake, compul­ sion, undue influence and minority, respectively.98 In other words, the reasons for invalidity and restitution are the same. Nor does it deal with contracts void due to illegality (the province of the condictio ob turpem vel iniustam causam). Here again, it is the illegality of the plaintiff’s purpose, a category-three unjust factor, which provides the reason for restitution, provided that restitution is not blocked by the operation of the par delictum rule. Thirdly, it does not deal explicitly with the condictio causa data causa non secuta, the claim to recover money or goods transferred 94  P Birks and R Chambers, The Restitution Research Resource (Oxford, Mansfield Press, 1994) vi–vii. 95   Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70 (HL). 96  Burrows, The Law of Restitution, n 80 above, ch 20. 97  ibid 517–20. Virgo, The Principles of the Law of Restitution, 387–88 considers also the possibility that minority belongs in this category. 98   See Chapter 6 at V(A).



Beyond the Condictiones

15

in order to achieve a specific future purpose, or with the restitution of performance rendered under a contract which fails due to supervening impossibility (the prov­ ince of the condictio ob causam finitam). In both cases the reason for restitution is located in what a common lawyer would recognise as failure of consideration: in the plaintiff’s misprediction regarding the coming into existence of a future state of affairs, or the capacity of a present state of affairs to sustain itself, leading to the qualification of his intention.99 By contrast, the condictio indebiti in its pure form implies no unjust factor within the standard common law taxonomy. It resembles rather the claim triggered by ‘absence of consideration’ recognised by the English Court of Appeal in Guinness Mahon & Co Ltd v Kensington and Chelsea Royal London Borough Council.100 Thus, it is clear that any attempt to assert the analytical significance of unjust factors within the South African law of enrichment by transfer must take the condictio indebiti as its focus.

V  Beyond the Condictiones However, the reanalysis of those instances where the condictio indebiti is expressly applied is only one of the goals of this book. According to orthodoxy, with minor exceptions the condictiones are the only mechanisms available to effect the restitu­ tion of enrichment by transfer in modern South African law: the identification between form of action and cause of action is almost complete. Furthermore an orthodox account of the South African law of unjustified enrichment naturally focuses on the condictiones, since these have historically been closely identified with the absence of legal ground analysis. On the other hand, an analysis explicitly founded on unjust factors breaks the link between the restitution of enrichment by transfer and the condictiones. By focusing on the role of mistake, compulsion and incapacity as reasons for restitution, it invites consideration of other instances where restitution of money and goods is effected on these grounds. Thus, it per­ mits the ambit of the category of enrichment by transfer to be extended beyond the condictiones to include also other species of restitutionary claim. In particular, it invites analysis of those instances where restitution has been effected by means of the remedy of restitutio in integrum. The term restitutio in integrum appears to carry at least two distinct meanings in modern South African law. First, it may refer to the substantive grounds upon which a valid contract may be avoided, in the case of contracts induced by misrep­ resentation, compulsion and undue influence. Thus, the avoidance of contracts on  Birks, An Introduction to the Law of Restitution, n 82 above, 223.   Guinness Mahon & Co Ltd v Kensington and Chelsea Royal London Borough Council [1999] QB 215. It was this case, together with a number of other decisions involving void interest swaps, espe­ cially Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 (HL), which induced Prof Birks to abandon his unjust factors taxonomy in favour of a civilian analysis founded on absence of basis. See Birks, Unjust Enrichment, n 81 above, ch 5. 99

100

16

Introduction

these grounds is sometimes referred to as an instance of restitutio in integrum.101 Bound up with this first meaning are the conditions for the restitution of perform­ ance rendered under such an avoided contract. Both – conditions of avoidance or grounds of invalidity and conditions of restitution or unjust factors – are generally regarded as part of the law of contract. On the other hand, the term restitutio in integrum can refer also to a particular species of bilateral restitutionary response with certain characteristic features, chief among which is the rule that restitution of a party’s performance is dependent on counter-restitution of performance received.102 Again, in modern South African law use of the term in this sense is generally confined to contract, that is to the restitution of performance rendered under a contract avoided for misrepresentation, compulsion, etc.103 However, the restitutio in integrum of the civilian tradition appears to have been of a different character again.104 It is generally thought that the restitutio in integrum of Roman law was one of a range of remedies by means of which the Praetor mitigated the harshness of the old civil law, the ius civile.105 Although more recently this view has been challenged – it is argued that in classical Roman law the term restitutio in integrum referred to the restitutionary response only, as opposed to an independent remedy – in the ius commune, restitutio in integrum does indeed appear to have been regarded as an equitable remedy in its own right. Although the procedural distinction between the ius civile and the Praetorian ius honorarium had long lost its signific­ance, restitutio in integrum continued to be regarded as an extraordinary remedy, designed to pro­ vide relief where the ius civile was silent. Moreover, and consequent on this extraor­ dinary nature, it was regarded as a flexible remedy, in the sense that relief might take whatever form equity appeared to demand. Finally, unlike a conventional action in terms of which relief is available under specific conditions as of right, the restitutio in integrum of the ius commune was discretionary, in the sense that it could be granted in any circumstances at all, provided the court felt that there was a reasonable cause (iusta causa) for restitution. These key characteristics had important implications for the scope of restitutio in integrum in Roman-Dutch law. First, as in Roman law, it was understood by most old authorities to include a wide range of responses, applicable to a wide range of human actions: these responses extended even to the granting of clem­ ency in criminal cases, but the restitution of money and goods remained one of 101  eg Davidson v Bonafede 1981 (2) SA 501 (C) 509–10; D Hutchison et al, The Law of Contract in South Africa (Cape Town, Oxford University Press Southern Africa, 2009) 114. 102   See, eg, S Van der Merwe et al, Contract: General Principles, 3rd edn (Cape Town, Juta, 2007) 136–40. Other textbooks refer simply to ‘restitution’ or ‘restitutionary damages’: see, eg, AJ Kerr, The Principles of the Law of Contract, 6th edn (Durban, Butterworths, 2002) 329–33. 103   Johnson v Jainodien 1982 (4) SA 599 (C) 605. See also Probert v Baker 1983 (3) SA 229 (D) 233; Baker v Probert [1985] ZASCA 22, 1985 (3) SA 429 (A) 438–439 (regarding cancellation for breach of contract). See also Van der Merwe et al, Contract: General Principles, n 102 above, 136–40. 104   The historical character of restitutio in integrum is considered in detail in Chapter 2 at III(A) and Chapter 4 at II(A) and (B). 105   For full sources refer to Chapter 2 at III(A) and Chapter 4 at II(A) and (B).



Beyond the Condictiones

17

the primary applications of restitutio in integrum. Thus, its potential to act as a technique for reversing enrichment by transfer is clear. Secondly, the restitutio in integrum of Roman-Dutch law was granted on a wide (and presumably unlim­ ited) range of equitable grounds. As in the Roman sources, fear (metus), fraud (dolus), minority and absence received by far the fullest treatment, but several Roman-Dutch writers include also iustus error (reasonable mistake) as a nomi­ nate ground in this list. Thus, to the extent that restitutio in integrum served to effect the restitution of transfers, the claim embodied in the remedy arose from unjust factors – reasons for restitution – rather than from the absence of a legal ground. The restitutio in integrum of nineteenth-century South African law appears to have retained in large measure its original Roman-Dutch character.106 White Brothers v Treasurer-General, decided by the Cape Supreme Court in 1883, concerned a claim to recover the payment of tax alleged to have been incorrectly levied, on grounds of either mistake or compulsion.107 Restitutio in integrum was identified as the appropriate remedy to reverse these payments, and the grounds on which it might be granted were listed as, ‘metus [fear], dolus [fraud], minor aetas [minority], Capitis diminutio [loss of civil status], absentia [absence], alienatio judicii mutandi causa [alienation with the object of frustrating a judicial pro­ ceeding], and justus error [reasonable mistake]’.108 As late as 1950, Lee and Honoré in their South African Law of Obligations maintained that, ‘the difference between claims for the return of property, based on condictio and restitutio in integrum respectively, is mainly historical’.109 However, in 1949 Van den Heever JA held in Tjollo Ateljees (Eins) Bpk v Small that, ‘we do not petition for restitutio in integrum to relieve us from the obligations induced by fear, force of fraud . . . [but] raise these negations of free volition as direct defences or causes of action’. Thus he rejected the Roman-Dutch conception of restitutio in integrum as a free-standing restitutionary remedy.110 Van den Heever JA was correct. There is of course no separate equitable jurisdiction in modern South African law, comprising equita­ ble forms of action, as there was in classical Roman law and in Roman-Dutch law. All surviving instances of restitutio in integrum must therefore be rationalised in terms of substantive causes of action. Yet there has so far been no systematic attempt to investigate the causes of action inherent in its application outside the sphere of contract. In his Verrykingsaanspreeklikheid, first published in 1958, De Vos dismissed outright the idea that restitutio in integrum might be brought within the fold of enrichment liability along with the condictiones, serving as an ‘enrichment action’.111 As we have seen, in modern South African law restitutio in   See Chapter 2 at III(B).   White Brothers v Treasurer-General (1883) 2 SC 322. 108  Voet, Ad Pandectas 4.1 n 26, quoted ibid 349 (De Villiers CJ). 109   RW Lee and AM Honoré, The South African Law of Obligations (Durban, Butterworths & Co, 1950) para [681]. 110   Tjollo Ateljees (Eins) Bpk v Small 1949 (1) SA 856 (A) 871–72. 111   De Vos, Verrykingsaanspreeklikeheid, n 15 above, 158–59. 106 107

18

Introduction

integrum has come to be regarded solely as a contractual remedy. However, as this book will argue, restitutio in integrum still figures in modern South African law as a restitutionary remedy triggered by the enrichment of the recipient. Even if it is accepted that the obligation to restore contractual performance consequent upon avoidance arises from the contract itself, self-evidently this explanation is unavail­ able in wholly extra-contractual cases or in cases where a contract is void ab initio rather than voidable. On the other hand, although historically dolus (fraud) and metus (fear) have sometimes been regarded as delicts, it does not appear to be possible to explain the restitution of transfers in cases of mistake, compulsion and minority as arising from a wrong: mistake and minority at least are wholly plaintiff-sided. It is also significant that the response in such cases is exclusively restitutionary, rather than compensatory. As for the second aspect of the claim that restitutio in integrum is a wholly con­ tractual remedy, namely, that it is a species of restitutionary response reserved for the restitution of performance under contracts avoided for misrepresentation, compulsion, etc, here again questions arise. De Vos’s reasons for denying that restitutio in integrum was an enrichment action were, first, that it appeared to rec­ ognise no defence of change of position or disenrichment; and secondly, that interest on sums recovered by means of this remedy was calculated retrospectively rather than prospectively.112 More recently, however, Visser has sought to refute these arguments.113 The absence of a defence of disenrichment should not in itself be regarded as fatal, while the position regarding interest has itself been dictated by the classification of the remedy.114 Speaking more generally, comparative scholarship suggests that restitutio in integrum is in truth a relatively sophisticated technique for reversing enrichment in the context of reciprocal transfers:115 whereas the traditional enrichment condictiones are designed to effect the restitu­ tion of unilateral transfers, restitutio in integrum is much better adapted to the restitution of bilateral performances. In fact it seems that it does not matter whether restitutio in integrum is labelled a contractual or an enrichment remedy, as long as the difficult problems associated with the winding up of failed contracts are treated consistently across South African law.116 112   ibid 158–59. On the other hand, Michael Lambiris takes the view that restitutio in integrum can­ not be an ‘enrichment action’ because it does not merely restore the parties to their former position, but also constitutes the instrument by means of which the contract is avoided. M Lambiris, Orders of Specific Performance and Restitutio in Integrum in South African Law (Durban, Butterworths, 1989) 181, 198–200, 319 n 7. 113  See generally Visser, ‘Rethinking Unjustified Enrichment’, n 45 above, 211–25; Unjustified Enrichment, n 5 above, 101–13, 517–26. 114  Visser, ‘Rethinking Unjustified Enrichment’, n 45 above, 218–19; Unjustified Enrichment, n 5 above, 111–12. 115  Visser, Unjustified Enrichment, n 5 above, 101–13, especially 112–13, 517–26. 116  Visser, Unjustified Enrichment, n 5 above, 90–113, drawing on the work of Phillip Hellwege, Die Rückabwicklung gegenseitiger Verträge als einheitliches Problem (Tübingen, Mohr Siebeck, 2004). But see S Miller, ‘Unjustified Enrichment and Failed Contracts’ in R Zimmermann, DP Visser and K Reid, Mixed Legal Systems in Comparative Perspective: Property and Obligations in Scotland and South Africa (Oxford, Oxford University Press, 2004) 437, and see now analysis of this question in Du Plessis, The South African Law of Unjustified Enrichment, n 30 above, 74–75.



Plan of Action

19

VI  Plan of Action In Chapters 2, 3, 4 and 5, I will begin by subjecting the condictio indebiti of South African law to an analysis based on unjust factors. Once again, the pattern of application of this condictio in modern law suggests three principal unjust factors: mistake (Part I), compulsion and incapacity (Part II). However, I will consider also the role played by restitutio in integrum as a mechanism for effecting the res­ titution of transfers on these grounds. While the South African courts adopt an explicitly ‘mixed’ approach to the restitution of enrichment by transfer by means of the condictio indebiti, where the restitutionary remedy applied has been restitutio in integrum they have generally favoured a pure unjust factors approach. In addition, I will consider the historical interaction between restitutio in integrum and the condictio indebiti: in particular, I will attempt to show that many of the characteristics of the modern condictio indebiti are explicable only when the influ­ ence of restitutio in integrum is appreciated. It follows that once De Vos’s identifi­ cation of form of action with cause of action is abandoned, an unjust factors approach to the restitution of enrichment by transfer may well turn out to have far greater explanatory power than one founded on the absence of a legal ground. Only once the role played by unjust factors in South African law is accorded proper recognition does it become possible to describe accurately, evaluate and if necessary reform the modern law. However, even if it turns out that the dominant approach applied by the South African courts to the restitution of enrichment by transfer is indeed one founded on unjust factors, the question remains whether the absence of legal ground approach is not in some sense inherently superior. Would it not then be prefera­ ble for the South African courts to retreat from the position which the law has reached and attempt instead to bring it into line with an analysis based purely on the absence of a legal ground? This question is particularly pressing in light of recent developments in English law. Within the last decade it has been forcefully argued in the common law context that the unjust factors approach is internally incoherent, and that it has poor explanatory power in certain important cases of enrichment by transfer. If these arguments turn out to be compelling, then despite the evidence accumulated in Parts I and II there would be powerful reasons for a change of direction in South African law. Thus, Chapter 6, Part III, will be concerned with the assessment of the most compelling criticisms levelled against the unjust factors approach to enrichment by transfer in general, and mistaken transfers in particular.

2 Mistake: Nineteenth Century I Introduction Even in classical Roman law, the condictio to recover what was not owed appears to have been denied in cases where the transferor knew that the sum paid was not owing.1 In other words, mistake on the part of the transferor appears to have been a requirement of recovery even at that early stage in the development of the action. It has been argued that the classical error requirement was a ‘negative’ one, in the sense that it was for the defendant to prove knowledge once the plaintiff had shown that the transfer which he had made had in fact not been owing.2 This view is at least compatible with Gaius’ (authentically classical) account of the claim to recover the payment of an amount not owed (solutio indebiti).3 On the other hand, in other texts in Justinian’s Digest proof of mistake is positively required in order to found recovery.4 Thus, it appears that by the time of Justinian, mistake had certainly come to be regarded as one of the elements of liability under what was now labelled the condictio indebiti, requiring to be proved by the plaintiff in each case.5 As a result, throughout the European ius commune the condictio indebiti was understood to require positive proof of mistake.6 Most importantly for present purposes, the mistake requirement was universally acknowledged in Roman-Dutch law.7 From there, this positive mistake requirement was received into South African 1   See, eg, Justinian, Digest 12.6.1.1 (Ulpian, On the Edict, Book 26): ‘If someone mistakenly pays what is not owed he can recover by this condictio, but if he pays knowing that the money is not owed, the payment is not recoverable’. 2   See, eg, R Zimmermann, The Law of Obligations: Roman Foundations of the Civilian Tradition (Cape Town, Juta, 1990) 849–51. 3  Gaius, Institutes 3.91. 4   See, eg, D 22.3.25 pr (Paul, Questions, Book 3): ‘He who alleges that he has paid an indebitum must prove that he paid it through fraud on the part of the recipient or some just cause of ignorance, and unless he show this, he cannot recover’. 5   See, eg, Zimmermann, Law of Obligations, n 2 above, 849–51. 6  DP Visser, Die Rol van Dwaling by die Condictio Indebiti: ’n Regshistoriese Ondersoek met ‘n Regsvergelykende Ekskursus (Dr iur thesis, University of Leiden, 1985) chs 2 and 3. Mistake remains a positive requirement for recovery by means of the condictio indebiti in Scottish law, another uncodified civilian system: see Morgan Guaranty Trust Co of New York v Lothian Regional Council 1995 SC 151. 7  See, eg, Hugo Grotius, Inleydinge tot de Hollandsche Rechtsgeleertheid 3.30.6; Johannes Voet, Commentarius Ad Pandectas D 12.6 n 6; W De Vos, Verrykingsaanspreeklikheid in die Suid-Afrikaanse Reg, 3rd edn (Cape Town, Juta, 1987) 69–71; Visser, Die Rol van Dwaling, n 6 above, ch 4.

24

Mistake: The Nineteenth Century

law.8 Proof of mistake undoubtedly remains a requirement for success in the condictio indebiti in modern South African law.9 For example, in ABSA Bank Ltd v Leech and others NNO, the Supreme Court of Appeal held that, ‘in order to succeed [in the condictio indebiti] the respondents had to prove that a payment was made in the mistaken belief that it was owing’.10 In fact, proof of mistake is not in itself enough to succeed under this action. Until relatively recently, there could be no restitution of a mistaken transfer by means of the condictio indebiti if the mistake was one of law. On the other hand, a mistake of fact had to be excusable in order to found recovery. In the important decision of the then Appellate Division of South Africa in Willis Faber Enthoven (Pty) Ltd v Receiver of Revenue11 in 1992, the former rule was abrogated. However, in the same decision, excusability was elevated to the status of a universal requirement for all mistakes triggering restitution. As the law now stands, there can be no restitution of a mistaken payment by means of the condictio indebiti unless the plaintiff’s mistake can be shown to have been an excusable one. It is primarily with the origins and significance of the excusable mistake requirement that Chapters 2 and 3 will be concerned. I will begin this chapter with an examination of the condictio indebiti in Roman and Roman-Dutch law; in particular, I will consider Daniël Visser’s argument that the excusable mistake requirement derives from the concept of error excusabilis employed by the nineteenth-century German Pandectists in order to try to reconcile the apparently conflicting views on mistake of law reflected in Justinian’s Corpus Juris Civilis.12 However, I will question his explanation, suggesting that the requirement is due instead to the influence on the condictio of the extraordinary, equitable remedy of restitutio in integrum; specifically, restitutio on grounds of iustus error (reasonable mistake). First, I will examine certain early cases in which restitutio in integrum on grounds of iustus error was used to effect the restitution of mistaken transfers outside the contractual context. In so doing I hope to challenge the widely held view that the condictio indebiti has historically been the only remedy used to reverse this species of enrichment in South African law. However, I will examine also the application of restitutio in integrum on grounds of iustus error to the restitution of performance rendered under contracts vitiated by unilateral mistake.13 I hope to   Port Elizabeth Divisional Council v Uitenhage Divisional Council (1868) 1 Buch 221.   See, eg, De Vos, Verrykingsaanspreeklikheid, n 7 above, 171–209; DP Visser, Unjustified Enrichment (Cape Town, Juta, 2008) 290–95; J Lotz (updated FDJ Brand), ‘Enrichment’ in The Law of South Africa, 2nd edn (Durban, LexisNexis Butterworths, 2005) vol 9, para [212]; J Du Plessis, The South African Law of Unjustified Enrichment (Cape Town, Juta, 2012) 130–39. 10   ABSA Bank Ltd v Leech and others NNO [2001] ZASCA 65, 2001 (4) SA 132 (SCA) para 8 (Streicher JA). 11   Willis Faber Enthoven (Pty) Ltd v Receiver of Revenue 1992 (4) SA 202 (A). 12   Summarised in English in Visser, Unjustified Enrichment, n 9 above, 301–18. 13   This is distinct from the well-known application of restitutio in integrum to the rescission of contracts induced by misrepresentation. See, eg, AJ Kerr, The Principles of the Law of Contract, 6th edn (Durban, Butterworths, 2002) 267–300; S Van der Merwe et al, Contract: General Principles, 3rd edn (Cape Town, Juta, 2007) 105–17; D Hutchison et al, The Law of Contract in South Africa (Cape Town, Oxford University Press Southern Africa, 2009) 116–36; RH Christie and GB Bradfield, Christie’s The Law of Contract in South Africa, 6th edn (Durban, LexisNexis, 2011) ch 7. 8

9



Condictio Indebiti

25

show that the iustus error concept applied in these two contexts is essentially the same. The content of this concept can in turn be traced back to the influence of English contract law, specifically the doctrine of mistake in Equity, during the latter part of the nineteenth century. It is this – the influence of English Equitable principles via South African contract law – that accounts for the excusable mistake requirement applied to the modern condictio indebiti.

II  Condictio Indebiti  A  The Civilian Tradition From an early stage in its development, Roman law appears to have recognised a fundamental distinction between mistakes of law and mistakes of fact.14 The late classical jurist Paul stated unequivocally that, ‘mistake of law prejudices, mistake of fact does not’.15 While a mistake of law would in no circumstances avail one who sought to rely on it, mistake of fact could be freely raised as a cause of action or defence. However, Paul himself qualified this statement by saying that specific classes of people – women, minors and soldiers – were exempt from the operation of the mistake of law rule.16 Labeo, writing two centuries before, seems to have gone further, stating as a general proposition that only those who had access to legal advice or who were themselves legally competent should be prevented from relying on mistake of law.17 In other words, Labeo appears to have thought that only where the mistake of law could reasonably have been avoided should the rule operate.18 Thus, the mistake of law rule was rationalised in terms of the more fundamental idea that one cannot rely on a careless mistake: since everyone can reasonably be expected to know what the law is, mistakes of law are typically careless.19 On the other hand, Labeo’s analysis appears to have had implications for later jurists’ understanding of mistake of fact too. Just as a mistake of law might not prejudice where, exceptionally, it could not have been avoided even through the exercise of reasonable care, according to Paul mistake of fact would 14   LC Winkel, Error Iuris Nocet: Rechtsdwaling Als Rechtsorde-Probleem (Doctoral thesis, University of Amsterdam, 1982) 189–202; ‘Mistake of Law: English and Roman Comparisons’ in WJ Swadling (ed), The Limits of Restitutionary Claims: A Comparative Analysis (London, United Kingdom National Committee of Comparative Law, 1997) 244, 246. 15   D 22.6.9 pr (Paul, Mistake of Law and Fact) (Watson’s translation). 16   D 22.6.9 pr–1 (Paul, Mistake of Law and Fact). 17   D 22.6.9.3 (Paul, Mistake of Law and Fact, quoting Labeo). 18   It seems that Labeo may have been using Aristotle’s analysis of mistake to explain the indigenous Roman rule that ‘mistake of law does not profit’. According to Aristotle, an act which is performed in ignorance ought not to be punished, since ignorance excuses, but where the actor’s ignorance was careless, in the sense that it was in his power to avoid it, then the actor will nevertheless be held responsible for his act: Nicomachean Ethics 1110b18–1111a2; 1113b22–1114a3. See further Winkel, ‘Mistake of Law’, n 14 above, 244–45, 247. 19   D 22.6.2 (Neratius, Parchments).

26

Mistake: The Nineteenth Century

prejudice if it was the product of carelessness or gross negligence (summa negligentia).20 Similarly, according to Ulpian: There is no excuse for supine ignorance of fact, but scrupulous inquiry is not required. The sort of knowledge looked for is that which does not excuse gross negligence or laxity, but does not demand the curiosity of an informer.21

It must be emphasised that this general analysis of mistakes of law and fact does not seem to have been applied to what later came to be called the condictio indebiti, at least during the classical period.22 For example, in his account of this application of the condictio Ulpian simply asserted the requirement of mistake or ignorance without qualifying it.23 Admittedly, the condictio may have been barred by mistake of law in isolated cases.24 But it does not seem that the mistake of law rule was generally applied to the condictio at this time. However, later the position appears to have changed. Towards the end of the third century AD the Emperors Diocletian and Maximian issued a rescript which appeared to prohibit generally restitution on grounds of mistake of law: ‘when someone has paid money which is not owed in ignorance of the law, then there is no recovery’.25 It may be that this rescript has been taken out of context, and was not formulated as a general prohibition after all.26 Nevertheless, to later readers of the Corpus Iuris Civilis, the ancient law on this point seemed horribly confused. Different ages adopted different approaches in their attempts to reconcile the apparent conflicts in the ancient sources. During the medieval period the weight of authority appears to have been in favour of the recovery of transfers made under mistake of law. Following the Glossators, it was argued that recovery would be refused only where the plaintiff had honoured a natural obligation in the belief that he was legally bound to do so.27 On the other hand, in the early modern period the pendulum seemed to swing: the French Humanists insisted on the application of the rule to all instances of the condictio indebiti.28 This meant that the requirement of non-negligent mistake of fact came to be applied here also, since it figured in the general analysis of mistakes of law and fact in Digest 22.6. In his Commentary on the Pandects, first published around the turn of the eighteenth century, the RomanDutch jurist Johannes Voet adopted a broadly Humanist position: not only did he apply the mistake of law rule to the condictio indebiti; he also stated that in order to   D 22.6.9.2 (Paul, Mistake of Law and Fact).   D 22.6.6 (Ulpian, Lex Julia and Papia, Book 18) (Watson’s translation).   See Winkel, Error Iuris Nocet, n 14 above, 189–202; Visser, Die Rol van Dwaling, n 6 above, 31–45. 23   D 12.6.1 (Ulpian, On the Edict, Book 26). Similarly, in a rescript of Diocletian and Maximian preserved in Justinian’s Code, recovery by means of the condictio is permitted where the mistake in question is clearly one of law: see Justinian, Code 4.5.5. See also Gaius, Institutes 3.91. 24   For example, the Emperors Severus and Antoninus issued a rescript to the effect that where an heir had paid out a legacy or fideicommissum by mistake, not realising that he could subtract the quarta Pegasiana, he could not recover the money so paid: D 22.6.9.5 (Paul, Mistake of Law and Fact). 25   C 1.18.10; also, by implication, C 4.5.6 (Diocl et Max). 26   For an account of the debate see Visser, Die Rol van Dwaling, n 6 above, 45–52; Winkel, Error Iuris Nocet, n 14 above, 189–202. 27  Visser, Die Rol van Dwaling, n 6 above, ch 2. 28   ibid ch 3. 20 21 22



Condictio Indebiti

27

found this action a mistake of fact must be nec supina nec affectata (neither negligent nor studied).29 However, as Visser has shown, although there was no unanimity among the Roman-Dutch Institutional writers regarding the mistake of law rule,30 Voet appears to have been alone in applying the requirement of non-negligent mistake of fact to the condictio indebiti.31 A number of writers, including Grotius, Vinnius and Van Leeuwen, make no mention of a requirement that mistakes of fact be neither ‘negligent’ nor ‘studied’ in their account of the condictio, while others, like Huber,32 actively refute the existence of any such requirement. A case recorded by Willem Pauw in his Observationes Tumultuariae Novae,33 concerning the recovery of grossly negligent overpayments by the executors of a deceased estate, suggests that the attitude of the Dutch courts was probably similar.34 Ultimately, the jurists of the nineteenth-century German Historical School were able to reconcile the conflicts in the Roman sources by explicitly applying to the condictio indebiti the general concept of excusable mistake latent in Digest 22.6.35 Savigny, for example, thought that although any mistake would in principle found the condictio indebiti, this assistance ought to be excluded where the mistake had been inexcusable (verschuldeten): the right to recover on grounds of mistake was founded on the principles of equity (begünstigung aus billigkeit) and it would be inequitable to permit restitution under these circumstances.36 A few years later Vangerow formulated the principle even more broadly: ‘only excusable error, but then every excusable error, without distinction as to whether it is an error of law or an error of fact’.37 This implied a general requirement of excusability applicable to  Voet, Ad Pandectas D 12.6 n 7.  Visser, Die Rol van Dwaling, n 6 above, 152–77, especially 175–77. 31   ibid 177–82, especially 182; in English, ‘Error of Law and Mistaken Payments: A Milestone’ (1992) 109 South African Law Journal 177, 183–84. See also the acceptance of this view in De Vos, Verrykingsaanspreeklikheid, n 7 above, 69–70. 32  Huber, Praelectiones 3.28.7. 33  Pauw, Observationes Tumultuariae Novae 613. 34  Visser, Die Rol van Dwaling, n 6 above, 180–82; ‘Error of Law and Mistaken Payments’, n 31 above, 183; Unjustified Enrichment, n 9 above, 302–3. 35   Augustin Leyser, writing towards the end of the eighteenth century, had already proposed sub­ ordinating the intractable law/fact distinction to a more fundamental principle of error invincibilis, unavoidable mistake: Meditationes ad Pandectas vol V (Frankenthal, Gegel, 1778) spec 289, 1–2. See Zimmermann, Law of Obligations, n 2 above, 869–71. On the contribution of the German Historical School and the Pandectists to the mistake of law debate, see Visser, Die Rol van Dwaling, n 6 above, ch 5; ‘Unjustified Enrichment’ in R Zimmerman and DP Visser (eds), Southern Cross: Civil Law and Common Law in South Africa (Cape Town, Juta, 1996) 523, 529–31; Unjustified Enrichment, n 9 above, 303–5. 36   FC von Savigny, System des heutigen römischen Rechts, vol III, (Berlin, Veit und Comp, 1840) 448, para XXXV (Irrthum und Unwissenheit ). 37  KA von Vangerow, Lehrbuch der Pandekten, 7th edn (Marburg und Leipzig, RG Elwert Verlagsbuchhandlung, 1876) vol III, 397–98. The translation is Daniel Visser’s: see ‘Unjustified Enrichment’, n 35 above, 529. cf also the work of Otto Bähr, who argued that no mistake, even a mistake of fact, would found the condictio indebiti unless the circumstances were such that, given human nature, a mistake might easily have occurred. For Bähr, error probabilis (terminology already used by Johannes Voet at the beginning of the eighteenth century) had both substantive and procedural significance: the mistake must be one which could in theory have befallen even a careful person and was therefore likely to have occurred in this case. See Voet, Ad Pandectas D 22.6 n 6 and 7; O Bähr, Die Anerkennung Als Verpflichtungsgrund, 3rd edn (1894, Leipzig; reprinted Scientia Verlag, Aaalen) 55–56, para 19. 29 30

28

Mistake: The Nineteenth Century

every sort of mistake, wholly supplanting the mistake of law rule. However, most Pandectists followed Savigny in characterising mistakes of law as typically avoidable and therefore typically inexcusable.38 Similarly, regarding mistakes of fact, most took the view these were typically excusable (excusabilis or entschuldbar).39 For example, according to Mackeldey’s Lehrbuch, first published in 1814, error of fact would found recovery unless it arose from gross negligence and carelessness. This negative formulation – which once again closely tracked the analysis in Digest 22.640 – suggested that the plaintiff under the condictio could make out a prima facie claim merely by pointing to his mistake: only exceptionally would this prima facie claim be barred by the fact that the mistake had been grossly negligent. Thus, the Pandectists were able to harmonise the ancient texts by means of a general criterion of excusability, while in practice maintaining the distinction between mistakes of law and mistakes of fact.

B  Nineteenth-century South African Law (i)  Rooth v The State The question of the recovery of payments made under mistake of law was considered for the first time in South Africa in 1888, in Rooth v The State,41 by the Supreme Court of the independent South African Republic.42 Here, the plaintiffs had paid dues on the transfer of gold claims between August 1887 and August 1888, believing themselves liable to do so. However, it had subsequently been held by the same court that prior to the passing of certain legislation in 1888 the State had not in fact been entitled to these dues. Thus, the plaintiffs sought to recover the payments by means of the condictio indebiti, already well established in South African law. They based their claims on mistake, arguing that the mistake of law rule did not apply in South African law. According to an appendix to the Grondwet (Constitution) of the Transvaal, where the local laws failed, recourse was to be had to the Inleydinge of Grotius,43

38   See, eg, Savigny, System Des heutigen römischen Rechts, n 36 above, 448; A Thibaut, System des Pandektenrechts 4th edn (Jena, Mauke, 1814) para 29; F Mackeldey, Lehrbuch des heutigen römischen Rechts, translated from the 14th German edition by Moses Dropsie as Handbook of the Roman Law (Philadelphia, Johnson & Co, 1883) para 178; B Windscheid, Lehrbuch des Pandektenrechts, 7th edn (Frankfurt aM, Rütter & Loening, 1906) vol I, 79a. 39   This seemed to fit with Paul’s statement in D 22.6.9.2 that mistake of law did not prejudice, provided that it did not arise from gross negligence (summa negligentia). 40   D 22.6.9.2 (Paul, Mistake of Fact and Law). 41   Rooth v The State (1888) 2 SAR 259. 42   According to the South Africa Act 1909, the British colonies at the Cape and Natal were united with the former South African Republic and Orange Free State (Crown Colonies since the end of the South African War) to form the Union of South Africa. The courts of what were now the four provinces were made subordinate to a single appellate court, the Appellate Division at Bloemfontein. See, eg, RW Lee, An Introduction to Roman-Dutch Law, 5th edn (Oxford, Clarendon Press, 1953) 13 ff. 43  Grotius, Inleydinge 3.30.6.



Condictio Indebiti

29

Van Leeuwen’s Roomsch Hollandsch Recht 44 and Van der Linden’s Koopmans Handboek.45 As counsel for the applicants was quick to point out, all three jurists took the view that money paid under mistake of law could be reclaimed. However, having assessed these authorities, Chief Justice Kotzé (and with him Esselen J and De Korte J) came to the conclusion that none had discussed the question in sufficient detail or with sufficient clarity for their views to be binding on the court.46 Thus, it was necessary to have recourse directly to the Roman law itself.47 He considered those texts in which no distinction was made between mistakes of fact and mistakes of law, as well as the argument advanced inter alia by Vinnius that: the condictio indebiti is founded ex aequo et bono, and no one is allowed to enrich himself through the loss of another, which would be the case if anyone who has paid in error of law is not allowed to recover back what he has so unjustly paid.48

However, adopting what can broadly be described as the Humanist view, he followed Voet, as well as Glück and Savigny, in concluding that general texts could not prevail against passages such as Code 1.18.10 and Digest 22.6.9 pr, in which the distinction between mistakes of fact and law was explicitly made. ‘[W]here the leges are clear and specifically lay down . . . that in case of error juris the condictio indebiti does not lie . . . there can be no question of natural equity.’49 In fact, Kotzé CJ appears to have regarded the rule – which he formulated ignorantia iuris neminem excusat (ignorance of the law is no excuse)50 – as a sound one in its own right, quite apart from any authority. It was founded on sound legal policy and ‘the practical good’, as appeared from the fact that it was applied also in English law.51 He also denied that the rule conflicted with the principles of equity (aequum et bonum), as counsel for the applicants had argued. In this way the mistake of law rule was established in South African law.52 As for mistake of fact, here Kotzé CJ stated simply that, ‘the commentators and expounders of the Roman law are all agreed that money paid in mistake of fact can be recovered back’.53 Thus, he appears to have seen recovery for mistake of   Simon van Leeuwen, Roomsch Hollandsch Recht 4.14.4.   Joannes van der Linden, Koopmans Handboek 1.15.5, 15.   Rooth v The State, n 41 above, 261–63. 47   ibid 261–62. 48   ibid 263, referring to Vinnius, Quaestiones 1.47. 49   Rooth v The State, n 41 above, 263–64. Visser has criticised the approach of Kotzé CJ as unsound. He points out that Kotzé CJ simply listed the authorities for and against the rule (whether RomanDutch writers, French Humanists or Pandectists) without taking account of different phases in Roman law scholarship, or attempting to place those authorities in context. Had he confined himself to an assessment of the interpretation of the Roman sources by the Roman-Dutch writers of the seventeenth and eighteenth centuries, he might well have reached a different conclusion. See Visser, Die Rol van Dwaling, n 6 above, 236–41; in English, ‘Daedalus in the Supreme Court: the Common Law Today’ (1986) 49 Tydskrif vir Hedendaagse Romeins-Hollandse Reg 127, 135–36. 50   Rooth v The State, n 41 above, 265, 266. 51   ibid 266–67. 52   It was later confirmed by the South African Appellate Division in Benning v Union Government (Minister of Finance) 1914 AD 420. 53   Rooth v The State, n 41 above, 263. 44 45 46

30

Mistake: The Nineteenth Century

fact as entirely unrestricted. However, later in his judgment the Chief Justice remarked with respect to the mistake of law rule that: the jurists of our own time . . . are more or less inclined to adopt a middle view, and (as Glück expresses it) discard the distinction between mistake of law and mistake of fact, and simply consider if the error, whether juris or facti, be excusable (verzeihlich, entschuldbar) or not.54

The Chief Justice was clearly alluding – albeit rather cautiously – to the Pandectists’ idea of an overarching criterion of excusability, applicable to both mistake of law and mistake of fact, an idea previously unknown in South African law.55 In fact, it made no difference to the outcome of the case whether this ‘middle view’ was adopted or not, since there was not found to be any ‘special equity’ on the side of the applicants sufficient to justify departing from the characterisation of mistakes of law as typically inexcusable.56 Nevertheless, according to Visser, ‘even though the court did not accept the doctrine as part of the ratio decidendi, its sympathetic treatment of the Pandectist approach was to exercise a powerful influence on the law in regard to this matter’.57 No doubt there is much truth in this view (the development of the mistake requirement during the twentieth century will be dealt with in the next chapter). On the other hand, it does not seem that the Rooth v The State decision can be understood to have introduced into South African law the version of the requirement which it in fact now recognises, namely, a positive requirement of excusable mistake which must be demonstrated by the plaintiff in every case. As we have seen, according to the Pandectists’ analysis, mistakes of law were typically avoidable and therefore typically inexcusable, while mistakes of fact were typically excusable.58 Thus, restitution on grounds of mistake of fact would be precluded only if the mistake could be shown to be grossly negligent. This was essentially a negative requirement. However, only a few years later a positive requirement of excusable mistake of fact was independently recognised, this time by the Supreme Court of the Cape Colony, in Divisional Council of Aliwal North v De Wet.59

(ii)  Divisional Council of Aliwal North v De Wet The plaintiff in this case, the Divisional Council, had made a series of payments to De Wet between 1883 and 1888, relying on a statutory provision according to which divisional councils were permitted to pay travelling expenses to their members provided that the member’s ordinary place of residence was more than 15 miles away from the place of the meeting. De Wet had repeatedly represented to   ibid 265.   He referred explicitly to the Pandectists’ analysis of the Roman sources, citing works by Thibaut, Savigny, Mackeldey, Goudsmit, Modderman and Windscheid. 56   Rooth v The State, n 42 above, 265–67. 57  Visser, Unjustified Enrichment, n 9 above, 306. For details see Die Rol van Dwaling, n 6 above, 241–44; ‘Unjustified Enrichment’, n 35 above, 532–33; Unjustified Enrichment, n 9 above, 301–18. 58   See above at II(A). 59   Divisional Council of Aliwal North v De Wet (1890) 7 SC 232. 54 55



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the Aliwal North Divisional Council that he lived sufficiently far from the meeting place to be entitled to his expenses. In fact, when the Council finally undertook to measure the distance, it turned out to be slightly shorter than the required 15 miles. The Council now sought to recover its payments by means of the condictio indebiti, in reliance on its mistake. Chief Justice De Villiers accepted the argument of counsel for the defendant that in order to found the condictio indebiti, a mistake must not only be a mistake of fact but also a iustus error, a phrase which he translated as ‘excusable mistake’.60 In support of this proposition he cited the view of Voet, that in order to found the condictio a mistake of fact must not be supina aut affectata (‘negligent or studied’).61 Furthermore, he went on to approve the view expressed by Voet in respect of Digest 22.6, that a mistake would usually be regarded as negligent and studied if it pertained to the plaintiff’s own affairs.62 That was certainly the case here: all public roads in the district were under the Council’s control. However, De Villiers CJ immediately introduced the further qualification, not found in Voet, that even ignorance of one’s own affairs might be considered excusable if one had been led into the mistake by the recipient himself.63 He concluded that the question of the distance from his house to the meeting place of the Council was something the defendant ought to have known, since he himself travelled it all the time, and that for this reason the Council had been justified in accepting his assurances, that is, its members had not been bound to make further inquiry. Thus, he followed the argument of counsel for the plaintiff in accepting that the inducement of the plaintiff’s mistake by the defendant’s misrepresentation was determinative of the issue. Accordingly the Council recovered the money paid out. Such a positive excusable mistake requirement does not seem to have been imposed before in what would become South Africa. In Port Elizabeth Divisional Council v Uitenhage Divisional Council,64 decided in 1868, Connor J had discussed the mistake of law rule in the context of the condictio indebiti, considering many of the same authorities adduced in Rooth v The State, and concluded simply that ‘whatever difference there may be upon that question, there is no difference on this, that there must be a natural equity on the side of him who claims the condictio indebiti’.65 Similarly, in two cases decided in 1883 by the same judge, Connor J, now sitting as Chief Justice of the Natal Supreme Court,66 the condictio indebiti had been applied to mistake of fact without any qualification.67 Looking  ibid 234–35. Henry Juta’s arguments for the defendant are preserved at 233.  Voet, Ad Pandectas D 12.6 n 7, cited in Divisional Council of Aliwal North v De Wet, n 59 above, 234. 62  Voet, Ad Pandectas D 22.6 n 7, cited in Divisional Council of Aliwal North v De Wet, n 59 above, 234–35. 63   Divisional Council of Aliwal North v De Wet, n 59 above, 235. 64   Port Elizabeth Divisional Council v Uitenhage Divisional Council (1868) 1 Buch 221. 65   ibid 225. 66   Fynney v Dalton (1883) 4 NLR 71; Joseph Freeman v JH Isaacs (1883) 4 NLR 139. 67   Fynney v Dalton, n 66 above, 74: ‘it seems to me to be a tolerably correct general rule that there is a case for the condictio indebiti, whenever something has been paid or the like, in error, and when there was, or there turns out to have been, no such right of action, in the person paid, for the payment, as could not have been defeated by the person paying’. 60 61

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further back into the civilian tradition, Voet’s distinction between ignorance of one’s own affairs and ignorance of the affairs of others was drawn in the context of Digest 22.6, the general title on mistake of law and fact, not Digest D.12.6 on the condictio indebiti in particular. The distinction is a singularly unhelpful one when applied to the condictio indebiti: it is hard to imagine how a mistake as to one’s own indebtedness could be anything other than a mistake as to one’s own affairs. In fact, De Villiers CJ’s reformulation of Voet’s negative ‘supina aut affectata’ test in positive terms had fundamentally changed its character. In formulating the requirement in terms of iustus error or ‘excusable mistake’, De Villiers CJ required the excusability of the transferor’s mistake to be actively demonstrated: the defendant had misrepresented the distance in question to the Council, it had been reasonable of the Council to accept his assessment, and therefore it was the defendant rather than the plaintiff who was responsible for the mistake. Thus, De Villiers CJ’s reinterpretation of Voet’s test had the effect of shifting the burden of proof from the defendant – to demonstrate that the mistake had been negligent – to the plaintiff – to demonstrate that it had been excusable or reasonable. In order to show this, the plaintiff was required to show that it was not the Council but rather the defendant, De Wet, who had been responsible for the mistake. Chief Justice De Villiers’ iustus error requirement quickly became orthodoxy throughout the British Colonies at the Cape and Natal. In Chaffer v Wade and Sons,68 decided in 1905, the Supreme Court of Natal stated obiter that excusable mistake of fact was required to found the condictio indebiti. Bale CJ held, citing Divisional Council of Aliwal North v De Wet, that ‘nor does every error of fact excuse, but only such errors as a man might fall into, notwithstanding ordinary care’.69 More significantly, in Peters v Adams, decided in 1907, the court explicitly followed Divisional Council of Aliwal North v De Wet in regarding the inducement of the plaintiff’s mistake by the defendant as crucial to determining ‘justus error’.70 It was held, following the reasoning in Divisional Council of Aliwal North v De Wet, that while an error concerning the plaintiff’s own affairs would generally be considered ‘supina aut affectata’, ‘if the plaintiff has been led into the mistake by the defendant himself he is entitled to relief’.71

  Chaffer v Wade and Sons (1906) 27 NLR 68, 75–76.  ibid 75.   Peters v Adams (1907) 28 NLR 429. See also the very similar decision in Bell v Ramsay (1928) 49 NPD 266. 71   Peters v Adams, n 70 above, 433. In fact the plaintiff, a clerk at the Government Savings Bank, had paid out £5 to the defendant in the mistaken belief that there were sufficient funds in his account; this mistake arose from a previous error on the part of the plaintiff (he had entered a withdrawal as a credit instead of a debit) and not from any conduct on the part of the defendant. Thus, the plaintiff ’s mistake in this respect was held to be insufficient to found the condictio, although ultimately the case was decided on another ground. 68 69 70



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C Conclusion To sum up: there is little in Voet’s Commentaries, in the writings of the Pandectists or in applications of the condictio indebiti in South African law prior to Divisional Council of Aliwal North v De Wet to suggest that a plaintiff in that action must demonstrate the presence of an excusable mistake of fact in order to succeed. Nor is there anything in these sources to suggest that a plaintiff is entitled to relief in the form of the condictio only where his mistake has been induced by the other party. Instead, we must look elsewhere for the source of the rules applied by De Villiers CJ in Divisional Council of Aliwal North v De Wet. A clue is provided by the phrase ‘iustus error’ itself, which does not appear to have been used in connection with the condictio indebiti prior to this. In fact, the phrase occurs in Digest Title 4.1, ‘On restitutio in integrum’. On its face, then, the use of the phrase iustus error in the context of the condictio indebiti by De Villiers CJ indicates some association or overlap between the condictio indebiti and the remedy of restitutio in integrum. Furthermore, it is noteworthy that in the same year in which Divisional Council of Aliwal North v De Wet was decided, the phrase ‘iustus error’ was being used for the first time to describe the kind of mistake that would allow a mistaken party to recover performance rendered under a contract. Thus, we might also reasonably suspect some overlap between the content of iustus error in the context of the condictio indebiti and its content in the contractual context; between iustus error as an unjust factor and iustus error as a ground of contractual invalidity. Accordingly, in the next section I will examine in general terms the application of the extraordinary remedy of restitutio in integrum to the restitution of mistaken transfers in South African law. Next, in particular, I will examine the application of this remedy to recover performance rendered under contracts vitiated by mistake. In this way I hope to show how the concept of iustus error – previously alien to it – came to be applied to the condictio indebiti, and how the analogy between restitutio in integrum and the condictio indebiti implied by this cross-application of the iustus error concept may have influenced the character of the condictio indebiti in twentieth-century South African law. Moreover, by exploring the interaction between English law and the Roman-Dutch sources in contract cases of the late nineteenth and early twentieth centuries, I hope to shed light on the content of the iustus error concept itself. I hope to demonstrate that this content can in turn be traced back to the influence of English law, specifically English Equity, during the latter part of the nineteenth century.

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III  Restitutio in Integrum on Grounds of Iustus Error A  The Civilian Tradition72 It is necessary to begin by distinguishing two senses in which the term restitutio in integrum can be used in the context of the uncodified civilian tradition.73 In the first sense it refers to a particular species of remedy with particular conditions of application. Specifically, it refers to the conditions on which a transaction may be avoided and benefits rendered under it restored. In the second sense, however, this term denotes a kind of response: namely, the restitution of benefits by both parties to a bilateral transaction. Traditionally it had been supposed that classical Roman law embraced the first sense.74 Restitutio in integrum belonged to the ius honorarium, being one of a range of mechanisms by means of which the Praetor mitigated the harshness of the ius civile. In case of fear (metus) or fraud (dolus), for example, in addition to the equit­able defences represented by the exceptio metus and exceptio doli, the Praetor granted two active remedies, one penal (the actio quod metus causa or actio de dolo) and one restitutionary, restitutio in integrum.75 Although classical Roman law had no clear concept of substantive invalidity,76 nevertheless any transaction in respect of which restitutio in integrum was ordered was effectively avoided, in the sense that any performance rendered under it was reversed. The amalgamation of these remedies apparent in titles such as Digest 4.2, ‘Acts done as a result of fear’, was attributed to Justinian’s compilers. More recently, however, this traditional view has been challenged.77 As I will explain more fully in Chapter 4, it is argued that in classical Roman law the term restitutio in integrum referred to the restitutionary response only, as opposed to an independent remedy.78 Thus, the actio quod metus causa, although technically a penal remedy, was in fact the mechanism used to effect restitution, the generic in integrum restitutio. Whatever the historical position in Roman law, in the ius commune restitutio in integrum does indeed appear to have been regarded as a restitutionary remedy in its own right.79 As such, it had a number of key characteristics. Although the pro72   I will consider the historical origins of restitutio in integrum in more detail in Chapter 4 with respect to transfers made under compulsion: the detailed treatment of restitutio on grounds of metus (fear) in the Roman and Roman-Dutch sources permits a fuller investigation of this question in that context. For present purposes, it is enough to sketch in outline the historical development of this remedy. 73   cf Chapter 1 at V where a slightly different distinction is drawn. 74   On this traditional view see Zimmermann, Law of Obligations, n 2 above, 656–57, 680 ff. 75   See further Chapter 4 at II(A). 76   See, eg, Zimmermann, Law of Obligations, n 2 above, 678–81. 77  By B Kupisch, In Integrum Restitutio und Vindicatio Utilis bei Eigentumsübertragungen im Kassischen Römischen Recht (Berlin, De Gruyter, 1974). 78   See Chapter 4 at II(A)(i). 79   MA Lambiris, Orders of Specific Performance and Restitutio in Integrum in South African Law (Durban, Butterworths, 1989) 191–92; DP Visser, ‘Rethinking Unjustified Enrichment: a Perspective of the Competition between Contractual and Enrichment Remedies’ (1992) Acta Juridica 203, 220–21; Visser, Unjustified Enrichment, n 9 above, 108–11. For details see Chapter 4 at II(B)(i).



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cedural distinction between the ius civile and ius honorarium had long lost its significance, restitutio in integrum continued to be regarded as an expression of praetorian justice, designed to provide relief where the ius civile was silent.80 Thus, it belonged to a separate remedial jurisdiction: in the words of Huber, ‘[restitutio in integrum] is not really an action, but an extraordinary remedy, by which in default of an ordinary action the judge is requested to exercise his duty and power’.81 Such herstelling in het geheel was effected by means of an order of relief obtained from the Hooge Raad, as representative of the sovereign.82 Moreover, and consequent on its extraordinary nature, it was regarded as an equitable remedy, in the sense that the court could intervene in whatever manner equity appeared to demand. Finally, unlike a conventional action, in terms of which relief is available under specific conditions as of right, restitutio in integrum in the ius commune was entirely discretionary. Thus, it could be granted in any circumstances at all, provided the court felt that there was a reasonable cause for restitution.83 According to Van der Linden, in principle these included ‘all such equitable grounds according to which the transaction ought not to continue to exist’.84 These key characteristics had important implications for the scope of restitutio in integrum in Roman-Dutch law. On the one hand, in the context of a legal order which now thought in terms of the substantive validity of obligations, restitutio in integrum was regarded as the appropriate mechanism to sweep away contracts.85 In fact, the remedy appears to have been construed by some as an exclusively contractual one: Grotius speaks only of obligations in his discussion of ‘restitution on grounds of fear, fraud and minority’.86 On the other hand, as in Roman law, it was understood by most to include a wide range of responses, applicable to a wide range of human actions:87 as Voet says in his discussion of fear (metus), ‘it [restitutio] is open . . . to him who suffered loss through intimidation by having given, promised or left undone something to his detriment’.88 These responses extended even to the granting of clemency in criminal cases.89 However, the restitution of money and goods remained one of the primary applications of the remedy.90   See especially Voet, Ad Pandectas D 4.1 n 1.  Ulrik Huber, Heedendaegse Rechtsgeleertheyt 4.37.1 (Gane’s translation); Visser, ‘Rethinking Unjustified Enrichment’, n 80 above, 221. 82  Grotius, Inleydinge 3.48.5. See also Ulrik Huber, Heedendaegse Rechtsgeleertheyt 4.37; Van Leeuwen, Roomsch Hollandsch Recht 4.42.2; Dionysius Godefridus van der Keessel, Praelectiones 3.48.5. 83   Huber refers to ‘any just cause which can induce the judge to grant it’: Huber, Heedendaegse Rechtsgeleertheyt 4.37.12 (Gane’s translation). 84   Van der Linden, Koopmans Handboek 1.18.10. 85   See, eg, Simon van Leeuwen, Censura Forensis 4.43.2; Voet, Ad Pandectas D 4.1 n 21; Van der Linden, Koopmans Handboek 1.18.10. 86   Grotius begins, ‘we have seen how obligations are determined: let us now see how they are rendered inoperative by legal remedies’: Grotius, Inleydinge 3.48.1 (Lee’s translation), speaking of herstellinge generally. See also Van Leeuwen, Roomsch Hollandsch Recht 4.42.4; Van der Linden, Koopmans Handboek 1.18.10. 87   See Huber’s discussion of responses in Heedendaegse Rechtsgeleertheyt 4.37.10. 88  Voet, Ad Pandectas D 4.2 n 3 (Gane’s translation). 89   Visser, ‘Rethinking Unjustified Enrichment’, n 79 above, 221. 90   See Chapter 4 at II(B)(i). 80 81

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Regarding the specific grounds on which relief was granted, as in the Roman sources, fear (metus), fraud (dolus), minority and absence receive by far the fullest treatment. Huber says, ‘five [grounds for restitution] are stated in the laws: fear, fraud, minority, absence and finally any just cause’, although in his discussion of the residual category he explicitly considers iustus error.91 However, several Roman-Dutch writers include also iustus error as a nominate ground in this list, following the opening fragments of Digest 4.1, the general title on restitutiones in integrum. In fact, while Digest 4.1.1 (attributed to Ulpian) lists fear, fraud, minority and absence as grounds of restitutio,92 Digest 4.1.2 (attributed to Paul) adds change of status and iustus error.93 Thus, Voet in his commentary on Digest 4.1 has, ‘the just causes of restitution are fear, fraud, minority, loss of status, absence, alienation with the object of frustrating a judicial proceeding and iustus error’.94 Similarly, van den Linden lists as recognised grounds, ‘fear or violence, fraud, minority, absence, iustus error, suffering damage to the extent of more than the half’.95 Thus, it appears that even if Ulpian and Paul were not after all enumerating a list of substantive grounds on which an independent remedy of restitutio in integrum would be granted, nevertheless this is how the fragment was understood by the Roman-Dutch writers.

B  Nineteenth-century South African law In modern South African law, restitutio in integrum appears largely to have lost this sweeping character.96 An award of restitutio in integrum no longer involves the exercise of a wide-ranging equitable discretion as to the existence of a reasonable cause (iusta causa) for intervention. Nor does it permit the same degree of flexibility as to the character of the restitutionary response. However, in early South African law restitutio in integrum still retained a large measure of its ius commune vitality. Recognised as an independent remedy in Roman-Dutch law, it retained the potential to be applied in entirely new situations. In particular, the com­bination of features outlined above – the range of responses which it encompassed, including the restitution of extra-contractual transfers, as well as the explicit recognition 91  Huber, Heedendaegse Rechtsgeleertheyt 4.37.12 and 4.41.6 (Gane’s translation): ‘I say “just error”, so that what was done deliberately, without error, however imprudently, can by no means be annulled. Further, the error must be just, nor merely free from duplicity and simulation, but such that the person who says he erred must adduce an actual, effective cause outside himself, by which he was entangled in error and a transaction resulting in loss’. 92  Ulpian, On the Edict, Book 11. 93  Paul, Opinions, Book 1. 94  Voet, Ad Pandectas D 4.1 n 26. 95   Van der Linden, Koopmans Handboek 1.18.10. 96   Visser, ‘Rethinking Unjustified Enrichment’, n 80 above, 223; G Lubbe, ‘Voidable Contracts’ in R Zimmerman and DP Visser (eds), Southern Cross: Civil Law and Common Law in South Africa (Cape Town, Juta, 1996) 261–63. But cf Lambiris, Orders of Specific Performance, n 80 above, ch 12, who maintains that it retains its character as an extraordinary, discretionary and equitable mechanism even in modern law. Fehr v Gordon and Rennie NNO [1987] ZASCA 100, 1988 (1) SA 125 (A) provides a modern example of an attempt to obtain an order of restitutio in integrum on grounds of iustus error.



Restitutio in Integrum on Grounds of Iustus Error

37

of mistake (iustus error) as a named ground of relief in the sources – meant that it overlapped considerably with the condictio indebiti as a mechanism for effecting the restitution of mistaken transfers. These points are illustrated by a series of import­ant nineteenth and early twentieth-century decisions. In White Brothers v Treasurer-General,97 decided in 1883, in which the relief sought was the restitution of duty unlawfully levied by the Cape Colonial Government, Chief Justice De Villiers simply assumed that restitutio in integrum was indeed the appropriate mechanism to effect restitution: ‘the further question arises whether the plaintiffs, having paid duty, can recover the moneys so paid; in other words, whether this is a case in which the plaintiffs are entitled to be relieved by means of a restitutio in integrum’.98 Following Voet, he listed the grounds of restitutio in integrum as ‘metus [fear], dolus [fraud], minor aetas [minority], Capitis diminutio [loss of civil status], absentia [absence], alienatio judicii mutandi causa [alienation with the object of frustrating a judicial proceeding], and justus error [reasonable mistake]’.99 In fact, the case turned on whether the plaintiffs could be said to have made the payments under duress: in particular, whether duress of goods was sufficient to found the restitution of an extra-contractual payment like this one.100 However, in discussing the possibility of a claim based on iustus error, De Villiers CJ quoted the following sentence from Vinnius’ discussion of the condictio indebiti in his Selectae Quaestiones: [I]f a person makes a payment knowing that he is not indebted, it is agreed on all hands that he has not any right of repetition; for a payment which is subject to repetition if made by mistake, amounts to a donation, if made with full knowledge.101

Thus, it appears from this decision, first, that De Villiers CJ regarded restitutio in integrum as a remedy in its own right, with application outside the recovery of contractual performance. Moreover, at least insofar as mistaken payments were concerned, he appears to have regarded it as essentially interchangeable with the condictio indebiti. The equitable character of restitutio in integrum and its wide remedial scope appears also from other contemporary decisions of the Cape Supreme Court. Stewart’s Assignee v Wall’s Trustee and others102 concerned an application for the setting aside of a liquidation account which had already been duly advertised and confirmed, as well as the filing of a new one and the redistribution of the estate accordingly. De Villiers CJ held that, ‘our Courts would not be bound by the strict rules of the Civil law, but would take for guidance the more liberal principles which guided the Dutch courts’.103 A similar approach is evident in the judgment of Sir John Kotzé, by now Judge President of the Eastern Cape Division of the Cape   White Brothers v Treasurer-General (1883) 2 SC 322, 349.  ibid. 99  Voet, Ad Pandectas D 4.1 n 26, quoted at 349 (De Villiers CJ). 100   See further Chapter 4 at III(A). 101   No pinpoint citation is provided for this passage, which appears at 349. 102   Stewart’s Assignee v Wall’s Trustee and others (1885) 3 SC 243. 103   At 246. In this respect he relied on Voet, Ad Pandectas D 4.6 n 9. 97 98

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Supreme Court, in Umhlebi v Estate Umhlebi104 in 1905. The plaintiff, Sarah Umhlebi, had in 1892 consented to the transfer of the family farm into her son’s name by an order of the Supreme Court. She believed at the time that her marriage had been governed by customary law, in terms of which on his death her husband’s entire estate had passed to her son. In fact, she had been married in community of property, and was thus entitled to a half share in the farm according to RomanDutch common law. Thirteen years later she discovered her mistake, and sought an order declaring that she was entitled to this half share and directing that it be retransferred to her from her son’s estate. Kotzé JP held that the plaintiff could not, ‘with any show of truth or justice be said to have renounced these rights and to have voluntarily made her choice to waive these rights in favour of her eldest son.’105 Accordingly, ‘upon every principle of law and equity the claimant is entitled to the relief which she asks.’106 The majority of civilian writers took the view that restitutio in integrum could be granted whenever a person had been prejudiced without his own fault, relying on the so-called ‘general clause’ of the Praetor’s edict preserved in Digest 4.6.1.107 Voet in particular had regarded iustus error as a ground for restitution in itself.108 Kotzé JP concluded that: The equitable spirit of our Roman Dutch law, to a large extent due to the influence of Canon law, is indeed one of its leading features. Hence ignorance of one’s own right, if it be a just and probable ignorance, is a good ground for restitution or relief according to the practice adopted in the Netherlands.109

Thus, the mistake of law rule was not regarded by Kotzé JP as presenting any obstacle to the claim. Unlike the condictio indebiti, this global equitable remedy could be founded on an unlimited range of factors: provided that equity appeared to demand relief, it was unaffected by the rule that mistake of law prejudices. This accounts for the very different attitude to the rule adopted by Kotzé JP here, in comparison with his decision in Rooth v The State.110 Essentially, he was exercising a different jurisdiction.111   Umhlebi v Estate Umhlebi (1905) 19 EDC 237.   At 246. Nor could she be said to have abandoned her rights at any point during the 13 years after the order was made, or to have given the impression that she had done so, since she remained ignorant of them throughout that period. 106  At 248. 107   Kotzé JP referred specifically to Voet, Ad Pandectas D 4.6 n 9, the passage quoted by De Villiers CJ in Stewart’s Assignee v Wall’s Trustee, n 102 above. 108   Here Kotzé JP referred to Voet, Ad Pandectas D 4.1 n 26. 109   Umhlebi v Estate Umhlebi, n 104 above, 249. 110   See II(B)(i) above. 111  Compare Steiger v Union Government (1919) 40 NPD 75. Here the plaintiff sought restitutio in integrum of his resignation, under protest, from the civil service, on grounds of metus, ie, fear of public disgrace if he were to be dismissed. It was argued that had the plaintiff known his rights, he would have known that the defendant was not entitled to dismiss him. Thus, the metus alleged was not iustus, ie, not ‘such as to overcome a mind of ordinary firmness’. This argument was successfully raised in Lilienfeld & Co v Bourke 1921 TPD 365. However, unlike the court in the Lilienfeld & Co v Bourke case, in Steiger v Union Government Dove-Wilson JP was prepared in principle to admit a claim for restitutio in integrum. Again, this more lenient approach is presumably attributable to the form of action employed, ie, the ‘equitable remedy’ of restitutio. See Chapter 4 at III(B)(ii) and IV(B). 104 105



Restitution of Contractual Performance

39

Once again, these decisions show that restitutio in integrum had retained its character as an equitable remedy of great flexibility even into the twentieth century. Such remedial flexibility clearly had the potential to effect fundamental changes in the substantive doctrines of Roman-Dutch private law. This is illustrated in particular by White Bros v Treasurer-General, where De Villiers CJ appears to have regarded restitutio in integrum and the condictio indebiti as essentially equivalent, thus setting the stage for the transplanting of the iustus error concept from restitutio to the condictio.112 On the other hand, this conception of restitutio in integrum as a flexible, equitable remedy could lead also to the forging of entirely new substantive doctrines: this is illustrated by its novel application in the Umhlebi case.

IV  Restitution of Contractual Performance on Grounds of Iustus Error There is a further important respect in which the independent remedy of restitutio in integrum appears to have effected fundamental changes in the substantive doctrines of the ius commune in early South African law. This is in its application to contractual performance: restitutio in integrum seems to have been used in early South African law in order to effect the restitution of performance tendered under contracts vitiated by unilateral mistake. Furthermore, the influence of English law in this respect is marked: although it had its origins in the ius commune, it appears that as an extraordinary, equitable remedy, restitutio in integrum could serve also as a conduit for the application of the principles of English Equity. I will begin by outlining briefly the approach to contractual mistake in the uncodified civilian tradition. I will then describe the English law of contractual mistake as it appeared in the textbooks of the late nineteenth century, emphasising the distinction between mistake at common law and in Equity.113 Finally, I will consider the influence of the English law of contractual mistake on the law of South Africa; specifically, the influence of the doctrines of Equity on the remedy of restitutio in integrum and on the concept of iustus error.

A  The Civilian Tradition The system of specific contracts which characterised classical Roman law (contracts were either verbal, written, real or consensual) makes it difficult to generalise about the consequences of mistake in the formation of contract: these differed markedly according to the nature of the contract in question. However, mistake certainly figures in the classical jurists’ discussions of the consensual contracts, in particular, sale. For example, a contract of sale would fail if the parties were labouring under   cf II(C) above.   ‘Equity’ and ‘Equitable’ (as opposed to ‘equity’ and ‘equitable’) are used throughout to refer specifically to the jurisdiction of the English Chancery Division. 112 113

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the same mistake as to the identity of the thing sold. Julian gives what is probably a marginal case: ‘you unwittingly sold me, who did not know the facts, a silver-­ covered table as solid silver; the purchase is of no effect and a condictio will lie to recover the money paid’.114 On the other hand, a sale might be destroyed by dissensus also: according to Ulpian, ‘if I thought that I was buying the Cornelian farm and you that you were selling the Sempronian, the sale is void because we were not agreed upon the thing sold’.115 Thus, it appears that in classical Roman law, both common mistake and actual dissensus could render a sale void.116 Any performance already made under such a sale would be recoverable. This subjective approach to contract formation prevailed in Roman-Dutch law too. According to Grotius’ Inleydinge tot de Hollandsche Rechtsgeleertheid (Introduction to Roman-Dutch Law), since the creation of a contract depended on the free exercise of will, a person could not be bound by something done by mistake.117 Voet introduced into his general discussion of mistakes of law and fact the further requirement that mistakes be ‘reasonable’ (probabilis), as opposed to ‘negligent and studied’,118 but as in Roman law itself, there does not appear to be anything to indicate that this requirement was intended to apply to mistakes excluding consensus in particular.119 Later in the eighteenth century the French jurist RobertJoseph Pothier advanced a more systematic account of contractual mistake, based on the Roman sources, which categorised different types of mistake according to their subject matter, and identifying certain species in particular as sufficiently serious to render a contract invalid.120 Thus, error in corpore (mistake as to subject matter) or error in negotio (mistake as to the nature of the transaction) would destroy the contract; error in substantia (mistake as to quality), on the other hand, would not. Nevertheless, Pothier’s account remained grounded in the Will Theory. For him, contractual liability stemmed from the mutual assent of the parties.121 114  Julian, Urseius Ferox, Book 3, D18.1.41.1 (Watson’s translation). See generally Zimmermann, Law of Obligations, n 2 above, 587 ff. 115  Ulpian, On Sabinus, Book 28, D18.1.9 pr (Watson’s translation). 116  Zimmermann, Law of Obligations, n 2 above, 590, 596. cf the view of Prof JC De Wet, who argued on the basis of Digest 22.6 (the general title on mistakes of law and fact) and D 4.1.2 (where iustus error is identified as a ground of restitutio in integrum) that even where dissensus was established, a party to a contract in Roman law would still be bound if the appearance of consensus was due to his fault. JC De Wet, Dwaling en Bedrog by die Kontraksluiting (Cape Town, Nasionale Pers, 1943) 6–9. 117  Grotius, Inleydinge 3.1.19; 3.14.4. See Dale Hutchison, ‘Contract Formation’ in R Zimmermann and DP Visser (eds), Southern Cross: Civil Law and Common Law in South Africa (Cape Town, Juta, 1996) 181. Grotius also added the qualification that a mistaken party who was negligent either in investigating the matter or in expressing himself would be liable to compensate any loss suffered by the other party to the contract as a result, but the source of this obligation appears to have been the negligently inflicted loss itself: Hugo Grotius, De Iure Belli ac Pacis 2.11.6.3. 118  Voet, Ad Pandectas D 22.6 n 6. cf II(A) above. 119   See, eg, JC De Wet and AH Van Wyk (eds), Die Suid-Afrikaanse Kontraktereg en Handelsreg, 5th edn (Durban, Butterworths, 1992) vol 1, 19 n 40, where the evidence in favour of the application of this requirement to mistakes vitiating consensus is acknowledged to be ‘thin’. Contrast De Wet, Dwaling en Bedrog, n 117 above, 10; Hutchison, ‘Contract Formation’, n 117 above, 181 n 123. 120  Zimmermann, Law of Obligations, n 2 above, 609 ff. 121   DJ Ibbetson, A Historical Introduction to the Law of Obligations (Oxford, Oxford University Press, 1999) 220–21.



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B  Nineteenth-century English Law Pothier’s Traité des Obligations appears to have exerted a profound influence on the English law of contract during the nineteenth century.122 At times, judges relied directly on civilian sources in deciding cases before them. More signific­ antly, mistake was accorded a prominent role as a factor capable of vitiating contract by the writers of the great nineteenth-century contract textbooks, eg Leake’s The Elements of the Law of Contracts in 1867123 and Pollock’s Principles of Contract in 1876,124 textbooks which appear in turn to have been heavily relied upon by judges in what would become South Africa, particularly those of the Cape Colony. However, the idea that contractual liability arose solely from consensus created difficulties in practice: [A]ll too often it might occur that what appeared to be a perfect agreement concealed a more ragged mixture of things on which the parties agreed, things on which they disagreed, and things to which one or both of them had given no thought.125

Nor was it clear that a wholly subjective account of contractual mistake could be reconciled with existing case law.126 Thus, Pothier’s account of mistake was qualified in the English context by a theory of objective agreement: the promisor was bound to perform his promise in accordance with what he was reasonably understood by the promisee to mean, rather than what he actually meant, a compromise articulated in the well-known dictum of Blackburn J in Smith v Hughes in 1871.127 As a result, and rather artificially, only certain kinds of mistake were treated as capable of destroying the parties’ contract.128 First, one could distinguish cases in which the parties were at cross-purposes from those in which the contract has been entered into under some misapprehension, whether this was common to both parties or unique to only one of them. Strictly speaking, it was only in the first case that consensus was excluded, but as in Pothier’s scheme, in nineteenth-century English law the second type of mistake was regarded as capable of rendering a contract void, provided the mistake was a sufficiently serious one.129 On the other hand, mistakes 122   Also influential was Savigny’s System des heutigen römischen Rechts, n 36 above. See generally Ibbetson, Law of Obligations, n 121 above, ch 12, especially 220–21, 225–26; and in more detail C MacMillan, Mistakes in Contract Law (Oxford/Portland, OR, Hart Publishing, 2010) chs 5 and 6. 123   SM Leake, The Elements of the Law of Contracts, 1st edn (London, Stevens & Son, 1867). 124   F Pollock, Principles of Contract at Law and in Equity, 1st edn (London, Stevens and Son, 1876). 125  Ibbetson, Law of Obligations, n 121 above. 126  ibid. 127   Smith v Hughes (1871) LR 6 QB 597. At 607: ‘If, whatever a man’s real intention may be, he so conducts himself that a reasonable man would believe that he was assenting to the terms proposed by the other party, and that other party upon that belief enters into the contract with him, the man thus conducting himself would be equally bound as if he had intended to agree to the other party’s terms’. This followed the earlier decision in Freeman v Cooke (1848) 2 Ex 654. 128   See generally Ibbetson, Law of Obligations, n 121 above, 226–29; MacMillan, Mistakes in Contract Law, n 122 above, ch 7. 129   For Pollock, ‘there does exist a common intention, which however is founded on an assumption made by both parties as to some matter of fact essential to the agreement’. In determining what constituted an ‘essential’ or ‘fundamental error’, Pollock followed Pothier in distinguishing between mistakes

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resulting in dissensus could be mutual or unilateral. If the parties were at crosspurposes, their mutual mistake rendered the contract void. But if one party’s belief as to the contract’s terms coincided with the objective agreement, then the other’s mistake was unilateral and generally inoperative. Such objectivity was compounded in the case of written contracts. Here, the operation of the parol evidence rule meant that no external evidence could be adduced in order to contradict the terms of the written agreement.130

(i)  Mistake at Common Law This approach to contractual mistake is clearly apparent in the cases and textbooks of the late nineteenth century. According to the second edition of Leake’s Law of Contracts in 1878: [I]n regard to the incidence of mistake upon an agreement, it will be found that the mistake may occur in the act of agreement itself; in expressing the matter of the agreement; in the application of the expressed agreement to the facts; or in some collateral fact or circumstance that is material in inducing the agreement.131

Mistake ‘in some collateral fact or circumstance that is material in inducing the agreement’ could be unilateral,132 as in Cundy v Lindsay,133 or common to both parties. Thus, in Cooper v Phibbs,134 where both parties entered into a lease of property in the belief that the respondent lessor was entitled to it, whereas in fact it belonged to the petitioner lessee, the contract was held to be invalid.135 On the other hand, ‘mistake in the application of the expressed agreement to the facts’ (this category included cases of both patent136 and latent137 ambiguity) rendered the contract void as a result of mutual mistake. As for ‘mistake in the act of agreement itself’, after Foster v Mackinnon138 in 1869 even a written contract could be relating to the nature of the transaction, to the person of the other party, and to the subject matter of the agreement: Pollock, Principles of Contract, n 125 above, 372–74, and 386 ff regarding error as to subject matter in particular. 130   See, eg, MacMillan, Mistakes in Contract Law, n 122 above, 54–56. 131   SM Leake, An Elementary Digest of the Law of Contracts, 2nd edn (London, Stevens and Son, 1878) 311. 132   See Ibbetson, Law of Obligations, n 121 above, 229, and the authorities cited at ibid n 60. 133   Cundy v Lindsay (1878) 3 App Cas 459. Also Smith v Wheatcroft (1878) 9 Ch D 223. 134   Cooper v Phibbs (1867) LR 2 HL 149. The case is discussed in Leake, Law of Contracts, n 132 above, 346–47 and Pollock, Principles of Contract, n 124 above, 400–401. 135   Further examples of fundamental mistake are given by Blackburn J in Kennedy v Panama, NZ and Australian Royal Mail Co (1867) LR 2 QB 580, 588. In that case the error, regarding the validity of a contract between the defendant company and the Postmaster-General of New Zealand, was held to be insufficiently fundamental, ie, not an error in substantia. 136   This referred to cases where there was some ‘generality or ambiguity of the expression’; where the terms of the contract were so incurably ambiguous as to render the contract void for vagueness. See Leake, Law of Contracts, n 131 above, 329. 137   Latent ambiguity, however, arose in those rare instances where some expression in the contract, ‘sufficiently certain in itself ’, applied equally to two different things, one of which was meant by one party to the contract and the other by the other: Leake, Law of Contracts, n 131 above, 331. Raffles v Wichelhaus (1864) 2 Hurl & C 906 is the stock example. 138   Foster v Mackinnon (1869) LR 4 CP 704.



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avoided through the defence of non est factum, on analogy with a deed. However, reliance on errors of this kind seems to have been confined to cases in which the promisor had been wholly mistaken about the type of document he had signed.139 Finally, a mistake as to the terms of the contract, though capable of producing dissensus, was not enough to allow the mistaken party to escape: thus ‘mistake in expressing the matter of the agreement’ was generally without effect, the parties being held to the objective form of their respective promises. In fact, the only circumstance in which a unilateral mistake might render a contract void was where the promisee actually knew of the promisor’s mistake as to the terms: according to Hannen J in Smith v Hughes, ‘the promisor is not bound to fulfil a promise in a sense in which the promisee knew at the time the promisor did not intend it’.140 A party to an apparent agreement void for mistake had several courses open to him. First, he could raise the nullity of the transaction as a defence when the other party sought to enforce it. Moreover, as Pollock points out in his second edition, ‘if he think fit he may also take the opportunity of seeking by counterclaim to have the instrument set aside’, although ‘it seems to be necessary for this purpose to obtain a transfer of the action to the Chancery Division’; alternatively, he could sue in the Chancery Division himself to have the transaction declared void, all causes and matters for the setting aside of deeds or other written instruments being assigned to Chancery by the Judicature Act of 1873.141 On the other hand: where he has actually paid money as in performance of a supposed valid agreement, and in ignorance of the facts which exclude the reality of such agreement, he may recover back his money as having been paid without consideration (the action ‘for money received’ of the old practice).

In support of this proposition Pollock cites Cox v Prentice.142

(ii)  Mistake in Equity However, there were also a range of cases in which the contract remained technically valid according to the common law but in which Equity would nevertheless come to the assistance of the mistaken party.143 ‘Equity recognised mistake as a factor, like fraud, accident or surprise, which could affect the conscience of the individual.’144 A doctrine of Equitable mistake had been in place since the eighteenth century and before, and the textbook writers of the period incorporated it   J Spencer, ‘Signature, Consent, and the Rule in L’Estrange v Graucob’ [1973] CLJ 104, 119–21.   At 610. Thus, if Smith had known that Hughes believed it to be a term of their contract that the oats sold were old oats, whereas in fact the terms to which Hughes had objectively consented contained no such warranty, Hughes could escape. 141   F Pollock, Principles of Contract, 2nd edn (London, Stevens and Son, 1878) 432 n (b) and (d). These issues are less fully discussed in the first edition. 142   Cox v Prentice (1815) 3 M&S 344. Pollock, Principles of Contract, n 141 above, 432. 143   Despite the administrative fusion of the Courts of Law and Equity by the Judicature Act of 1873, mistake cases continued to be dealt with on much the same basis as they had been before fusion. See MacMillan, Mistakes in Contract Law, n 122 above, 8 and generally ch 3. 144   ibid 38. 139 140

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into their taxonomies of mistake, although they differed in the degree to which they attempted to fuse the principles of Law and Equity.145 In Leake’s textbook the section on ‘mistake in expressing the matter of the agreement’ includes also the principles according to which written agreements could be rectified if they failed to reflect the true intentions of the parties.146 However, Equitable relief for mistake was not limited to rectification in cases of common mistake in the expression of the parties’ agreement. On the one hand, ‘there was a general discretion to refuse to order specific performance against a person who had entered into a contract under a mistake, even where the other party had been in no way to blame’.147 On the other, there were cases where a contract entered into by mistake might be rescinded, although only where the mistake was due to the conduct of the other party: these latter cases tended to be classified as instances of fraud or misrepresentation.148 Where rescission was permitted, the mistaken party could recover his performance, subject to the restitution of any performance rendered by the other party. Regarding the particular circumstances in which relief was granted, returning to Leake’s classification, where one party was mistaken as to some ‘matter of fact collateral to the agreement itself’, even where his mistake had no effect at law, nevertheless specific performance against him might be denied.149 Of course, where a collateral mistake had been caused by the fraudulent misrepresentation of the other party, then ‘the contract may be avoided at law and in equity upon that ground, which will be the matter for separate consideration in the following section (on Fraud)’.150 But even where such a mistake had been caused ‘undesignedly’, ‘without any fraudulent intention in fact’, ‘by negligence of himself, or his agent, or in any manner for which he may be responsible’,151 Equity might refuse specific performance against the mistaken party:152 an example is Denny v Hancock.153 Moreover, there were indications that Equity ‘may, in some cases, rescind the contract  Ibbetson, Law of Obligations, n 121 above, 226–28.  Leake, Law of Contracts, n 131 above, 319–29. 147  Ibbetson, Law of Obligations, n 121 above, 227. 148   ‘We speak not of Mistake induced by Fraud, but of Fraud simply, as a ground for avoiding contracts, though there can be no Fraud where there is no Mistake’: Pollock, Principles of Contract, n 124 above, 356. 149  Leake, Law of Contracts, n 131 above, 335 cites here Malins v Freeman (1837) 2 Keen 25, where specific performance was denied against a purchaser who negligently purchased a lot at an auction, under the mistake that it was a different lot, which he intended to purchase, although the purchaser remained liable for damages. At 34–35: ‘I think that he never meant to enter into this contract, and that it would not be equitable to compel him to perform it’. On forms of equitable relief for mistake in Equity prior to 1875 see MacMillan, Mistakes in Contract Law, n 122 above, 53–67. 150  Leake, Law of Contracts, n 131 above, 336; Pollock, Principles of Contract, n 125 above 387. 151  Leake, Law of Contracts, n 131 above, 336–37. 152   See MacMillan, Mistakes in Contract Law, n 122 above, 44–48 on grounds of Equitable intervention, especially 47 on ‘instances short of fraud’. 153   Denny v Hancock (1870) 6 Ch App 1. According to Leake, ‘where a purchaser, in inspecting the property offered for sale, was misled as to the boundary by the plan prepared by the vendor’s surveyor for the purpose of the sale; the bill of the vendor for specific performance was dismissed with costs’: Law of Contracts, n 131 above, 337. See also WW Kerr, A Treatise on the Law of Fraud and Mistake, 2nd edn (London, Maxwell & Son, 1883) 490. 145 146



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altogether’.154 Leake relied in this respect on Torrance v Bolton,155 decided in 1872, where fraud was said to be a nomen generalissimum, capable of founding rescission in any case in which ‘it is unconscientious for a person to avail himself of the legal advantage which he has obtained’.156 This wide definition of fraud (so-called ‘constructive’ fraud) considerably extended the relief available to a mistaken party in Equity. The recognition of truly ‘innocent’ misrepresentation as a ground of rescission later in Redgrave v Hurd extended it still further.157 Similarly, where the mistake arose in the expression of the agreement, although the common law adopted a highly objective approach, particularly if the parties had reduced their agreement to writing, Equity might nevertheless come to the assistance of a mistaken party. As we have seen, in Smith v Hughes it was recognised that if one party knew of the other’s mistake as to the objective terms of the contract, he could not hold the mistaken party to his promise. However, in Equity, where the mistake of one party as to terms was known to the other, this constituted grounds for setting aside the contract altogether.158 Thus, in Garrard v Frankel,159 Romilly MR held that the defendant lessee must have perceived the plaintiff’s mistake as to the amount of rental specified in the lease, and that contrary to the general rule, ‘the Court will . . . interfere in cases of mistake, where one party to the transaction, being at the time cognizant of the fact of the error, seeks to take advantage of it’.160 Moreover, here too, a mistake in the expression of the agreement was grounds for refusing specific performance. In Higginson v Clowes,161 ‘the particulars of a sale by auction were ambiguous as to including or excluding the timber, and the vendor and purchaser accepted them with the different meanings’.162 Grant MR held that the inaccuracy of the contractual document drawn up by the plaintiff had created the misapprehension in the mind of the defendant. [E]ven supposing the general words . . . would in strict construction bear, and properly bear, the meaning put upon them by the Plaintiff, my opinion is, that it would not be equitable to enforce the specific execution of a bargain, so different from that, which the purchaser might reasonably enough conceive himself to have concluded.163  Leake, Law of Contracts, n 131 above, 337.   Torrance v Bolton (1872) 42 LJ Ch 177. 156   At 177. Here a purchaser at auction had been induced to buy certain property by a misrepresentation as to the absence of incumbrances on the property in the advertised particulars. Pollock regarded this case as ‘really belong[ing] to the head of Misrepresentation’: Pollock, Principles of Contract, n 124 above, 396–97. 157   Redgrave v Hurd (1881) 20 Ch D 1. On the limits of rescission for mistake at this time, see generally J Story, Commentaries on Equity Jurisprudence, 1st English edn (London, Stevens and Haynes, 1884) paras [147]–[150]. For a succinct modern account see Ibbetson, Law of Obligations, n 121 above, 234–36. 158   See, eg, Leake, Law of Contracts, n 131 above, 318–19. 159   Garrard v Frankel (1862) 30 Beav 445. 160   At 451. See also Harris v Pepperell (1867) 5 Eq 1. 161   Higginson v Clowes (1808) 15 Ves 516. 162  Leake, Law of Contracts, n 131 above, 330. See also Swaisland v Dearsley (1861) 29 Beav 430. 163   Higginson v Clowes, n 161, above, 524. Pollock, Principles of Contract, n 124 above, 389–90 adds to this the dictum of Romilly MR in Baxendale v Seale (1855) 19 Beav 601, 612–13: ‘ “where the terms 154 155

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Mistake: The Nineteenth Century

C  Nineteenth-century South African Law It is against the backdrop of nineteenth-century English contract law that the South African law of contractual mistake must be considered. As we have seen, the Roman-Dutch authorities seemed to provide little guidance regarding the effect of contractual mistakes beyond a broad commitment to subjectivity. Certainly, there was no detailed discussion of particular factual complexes in their writings. On the other hand, the English law reports and textbooks of the late nineteenth century were rich with contemporary case law, well suited to the prevailing socio-economic context. The attraction of the English sources must have been particularly strong for the members of the Supreme Court of the Cape Colony, presided over for the last quarter of the century by the Anglophile Chief Justice De Villiers.164

(i)  Restitutio in Integrum on Grounds of Iustus Error Generally speaking, nineteenth-century South African law followed English law in its treatment of contractual mistake. A material mistake as to some fundamental underlying fact was understood to render a contract void ab initio,165 ‘material’ being broadly defined with reference to Pothier’s mistake typology.166 Similarly, following English law, in cases of mutual mistake, where there was found to be a genuine ambiguity in the terms, or indeed where offer and acceptance simply did not correspond, the contract would fail. On the other hand, in cases of dissensus as a result of a unilateral mistake as to the terms of an objectively-determined contract, here the position was more complex. The treatment of unilateral mistake in modern South African law can be traced back to the seminal decision in Logan v Beit,167 handed down by De Villiers CJ in 1890 on the day after his decision in Divisional Council of Aliwal North v De Wet.168 Beit, the plaintiff in the court a quo, had bought shares from Logan ‘cum rights’, a phrase which he interpreted as entitling him to certain additional bonus shares which had accrued to Logan prior to the sale. He sought specific performance according to his version of the contract are ambiguous, and where, by adopting the construction put upon them by the plaintiff, they would have an effect not contemplated by the defendant, but would compel him to include in the conveyance property not intended or believed by him to come within the terms of the contract”, and the plaintiff refuses to have the contract executed in the manner in which the defendant is willing to complete it, specific performance cannot be granted’. 164   See eg SD Girvin, ‘The Architects of the Mixed Legal System’ in R Zimmerman and DP Visser (eds), Southern Cross: Civil Law and Common Law in South Africa (Cape Town, Juta, 1996) 95, 119–21. 165   Confirmed with respect to common mistake by the Appellate Division in Dickinson Motors (Pty) Ltd v Oberholzer 1952 (1) SA 443 (A). In Beyers v McKenzie 1880 Foord 125, De Villiers CJ followed Cundy v Lindsay (1877–8) LR 3 App Cas 459 in suggesting that even a unilateral mistake of this kind might invalidate a contract. 166   Hutchison, ‘Contract Formation’, n 117 above, 183–84. 167   Logan v Beit (1890) 7 SC 197. See, eg, the detailed discussion of this case by Hutchison in ‘Contract Formation’, n 117 above, 185–87. 168   See II(B)(ii) above.



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of the contract. Failing this, he sought ‘cancellation’ of the contract and repayment of the purchase price in exchange for the return of the shares received plus dividends. In the court a quo, Lawrence JP relied heavily on English sources. First, he considered the evidence as to the meaning of ‘cum rights’. He cited Leake’s textbook in concluding that this was a case of genuine ambiguity, with the result that there was no completed contract.169 In consequence, he said, no specific performance of the contract could be obtained, and either party who had acted upon it under an erroneous apprehension that there was a binding agreement was entitled, as far as practicable, to restitutio in integrum.170 By way of authority for these propositions, he referred to Higginson v Clowes and Denny v Hancock, both decisions in which specific performance of a contract of sale had been refused against a mistaken party because of the misleading nature of a document prepared by the other party.171 He also referred to Pollock’s discussion172 of Cox v Prentice,173 to the effect that money paid in performance of a supposedly valid agreement could be recovered back by means of the action for money had and received ‘of the old practice’.174 On appeal against the decision, the future Chief Justice James Innes, counsel for Logan, invoked the terminology of Roman-Dutch law, arguing that there was no iustus error on the part of Beit which entitled him to restitutio in integrum of his performance.175 Schreiner, appearing on behalf of Beit, insisted that ‘the case was one for cancellation’. He cited Garrard v Frankel, in which the fact that the mistake of one party as to terms had been known to the other was regarded as constituting grounds for setting aside the contract altogether.176 Chief Justice De Villiers considered both English and Roman-Dutch law, treating them, as he so often did, as if they were in substantial agreement. He endorsed Logan’s reading of the contract: objectively speaking, the bonus shares had been excluded. However, if the plaintiff’s unilateral mistake as to the contract’s terms had been a iustus error, ‘that is to say, a mistake which is reasonable and justifiable’ in the circumstances, he could recover his performance under the contract, subject to counter-restitution,177 by means of

169   ‘If it appear that each party mistook the meaning of the other, and that they intended different things by the same expression, then the basis of the agreement fails and the contract is avoided’: Leake, Law of Contracts, n 131 above, 331. Note, however, that the passage cited actually refers in situ to Raffles v Wichelhaus, the ‘Peerless’ case, n 137 above, where the ambiguity was latent. 170   Logan v Beit, n 167 above, 212. 171   He also referred to Baxendale v Seale, n 163 above. 172  Pollock, Principles of Contract, n 141 above, 432. 173   (1815) 3 M&S 344. 174   In fact, while Higginson v Clowes and Denny v Hancock were cases in which the contract remained valid at law, as we have seen, the action for money had and received lay only in cases where the contract was void. It does not seem that there was sufficient ambiguity in the terms to render the contract at issue in Logan v Beit void at law. Nor does it seem that the plaintiff ’s mistake would have founded the cancellation of the contract in English Equity. 175   Logan v Beit, n 167 above, 214–15. See also his argument in Heatlie v Colonial Government (1887) 5 SC 353, 355. 176   At 215. In fact the case is referred to in the report as Gunard v Franken, but the citation is correct. 177   At 215–16.

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restitutio in integrum.178 In fact, the plaintiff had not been reasonably justified in supposing that the bonus shares were intended to be sold under the phrase ‘cum rights’. He could by inquiring have ascertained that the shares had already been distributed; ‘at all events the defendant was not responsible for the plaintiff’s ignorance’.179 De Villiers CJ emphasised that if the defendant had known or had reason to know that the plaintiff had been mistaken as to the meaning of the phrase but had deliberately remained silent, ‘relying upon the literal meaning of the terms’, the plaintiff would have been entitled to restitution of his performance.180 It is clear from his citation of secondary sources that Lawrence JP was purporting to follow English law, however confused his reasoning may have been. De Villiers CJ, on the other hand, applied the Roman-Dutch remedy of restitutio in integrum. Presumably he saw no significant difference between the application of restitutio in integrum here and in White Bros v Treasurer-General, where it was applied to effect the recovery of an extra-contractual payment.181 In both cases he appears to have regarded the remedy as an equitable technique for relieving a deserving party from the consequences of a prior juristic act. However, it does not appear that De Villiers CJ applied any distinctively Roman-Dutch concept of ‘iustus error’ in this case. As we have seen, he seemed to regard knowledge or inducement of the mistake on the part of the defendant – conduct which would make it unconscionable for the defendant to refuse to restore the benefit – as a necessary condition for restitutio. This conception of iustus error does not appear to have any counterpart in the RomanDutch sources. In fact, the requirement that the defendant be in some way ‘responsible for the plaintiff’s ignorance’ appears to have had its origins in the English cases cited by counsel and relied on by Lawrence JP in the court below. Thus, while the remedy applied was a Roman-Dutch one (restitutio in integrum), the substantive basis on which relief was granted appeared to derive from English Equity. These hypotheses are confirmed when we widen our focus to include other decisions of the Cape Supreme Court during the 1890s. First, the language of restitutio in integrum and iustus error was confined to cases in which the plaintiff’s mistake was treated as the basis for equitable relief against the consequences of a valid contract, as opposed to cases in which the contract was rendered entirely void at law. Thus, it was reserved for cases in which there had been a unilateral mistake as to objectively-determined contractual terms, or where the parties’ contract failed to reflect their true intentions, as opposed to cases in which the terms of the contract were patently ambiguous, or where there was simply no correlation between offer and acceptance. Indeed, restitutio in integrum appears to have been limited to cases in which active intervention was necessary, such as those in which the plaintiff was seeking to recover his performance or set aside a document, as opposed to cases in which the court could simply decline to enforce the contract against the mistaken party. Secondly, the content given to iustus error in this context bears close resem  At 216–17.   At 216. 180   At 215. 181   See III(B) above. 178 179



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blance to the doctrine of Equitable mistake in English law, in the sense that an error was considered iustus where it would have been unconscionable for the other party to rely on it. In particular, the courts treated the knowledge or inducement of the mistake by the other party as a trigger for restitutio in integrum. In Maritz v Pratley,182 where the defendant had bid for a lot at auction believing it to incorporate both a mantelpiece and a ‘pier-glass’, whereas the mantelpiece and glass were specified as different lots in the auction catalogue, and he had objected immediately afterwards when the auctioneer put up the glass for sale, Chief Justice De Villiers treated the case as one of straightforward dissensus in which offer and acceptance did not correspond: ‘the defendant did not agree to purchase the same thing which the claimant was endeavouring to sell’.183 Innes, who argued the case as if the defendant were seeking to be relieved of his unilateral mistake as to the terms on equitable grounds, and therefore contended that the defendant’s ‘gross negligence’ estopped him from setting up his mistake, was given short shrift.184 As long as the evidence was sufficient to support a finding of ‘bona fide mistake’,185 De Villiers CJ reasoned, the fact that the mistake had been negligent was not significant.186 On the other hand, in Wiggins v Colonial Government,187 decided in 1899, he took an entirely different approach. Where the government had undercharged for conveying the defendant’s melons by rail, he held obiter that there could be no restitutio in integrum of performance rendered.188 There had been no ‘iustus error’ sufficient to justify relief: ‘it is not alleged that the defendant in any way misled the Department or knew that the clerk was making an undercharge . . . the clerk knew that the melons were not in bags and he had the tariffbook to guide him’.189 Indeed, even if there had been such an allegation, the impossibility of counter-restitution would have precluded the claim.190   Maritz v Pratley (1894) 11 SC 345.   At 347. 184   cf Juta QC who, in full accordance with the approach outlined above, argued (at 347) that ‘this is not a question of restitution on the ground of mistake, but one whether there was ever a complete contract owing to a want of consensus. Negligence has nothing to do with such a case’. 185   At 347. 186   Thus, it may be misplaced to argue that the decision in Maritz v Pratley rests on a subjective approach to contract inconsistent with the De Villiers CJ’s objective approach to contract formation in Logan v Beit: see, eg, BR Bamford, ‘Mistake and Contract’ (1955) 72 South African Law Journal 166; WA Ramsden, ‘Justus Error Reconsidered’ (1973) 90 South African Law Journal 393. The Chief Justice seems to have been wrong in his analysis of the case: in fact, it appears to have been a case of unilateral mistake, as argued by Innes. Nevertheless, in his view it was simply a different sort of case from Logan v Beit, one in which an objectively constituted contract had never come into existence. Accordingly, there was no need for any equitable intervention and no place for a plea of iustus error. 187   Wiggins v Colonial Government (1899) 16 SC 425. 188   At 426. In fact, the government’s primary claim was for specific performance, ie, payment of the difference between the higher and lower rates. Although the contract had been concluded on the basis of the lower rate, the issue was complicated by the government’s argument that it could not legally carry at any rate other than that given in the tariff book. 189   At 428–29. 190   At 429–30. Maasdorp J, on the other hand, seemed to decide at 430–31 that the contract had in fact been concluded at the higher tariff, but that the government were estopped from enforcing it against the defendant because of their misrepresentation. See also the judgment of Buchanan J at 430: ‘if this were a question of quantum meruit the evidence would not support the claim now made’. 182 183

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The close relationship between restitutio in integrum on grounds of iustus error and Equitable relief for mistake in English law appears particularly clearly from a series of decisions regarding rectification handed down by Chief Justice De Villiers during the last quarter of the nineteenth century. As early as 1879 in Saayman v Le Grange, faced with an action to rectify a title-deed, he had remarked that: I have not met with this peculiar form of action to rectify an error in a title-deed in any of the Roman or Roman-Dutch authorities; but it is continually occurring in this Colony. The action to rectify transfer is purely a matter of equity, and the Courts of Equity in England have decided that in analogous cases the Statute of Limitations does not run until the discovery of the error. I think this Court should in a case of this nature be guided by the decisions of the Courts of Equity in England.191

In Van der Byl v Van der Byl & Co,192 plaintiff and defendants had entered into a lease, drawn up by the defendants; both wrongly believed it to be on the same terms as a previous lease, the defendants having assured the plaintiff that this was the case. It was held, following English law, that the plaintiff could either cancel the lease or obtain rectification of the new lease. According to De Villiers CJ, in order to achieve the same outcome ‘in Dutch law’ it would have been necessary to bring an action for restitutio in integrum of the contractual document on grounds of common mistake, leaving the plaintiff free to sue upon the original agreement.193 However, ‘in this Colony’ it was established practice for the plaintiff to ask directly for rectification: these remedies, he said, were ‘founded upon the same broad principles of equity’.194 Similarly, in Klette v SA Cycle Factory Ltd,195 where the applicant sought to have his name struck out from the defendant’s share register, De Villiers CJ appeared to regard the rescission of the contract and removal of the applicant’s name on grounds of material misrepresentation as analogous to a claim for the ‘relief of restitution’ on grounds of fraud or iustus error.196 To this group of cases can be added also the later decision in Van Rensburg v Rice,197 decided in the Eastern Cape in 1914, where McGregor J ordered the restitutio in integrum of a contractual document on the basis of iustus error, citing as authority Voet’s commentary on this ‘special remedy’.198 Counsel for the defendant relied on Redgrave v Hurd 199 in arguing that ‘the fact that the defendant was negligent cannot alone entitle plaintiff to uphold a contract clearly entirely at variance with the evidence and facts of the case’.200 McGregor J agreed: although there had been no actual misrepresentation of the terms by the plaintiff, the use   Saayman v Le Grange (1879) 9 Buch 10, 12–13.   Van der Byl v Van der Byl & Co (1899) 16 SC 338. 193   At 348. 194   At 349. 195   Klette v SA Cycle Factory Ltd (1899) 16 SC 240. 196   On the facts, he found that there had been no misrepresentation; and if there had been, it was certainly not a material one. Buchanan J emphasised the absence of fraud. 197   Van Rensburg v Rice 1914 EDL 217. 198  Voet, Ad Pandectas D 4.1 n 2, n 3, n 26, n 29. See Van Rensburg v Rice, n 197 above, 227. 199   Redgrave v Hurd (1881) 20 Ch D 1. 200   Van Rensburg v Rice, n 197 above, 219. 191 192



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made of prior documents by the plaintiff’s agent in drawing up the final document ‘may well have helped to bring about the present controversy’.201 Thus, the error was held – exceptionally – to be iustus.

(ii) Substantive Iustus Error Doctrine In all the cases discussed in the previous section, restitutio in integrum was conceived of as a remedy directed towards either the restitution of performance or the rescission of a document (rectification). Iustus error was merely the trigger for this equitable remedy. However, by the turn of the century the concept of iustus error had begun to break free of the specific remedial context of restitutio in integrum. The phrase ‘iustus error’ continued to be associated with equitable relief from the consequences of mistake, to be raised by a party seeking to escape an objectively constituted contract. Yet it was now used to refer to any factual circumstance in which a party to a contract could rely on his mistake in order to escape. In this form the doctrine was disseminated throughout what would shortly become the four provinces of South Africa. For example, in Burger v Central SA Railways, a Transvaal case, Chief Justice Innes (as he now was) distinguished between an error entitling a signatory to a contract to claim restitutio in integrum, and ‘such justus error . . . as could be successfully pleaded as a defence to an action founded upon the written contract’.202 Indeed this approach was applied by De Villiers CJ himself in Merrington v Davidson,203 where ‘iustus error’ was used outside the context of restitutio in integrum to denote a unilateral mistake sufficient to repel a claim for specific performance. Here, the purchasers of certain property by auction sought to rely on their mistake in order to defeat the plaintiff’s claim for specific performance: according to the conditions of sale, which they had signed, they had bought lot CC, but they averred that they had actually intended to buy C. Their defence failed because their error was not ‘iustus’.204 According to the Chief Justice, they ought to have found out for themselves what lots they were buying; in fact their ‘real defence’ was that the plaintiff had negligently misrepresented which lots were to be sold, but he found this improbable. Similarly, in De Villiers v Parys Town Council,205 decided by Maasdorp as first Chief Justice of the Provincial Division of the Orange Free State in 1910, the plaintiff claimed the ‘rescission’ of a sale at auction, as well as the return of that portion of the purchase price already paid, and a promissory note. Maasdorp CJ emphasised that there had been no misrepresentation by the auctioneer inducing the plaintiff’s mistake: ‘if there was any negligence it was on 201   The defendant’s original offer was made in English. This was then translated into Dutch for the benefit of the plaintiff by the plaintiff ’s agent in such a way as to suggest that the defendant was offering to sell the land outright, rather than selling only ‘his right to and interest in the ground’. Another agent of the plaintiff then drew up the final document in English, which the defendant signed on the basis that it incorporated terms originally proposed by the defendant. 202   Burger v Central SA Railways 1903 TS 571, 578. 203   Merrington v Davidson (1905) 22 SC 148. 204   At 150. 205   De Villiers v Parys Town Council 1910 OPD 55.

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the part of the plaintiff’. Thus, the mistake, while genuine, had not been a iustus error.206 In conclusion, the terminology of iustus error, previously confined to the special remedy of restitutio in integrum, was now used generically to describe the kind of unilateral mistake that would allow a mistaken party to escape an objectively constituted contract, whether this took the form of the restitution of performance or the rescission of a contractual document, on the one hand, or the denial of specific performance, on the other. However, the doctrine of iustus error remained an equitable one: as in previous decades, the mistaken party was still regarded as seeking relief from the consequences of his mistake. Moreover, as before, the doctrine owed much to the rules of English Equity outlined in the previous section. Generally speaking, a court would intervene in a case of unilateral mistake only where the other party to the contract knew of the mistake, or, more likely, was in some sense responsible for the mistake, namely, where he had induced it. This tendency to emphasise the inducement of the mistake by the other party appears to have been encouraged by the rise of innocent misrepresentation as a ground of rescission, if not yet in South Africa207 then certainly in England. Thus, both in Natal Bank Ltd v Kuranda208 (1907) and Hoffmann v SA Conservatorium of Music209 (1908), cases concerning the meaning of iustus error, explicit reference was made to the dictum of Lord Watson in Stewart v Kennedy, decided in 1890: I think it may safely be said that, in the case of onerous contracts reduced to writing, the erroneous belief of one of the contracting parties in regard to the nature of the obligation which he has undertaken, will not be sufficient to give him the right (to rescind), unless such belief has been induced by the representations, fraudulent or not, of the other party to the contract.210

D  Modern South African Law As we have seen, the Cape Supreme Court of the nineteenth century viewed restitutio in integrum on grounds of iustus error as a distinct remedy with a wide range of applications: it could be used to effect not only the restitution of contractual performance but also the rectification of contractual documents, transfer deeds, etc. However, by the beginning of the twentieth century the doctrine of iustus

  Although this term was used only in the headnote and by plaintiff ’s counsel’s in argument.   Even in Viljoen v Hillier 1904 TS 312, Solomon J had discussed with approval the rule of English Equity that an innocent misrepresentation as to some material fact might be sufficient to allow the mistaken party to resist an action on the contract so induced, as recognised by Sir George Jessel in Redgrave v Hurd (1881) 20 Ch D 1, analogising it to the exceptio doli of Roman-Dutch law. 208   Natal Bank Ltd v Kuranda 1907 TH 155, 167. Bristowe J stated that iustus error would include ‘not only mutual mistakes, but also mistake of fact on the part of one party only, if it has been induced by the representations (whether fraudulent or not) of the other party’. 209   Hoffmann v SA Conservatorium of Music (1908) 25 SC 24, 27 by Benjamin KC for the defendants. 210   Stewart v Kennedy (1890) 15 AC 108, 121. 206 207



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error was coming to be understood as a substantive theory of contractual validity, albeit one which conceived of mistake as a ground for equitable relief from the terms of an objectively constituted contract.211 As late as 1949, in Tighy v Putter, Roper J expressed confusion as to the nature of the iustus error doctrine: it was unclear, he said, whether the rule in Umhlebi v Estate Umhlebi rested on a ‘theory of contract’ or ‘the equitable discretion to grant relief by way of restitutio in integrum’.212 However, the concept of iustus error in modern contract law still carries essentially the same meaning as it did for De Villiers CJ in Logan v Beit in 1890.213 It refers to a mistake as to terms on the part of the party seeking to escape a contract which was either known to the other party at the time of contracting,214 or ought to have been known to him,215 or which was in fact induced by him, either through a positive misrepresentation216 or by remaining silent in circumstances in which there was a duty to speak, because of a prior misrepresentation217 or where a term in the contract constituted a ‘trap for the unwary’.218 Thus inducement of the error by the party seeking to affirm the contract remains an important factor in determining whether an error is iustus. In modern law, the doctrine of iustus error has been rationalised through the theory of quasi-mutual assent, according to which the primary source of the contractual obligation, consensus, is supplemented by a secondary doctrine of reliance.219 In this respect South African law’s position regarding unilateral mistake is said to be strongly influenced by the reliance principle adopted in Smith v 211   On this phase in the development of the doctrine see generally GF Lubbe and CM Murray, Farlam and Hathaway, Contract: Cases, Materials and Commentary, 3rd edn (Cape Town, Juta, 1988) 163–68; Hutchison, ‘Contract Formation’, n 117 above, 180 ff. 212   Tighy v Putter 1949 (1) SA 1087 (T) 1101. 213   The canonical statement of the modern doctrine of iustus error in contract appears in George v Fairmead (Pty) Ltd 1958 (2) SA 465 (A) 471 and National and Overseas Distributors Corporation (Pty) Ltd v Potato Board 1958 (2) SA 473 (A) 479. For recent treatments see, eg, Christie and Bradfield, Christie’s The Law of Contract in South Africa, n 13 above, 328–36; D Hutchison and F Du Bois, ‘Contracts in General’ in F Du Bois et al, Wille’s Principles of South African Law, 9th edn (Cape Town, Juta, 2007) 747–49; Van der Merwe et al, Contract: General Principles, n 13 above, 42–53; D Hutchison et al (eds), The Law of Contract in South Africa (Cape Town, Oxford University Press Southern Africa, 2009) 99–103. 214   See, eg, Sonap Petroleum (SA) (Pty) Ltd v Pappadogianis [1992] ZASCA 56, 1992 (3) SA 234 (A). 215   See, eg, Horty Investments (Pty) Ltd v Interior Acoustics (Pty) Ltd 1984 (3) SA 537 (W); Nasionale Behuisingskommissie v Greyling 1986 (4) SA 917 (T). 216   See, eg, Allen v Sixteen Stirling Investments (Pty) Ltd 1974 (4) SA 164 (D). 217   See, eg, Du Toit v Atkinson’s Motors Bpk 1985 (2) SA 893 (A); Constantia Insurance Co Ltd v Compusource (Pty) Ltd [2005] ZASCA 29, 2005 (4) SA 345 (SCA). 218   See, eg, Brink v Humphries & Jewell (Pty) Ltd [2004] ZASCA 131, 2005 (2) SA 419 (SCA). 219   George v Fairmead, n 213 above, 471; Sonap Petroleum SA) (Pty) Ltd v Pappadogianis, n 215 above, 239–41. RH Christie, ‘The Doctrine of Quasi-Mutual Assent’ (1976) Acta Juridica 149; D Hutchison and B Van Heerden, ‘Mistake in Contract: A Comedy of (Justus) Errors’ (1987) 104 South African Law Journal 523; Hutchison and Du Bois, ‘Contracts in General’, n 213 above, 748–49; Van der Merwe et al, Contract: General Principles, n 13 above, 38–42; Hutchison et al, The Law of Contract in South Africa, n 213 above, 103–7. I am here glossing over the alternative view that the theoretical basis of this approach is the doctrine of estoppel. See JC De Wet, Dwaling en Bedrog by die Kontraksluiting (Cape Town, Nasionale Pers, 1943); ‘Estoppel by Representation’ in die Suid-Afrikaanse Reg (Leiden, Sijthoff, 1939).

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Hughes.220 If the other party knew of the contract denier’s mistake, it follows that he did not rely on the appearance of consensus. On the other hand, if he ought to have realised that the other was mistaken as to the objective terms of the contract, his reliance, although real, was unreasonable, and therefore does not deserve protection, and the same is true where the party seeking to affirm the contract himself induced the mistake, either by active representation or by remaining silent when there was a duty to speak out.221 However, this rationalisation of the iustus error doctrine appears rather artificial, particularly insofar as it purports to explain the significance of the inducement of the mistake by the other party. As we have seen, inducement as a factor permitting the mistaken party to escape his objective agreement appears to have its origins in the nineteenth-century English doctrine of Equitable mistake: according to that doctrine, the affirmer’s inducement of the error renders it unconscionable for him to assert the objective agreement against the mistaken party.222 It seems that this conception of the iustus error doctrine in general and of the inducement requirement in particular is not entirely extinct even in modern South African contract law. As recently as 2004 it was held by the Supreme Court of Appeal in Brink v Humphries & Jewell (Pty) Ltd that, ‘[t]he law recognises that it would be unconscionable for a person to enforce the terms of a document where he misled the signatory, whether intentionally or not’.223

V Conclusion If the interpretation of the early cases on contractual mistake which I advanced in the previous section is correct, this has profound implications for our understanding of the iustus error requirement in the context of the condictio indebiti. As we have seen, Chief Justice De Villiers considered it necessary to give rise to a iustus error in Divisional Council of Aliwal North v De Wet, a condictio case, that it was the defendant rather than the Council that was responsible for the mistake; 220   The approach taken by Blackburn J in this case was specifically approved by the South African Appellate Division in Pieters & Co v Salomon 1911 AD 121. For more recent references to Smith v Hughes in South African law see again Sonap Petroleum, n 215 above, 239 (Harms AJA); Steyn v LSA Motors Ltd [1993] ZASCA 163, 1994 (1) SA 49 (A) 61 (Botha JA); HNR Properties CC v Standard Bank of SA Ltd [2003] ZASCA 135, 2004 (4) SA 471 (SCA) paras [22]–[23] (Scott JA). See also Christie and Bradfield, Christie’s The Law of Contract in South Africa, n 13 above, 318–19. 221   See especially George v Fairmead, n 213 above, 471 (Fagan JA), as well as Hutchison and Van Heerden ‘Mistake in Contract’, n 219 above, 526; Hutchison et al, The Law of Contract in South Africa, n 213 above, 107. 222   English law has encountered similar difficulties in making sense of the doctrine of Equitable mistake: see Solle v Butcher [1950] 1 KB 671; Great Peace Shipping v Tsavliris Shipping (International) Ltd [2002] EWCA Civ 1407, [2003] QB 679, and generally MacMillan, Mistakes in Contract Law, n 122 above, ch 9, as well as the neat summary of the current law provided by A Burrows, The Law of Restitution, 3rd edn (Oxford, Oxford University Press, 2011) 243–45. 223   Brink v Humphries & Jewell (Pty) Ltd, n 218 above, para [2] (Cloete JA), criticised by D Hutchison, ‘ “Traps for the Unwary”: When Careless Errors are Excusable’ in G Glover (ed), Essays in Honour of AJ Kerr (Durban, LexisNexis Butterworths, 2006) 39, 47–52.

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that the other party to the transaction had actively induced the plaintiff’s mistake. Yet there is little in the civilian sources to suggest that a plaintiff in the condictio indebiti is obliged to demonstrate such a mistake in order to succeed. In fact, the iustus error requirement applied in Divisional Council of Aliwal North v De Wet appears very close indeed to the iustus error requirement applied in contemporary decisions concerning the restitution of contractual performance by means of restitutio in integrum, such as Logan v Beit, also decided by De Villiers CJ. Here, following the English doctrine of Equitable mistake, the plaintiff could be relieved of the consequences of his unilateral mistake only if the balance of equities was in his favour: if it would have been unconscionable for the other party to take advantage of his mistake. How is this similarity to be explained? As we have seen, the fact that the restitutio in integrum of the civilian tradition was primarily a restitutionary remedy brought it very close to the condictio indeed. Furthermore, like restitutio in integrum, the condictio indebiti had long been regarded as an action ‘founded on equity’,224 and continued to be so regarded in early South African law: for example, in Port Elizabeth Divisional Council v Uitenhage Divisional Council,225 decided in 1868, Connor J went so far as to specify that, ‘there must be a natural equity on the side of him who claims the condictio indebiti, the onus being on him to show it’.226 Thus, it is likely that De Villiers CJ saw no distinction at all between the restitution of contractual performance on grounds of a unilateral mistake as to terms and the restitution of extra-contractual transfers on grounds of a mistake as to liability, applying restitutio in integrum on grounds of iustus error in both cases. Indeed, given the fact that his decision in the Divisional Council of Aliwal North v De Wet case was handed down on the day after his decision in Logan v Beit, it is hard to resist the conclusion that he meant the same thing by iustus error in each case. Thus, a double legal transplant appears to have occurred in the decisions of the Cape Supreme Court at the end of the nineteenth century: of the doctrine of Equitable mistake in contract from English to South African law, and of the iustus error concept from restitutio in integrum to the condictio indebiti.

224   This view is inherent in Pomponius’ principle against unjust enrichment – ‘by the law of nature it is fair that no-one become richer by the loss and injury of another’ – and is echoed in, for example, the statement of Vinnius to the effect that the condictio indebiti is an action granted ex bono et aequo: D 12.6.14 (Pomponius, On Sabinus, Book 21) and D 50.17.206 (Pomponius, Various Readings, Book 9) (Watson’s translation); Vinnius, Selectae Quaestiones 1.47 and the discussion of this passage in Rooth v The State (1888) 2 SAR 259, 263. See also Weinerlein v Goch Buildings Ltd 1925 AD 282 at 297; Rahim v Minister of Justice 1964 (4) SA 630 (A) at 636. 225   Port Elizabeth Divisional Council v Uitenhage Divisional Council (1868) 1 Buch 221. 226   At 225.

3 Mistake Continued: Twentieth Century and Beyond I Introduction In Chapter 2 I examined both the condictio indebiti, the action traditionally employed to reverse the mistaken transfer of goods or money not owed, and the extraordinary, equitable remedy of restitutio in integrum, with reference to its role as a technique for recovering mistaken transfers. I examined the leading explanation for the excusability requirement applied to the condictio indebiti in modern South African law, that it is due to the influence of Pandectist doctrine, and argued that this explanation is not a complete one: instead, I argued, this requirement is due at least in part to the influence on the condictio of restitutio in integrum, specifically, restitutio on grounds of iustus error (reasonable mistake). In making this argument I considered the historical development of restitutio in integrum on grounds of iustus error, its application in nineteenth-century South African law, and, in particular, its application to the restitution of performance rendered under contracts vitiated by unilateral mistake. I showed that the content of the iustus error concept was essentially the same in the context of both contract and enrichment, and that this content can in large part be traced back to the influence of English Equitable doctrine on South African law during the latter part of the nineteenth century. In each case, the emphasis appeared to be on whether the recipient of the transfer was responsible for the mistake. The purpose of this chapter is, first, to consider the manner in which the excusability requirement has been interpreted and applied during the course of the twentieth and early twenty-first centuries. I will pay particular attention to the decision of the then Appellate Division of South Africa in Willis Faber Enthoven (Pty) Ltd v Receiver of Revenue1 in 1992. Secondly, drawing on the conclusions reached here and in Chapter 2, I will argue that the character of the excusable mistake requirement recognised in modern South African law is linked to a particular conception of the condictio indebiti as an extraordinary, equitable remedy, a conception of the action which is in turn derived from restitutio in integrum. I will argue that this conception of the claim to recover mistaken transfers, and the excusable mistake requirement associated with it, is not only alien to the condictio   Willis Faber Enthoven (Pty) Ltd v Receiver of Revenue [1991] ZASCA 163, 1992 (4) SA 202 (A).

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in a purely historical sense but is also foreign to the principle against unjust/ unjustified enrichment itself. For this reason the excusable mistake requirement applied in modern South African law is indefensible. Nor is it possible to justify retaining the excusable mistake requirement in some more moderate form.

II  Twentieth Century: Excusable Mistake of Fact A  ‘Neither Negligent nor Studied’ as a Rule of Evidence As we saw in Chapter 2, in Divisional Council of Aliwal North v De Wet,2 the Cape Supreme Court for the first time required a plaintiff in the condictio indebiti to show an excusable mistake or iustus error in order to succeed in his claim. The plaintiff in that case, the Divisional Council, was required to show that it could not be held responsible for its mistake; that its mistake had been induced by the defendant. This iustus error requirement continued to be applied by the Natal Supreme Court during the first decade of the twentieth century.3 While in Chaffer v Wade and Sons 4 the claim was held to be precluded by ‘want of due diligence’, in Peters v Adams,5 as in Divisional Council of Aliwal North v De Wet itself, the plaintiff’s mistake was held to be excusable because it had been induced by the recipient of the payment. However, this approach did not go unchallenged. In fact, the courts of what would become the Transvaal Province moved in the opposite direction, attempting to recast Voet’s negatively formulated requirement that the plaintiff’s mistake be ‘neither negligent nor studied’ (nec supina nec affectata)6 as a rule of evidence. Thus, in Natal Bank Ltd v Roorda,7 a decision of the Witwatersrand High Court in 1903, the plaintiff bank had mistakenly honoured a cheque which had been countermanded by the drawer, having failed to pass on his letter to the ledger clerk on duty. Yet recovery of the money paid out was nevertheless permitted: having quoted extensively from that portion of the speech of Baron Parke in the English case of Kelly v Solari 8 in which he held that ‘money . . . paid under the impression of the truth of a fact which is untrue . . . may, generally speaking, be recovered back, however careless the party paying may have been, in omitting to use due diligence to inquire into the fact’,9 Smith J simply remarked that ‘the principles of RomanDutch law are similar’.10 A similar view seems to have been taken four years later by   Divisional Council of Aliwal North v De Wet (1890) 7 SC 232. See Chapter 2 at II(B)(ii).   See Chapter 2 at II(B)(ii).   Chaffer v Wade and Sons (1906) 27 NLR 68 (Bale CJ). 5   Peters v Adams (1907) 28 NLR 429. 6   See Chapter 2 at II(A). 7   Natal Bank Ltd v Roorda 1903 TH 298. 8   Kelly v Solari (1841) 9 M&W 54. 9   ibid 59. 10   Oddly, he cited Divisional Council of Aliwal North v De Wet as authority for this proposition: Natal Bank Ltd v Roorda, n 7 above, 303. 2 3 4

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the same court in Natal Bank Ltd v Kuranda.11 Discussing the condictio indebiti, Bristowe J held that ‘where an action is brought to recover money paid under mistake the question is whether the plaintiff was ignorant of the facts, not whether he might with greater diligence have discovered them . . . though the neglect of means of knowledge may be important on the question of waiver or acquiescence’.12 He too relied on Kelly v Solari in support of this proposition. Thus, the Transvaal court distinguished carelessness per se, which was irrelevant, from such carelessness as could give rise to the inference that the plaintiff had assumed the risk of his mistake, or had not really been mistaken at all. Voet’s requirement that the mistake not be ‘grossly negligent’ or ‘neither negligent nor studied’ was recast as a rule of evidence. This approach was applied once again in Durban Corp Superannuation Fund v Campbell,13 a decision of the Durban and Coast Local Division in 1949. In response to the plaintiff’s condictio indebiti, counsel for the defendant had argued that the plaintiff ‘had the means of knowledge and carelessly refused to avail itself of the means it possessed to determine the true facts’, and that such negligence was ‘so gross as to constitute an intention of making a gift’.14 This formulation suggests that intention to donate would be implied by law in cases where the payer’s mistake had been grossly negligent. However, De Wet J chose to regard the plaintiff’s ‘gross negligence’ as a matter of purely evidentiary significance: ‘I do not think that one can spell out of the acts of negligence an intention to make a gift of the excess payment . . . Although negligence contributed toward the mistake being made, it, nonetheless, was a genuine mistake’.15 It is clear from the wording of both the defendant’s argument and the judgment itself that the ultimate source of this view was Wessels’ Law of Contract in South Africa, the first edition of which had appeared in 1937.16 Wessels doubted whether negligent mistake in fact precluded the condictio indebiti in Roman law.17 Furthermore, he asserted that ‘the modern tendency’ seemed to be to attach ‘little importance to negligence’, the essential question being whether the plaintiff was actually in error.18 In support of this proposition he cited the Divisional Council of Aliwal North v De Wet and Natal Bank Ltd v Roorda cases, as well as Kelly v Solari and further English authority.19 The second edition of this work was later extensively cited in Vorster v Marine & Trade Versekeringsmaatskappy Bpk,20 a decision of the   Natal Bank Ltd v Kuranda 1907 TH 155 (Bristowe J).   ibid 165. 13   Durban Corp Superannuation Fund v Campbell 1949 (3) SA 1057 (D). 14   ibid 1061. 15   ibid 1066. 16   JW Wessels, The Law of Contract in South Africa (AA Roberts (ed), Durban, Butterworths, 1937) vol 2, paras 3688, 3690. Indeed, para 3690 was cited in the defendant’s heads of argument: Durban Corp, n 13 above, 1059. 17   JW Wessels, The Law of Contract in South Africa, 2nd edn (AA Roberts (ed), Durban, Butterworths, 1951) vol 2, para 3688. 18   ibid para 3690. 19   Townsend v Crowdy (1860) 8 CBNS 477; Brownlie v Campbell (1880) 5 App Cas 925 (HL); London & River Plate Bank v Bank of Liverpool (1896) 1 QB 7; Holt v Markham [1923] 1 KB 504; Re Jones Ltd v Waring & Gillow Ltd [1926) AC 670 (HL). 20   Vorster v Marine & Trade Versekeringsmaatskappy Bpk 1968 (1) SA 130 (O) 133. 11 12



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Orange Free State Provincial Decision in 1968, in which this view was again applied, and referred to with approval in Calder v SA Mutual Life Assurance Society,21 Barclays Bank International Ltd v African Diamond Exporters (Pty) Ltd 22 and Nkosi v Totalizator Agency Board (Transvaal).23 The effect of Natal Bank Ltd v Roorda, Natal Bank Ltd v Kuranda, Durban Corp Superannuation Fund v Campbell and Vorster v Marine & Trade Versekeringsmaatskappy Bpk was therefore to recast the excusability requirement applied by De Villiers CJ to the condictio indebiti in Divisional Council of Aliwal North v De Wet as a mere evidentiary tool. In this form, it amounted to nothing more than the assertion that actual knowledge that the transfer was not owed – or at least indifference as to whether it was owed or not – can sometimes be inferred from ‘gross negligence’ or ‘negligent or studied mistake’. This view, if accepted, would have brought South African law into line with that of England, where Kelly v Solari still applies.

B  ‘Neither Negligent nor Studied’ as a Substantive Requirement However, as early as 1921 the Appellate Division in Union Government v National Bank of South Africa Ltd 24 had affirmed the substantive version of the iustus error requirement, at least in general terms. Here, the Transvaal postal authorities had honoured certain postal orders presented for payment by the defendant bank. In fact, the orders were forged, having been stolen three years before from one of the branches of the post office; a third party, S, who had somehow got hold of some of the orders, had managed to obtain access to another branch and stamp them. Thus, the post office sought to recover the amounts paid out. In response, the bank argued that the post office ought to have checked the notes when they were presented in order to ascertain whether they were genuine, and, having failed to do so, that their condictio indebiti was barred. When the matter came before the Appellate Division, Innes, now Chief Justice of South Africa, unhesitatingly accepted Voet’s requirement that error must be nec supina nec affectata in order to found the condictio indebiti,25 discussing also Voet’s explanation of that phrase in his commentary on Digest 22.6.26 However, he concluded that in fact the element of ‘justus error’ was present, despite the fact that it was clearly a mistake as to the plaintiff’s own affairs, and that unlike in Divisional Council of Aliwal North v De Wet, there had been no inducement of the error by the defendant.27 It appears that although the iustus error requirement was construed as a substantive one, it was   Calder v SA Mutual Life Assurance Society 1972 (4) SA 285 (R) 290.   Barclays Bank International Ltd v African Diamond Exporters (Pty) Ltd 1977 (1) SA 298 (W) 305. 23   Nkosi v Totalizator Agency Board (Transvaal) 1980 (1) SA 122 (T). 24   Union Government v National Bank of SA Ltd 1921 AD 121, especially 126 (Innes CJ) and 140 (Juta JA). 25  Voet, Commentarius Ad Pandectas 12.6 n 7. 26  Voet, Ad Pandectas 22.6 n 7. Union Government v National Bank, n 24 above, 126. 27   At 126. 21 22

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considered sufficient that the mistake was subjectively excusable under the circumstances. This more lenient approach did not endure. In Rahim v Minister of Justice,28 decided by the Appellate Division in 1964, not only was the excusability requirement construed as a substantive requirement rather than an evidentiary one, but in content it appeared to be identical to the iustus error of the early law.29 The same vehicle had mistakenly been attached twice by a messenger of the court in respect of two different judgment debts. The Minister sought to recover the amount paid to the second creditor by means of the condictio indebiti. Like Kotzé CJ in Rooth v The State,30 Van Blerk JA cited the work of the eighteenth-century jurist Glück as authority for the proposition that payment should have been made as the result of an excusable error, in the sense that it should not have been based on gross ignorance.31 He referred also to Leyser’s Meditationes, to the effect that gross and inexcusable mistake bars the condictio indebiti.32 Thus far, he appeared to be embracing the negative formulation of the excusability requirement found in Digest 22.6, in Voet,33 and in the writings of the Pandectists on the condictio indebiti, according to which mistake of fact was presumed to be excusable and restitution was precluded only by gross negligence. On turning to the facts of the case, however, Van Blerk JA denied recovery, emphasising that: [The employee of the Minister] had the means of knowledge and the opportunity to ascertain the true facts. He was not led into the mistake by somebody else . . . He was by no means justified in assuming after a futile enquiry that the vehicle was the property of Hoosen.34

Thus, it seems that Van Blerk JA in fact treated excusable mistake as a positive element in the Minister’s claim to recover. Moreover, he appears to have regarded the inducement of the mistake by the recipient of the transfer as largely determinative of the question of liability. Thus, his approach strongly resembled that of De Villiers CJ in Divisional Council of Aliwal North v De Wet. In subsequent cases also, the inducement of the payer’s factual error by the recipient was identified as a key factor in determining excusable mistake in the context of the condictio indebiti. Although he decided the case on the basis of the Wessels view set out in the previous section, in Vorster v Marine & Trade Versekeringsmaatskappy Bpk Smit J also made the following observations: Defendant himself helped to mislead the plaintiff. It would be a pity if the law was not to allow an insurance company, which in good faith accepted a claim against it and paid   Rahim v Minister of Justice 1964 (4) SA 630 (A).   cf the decision of the Appellate Division in Le Riche v Hamman 1946 AD 648, where Union Government v National Bank was cited but no mention made of a requirement of excusable mistake or iustus error. 30   Rooth v The State (1888) 2 SAR 259. 31   Rahim v Minister of Justice, n 28 above, 634. 32  ibid. 33  Voet, Ad Pandectas 12.6 n 7. 34   Rahim v Minister of Justice, n 28 above, 634–35. 28 29



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it, to recover the amount when it finds out that the policy is no longer operative and defendant had submitted the claim wrongfully.35

On the other hand, in Barclays Bank International Ltd v African Diamond Exporters (Pty) Ltd,36 McEwan J recognised that inducement had generally been regarded as determinative of excusability37 but denied that it was in all cases a necessary condition for success.38 However, his decision appears to have been based not only on the relatively blameless character of the mistake but also on the fact that the plaintiff’s mistake must in fact have been known to the defendant: [I]t was immediately apparent to [the agents of the defendant] that somewhere along the line someone had made an unintentional mistake . . . [Thus] it becomes clear that both in law and in equity the defendant was not entitled to take the benefit of the money merely because there may have been some negligence in the way in which the matter was handled.39

This conclusion – that inducement is not necessary in all cases – was endorsed in Govender v Standard Bank of South Africa Ltd,40 although the claim was ultimately treated as an instance of the condictio sine causa. However, even here, the court clearly considered it a relevant question whether the defendant was himself responsible for the plaintiff’s mistake. Rose-Innes J distinguished the facts of the case before him, where the defendant had presented a stopped cheque for payment in good faith, with a case such as Natal Bank Ltd v Roorda, where the defend­ ant knew that the cheque had been stopped: We have no doubt that a bank in those circumstances is not precluded from reclaiming the payment despite carelessly overlooking the countermand of payment, since it was led into the error by the fraud of the payee and to fall into a trap of that kind is not gross negligence.41

Conversely, in Rane Finance (Pty) Ltd v Queenstown Municipality,42 decided in 1988, the fact that the payer had ‘the means of knowledge and the opportunity to ascertain the true facts’43 together with the absence of any inducement of the mistake by the recipient was held to preclude recovery without more.44 35   Vorster v Marine & Trade Versekeringsmaatskappy Bpk, n 20 above, 133. See also the discussion of the Vorster case in Calder v SA Mutual Life Assurance Society, n 21 above, where the English translation reproduced above is given. 36   Barclays Bank International Ltd v African Diamond Exporters (Pty) Ltd 1977 (1) SA 298 (W). 37   At 306–7. 38   At 307–9. 39   At 306. 40   Govender v Standard Bank of SA Ltd 1984 (4) SA 392 (C) 401–4. 41   ibid 403. 42   Rane Finance (Pty) Ltd v Queenstown Municipality 1988 (4) SA 193 (E). 43   Rahim v Minister of Justice, n 28 above, 634, quoted in Rane Finance v Queenstown Municipality, n 42 above, 199. 44   See also Barker v Bentley 1978 (4) SA 204 (N). In Nkosi v Totalizator Agency Board, n 23 above, Myburgh J appears to have applied a less stringent version of the substantive excusability test in permitting the restitution of money paid out by an overworked betting clerk in the mistaken belief that the recipient held a winning ticket: see DP Visser, Unjustified Enrichment (Cape Town, Juta, 2008) 311. However, in fact the approach adopted is closer to the rule of evidence described in the previous subsection: Myburgh J cited (at 126) Wessels, Law of Contract, n 17 above, vol II, para 3655.

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C Conclusion To sum up, during the course of the twentieth century the courts were sometimes resistant to the idea of substantive excusability, preferring to re-interpret ‘neither negligent nor studied’ as a mere evidentiary pointer even after Rahim v Minister of Justice. However, the substantive version of the requirement – indeed, a positive requirement of excusable mistake – ultimately triumphed. Moreover, where it was applied, the condictio indebiti generally failed, as in the Rahim v Minister of Justice case itself. It was only where the recipient could be shown to have been in some sense responsible for the mistaken payment – in particular, where he had induced the payer’s mistake – that the plaintiff’s mistake was found to be excusable.

III  Willis Faber Enthoven (Pty) Ltd v Receiver of Revenue Willis Faber Enthoven (Pty) Ltd, a company formed in 1985 when two separate companies trading as insurance brokers merged, had instituted action in respect of certain payments made by those companies to the Receiver of Revenue. The companies, Willis Faber and Robert Enthoven, had believed that they were liable to pay the taxes in question under a statutory provision.45 Willis Faber Enthoven alleged that no such liability had existed, and that having paid in the ‘reasonable but mistaken belief’ that the payments were owed, it was entitled to recover them. The first issue, whether or not the two companies had been liable to make the payments, turned on whether the provision in question applied not only to insurance business ‘underwritten by underwriters at Lloyds’ (‘Lloyds business’) but also to business effected through a broker at Lloyds but not underwritten by a Lloyds underwriter (‘other business’). It is unnecessary to consider here the arguments concerning this issue: it was decided both by the court of first instance and by the Appellate Division that the payments had not in fact been owed. However, it was held by the court a quo that although there had been no liability to make the payments, they could nevertheless not be recovered because they had been paid under a mistake of law.46 Thus, it fell to the Appellate Division to consider whether the longstanding rule barring recovery for mistakes of law under the condictio indebiti should be abrogated.

  Insurance Act 27 of 1943, s 60(1)(f), now repealed by Taxation Laws Amendment Act 30 of 2002,

45

s 1. 46   The court a quo felt itself bound by the long line of cases in which the mistake of law rule had been established in South African law, in particular Rooth v The State, subsequently confirmed in Benning v Union Government (Minister of Finance) 1914 AD 420.



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A  Abolition of the Mistake of Law Rule Hefer JA began his analysis of this question with a discussion of the old authorities.47 The conflicts in the Roman sources had led to the evolution of two very distinct schools of thought in the modern European tradition; in Rooth v The State, Kotzé CJ had preferred the view that there could be no recovery in the case of mistakes of law, but in this respect the decision appeared to have been historically unsound.48 Historical arguments of this kind were not decisive: although its foundations were shaky, the mistake of law rule undoubtedly formed part of contemporary South African law.49 Nevertheless, it appeared that the rule was indefensible on other grounds also. First, there appeared to be no principled argument in favour of the retention of the rule: What is immediately apparent is that there is no logic in the distinction between mistakes of fact and mistakes of law in the context of the condictio indebiti . . . Bearing in mind that the remedy lies in respect of the payment of an indebitum (i.e. a payment, without any underlying civil or natural obligation), it is clear that, where such a payment is made in error, it matters not whether the error is one of fact or of law: in either case it remains the payment of an indebitum and, if not repaid, the receiver remains enriched.50

Moreover, if one looked directly to the equities of the situation, the rule was equally hard to defend: Considered as a matter of simple justice between man and man, there is no conceivable reason why the receiver of money paid in error of fact should in the eyes of the law be in a better position than one who has received money paid in error of law.51

In fact, Hefer JA concluded that there was a large body of South African authority in which the rule that ignorance of the law could not found restitution had been relaxed on equitable grounds, for example, in the law relating to the renunciation of rights.52 In particular, he singled out the early decisions in Stewart’s Assignee v

  cf Chapter 2 at II(A).   Hefer JA accepted Visser’s criticisms of this aspect of the Rooth decision: Willis Faber Enthoven (Pty) Ltd v Receiver of Revenue, n 1 above, 219. See Chapter 2 at II(B)(i). 49   Willis Faber Enthoven (Pty) Ltd v Receiver of Revenue, n 1 above, 220. See, eg, Benning v Union Government, n 46 above, 422. 50   Willis Faber Enthoven (Pty) Ltd v Receiver of Revenue, n 1 above, 220. This passage was discussed by the English Court of Appeal in Deutsche Morgan Grenfell Group plc v IRC [2005] EWCA Civ 78 [286]: Buxton LJ asserted that ‘the condictio does not rest on the mistake, but rather on the effect of the mistake’. Although this may be true of the German Leistungskondiktion (cf Chapter 6 at III(A)) it cannot be accurate in respect of South African law, as the excusability requirement affirmed in Willis Faber Enthoven (Pty) Ltd v Receiver of Revenue itself shows. 51   Willis Faber Enthoven (Pty) Ltd v Receiver of Revenue, n 1 above, 221. In Rooth v The State, n 30 above, 266, Kotzé CJ had come to the opposite conclusion, namely, that the rule ‘ignorance of the law is no excuse’ did not conflict with the principles of aequum et bonum. See Chapter 2 at II(B)(i). 52   Willis Faber Enthoven (Pty) Ltd v Receiver of Revenue, n 1 above, 221–23. 47 48

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Wall’s Trustee53 and Umhlebi v Estate Umhlebi,54 in which restitutio in integrum had been applied.55 Finally, there did not appear to be any policy argument strong enough to justify the retention of the rule. One possible argument was that the efficient administration of the law would be compromised if the distinction between mistakes of law and mistakes of fact were abolished, but this was unconvincing. Since the decision in S v De Blom56 in 1977, ignorance of unlawfulness had served in certain circumstances to excuse even otherwise criminal behaviour, yet the administration of justice in South Africa did not seem to have suffered as a result. It could hardly be suggested on this basis that the mistake of law rule ought to be retained in the context of the condictio indebiti. Thus, it was unanimously held by the Appellate Division that there ought to be no distinction for the purposes of the condictio indebiti between mistakes of law and mistakes of fact.

B  Recognition of a Universal Excusable Mistake Requirement However, a further issue remained for decision, namely, whether mistake of law, like mistake of fact, should be subject to the excusability requirement. Hefer JA had already quoted Kotzé CJ’s obiter dictum to that effect in Rooth v The State;57 having reviewed certain more recent decisions in which the requirement of excusable mistake of fact had been discussed and approved58 he concluded that mistakes of law ought to be subjected to the same requirement: so that the assimilation between the two kinds of error might be complete . . . It follows that an indebitum paid as a result of a mistake of law may be recovered, provided that the mistake is found to be excusable in the circumstances of the particular case.59

Indeed, academic criticism of the excusability requirement notwithstanding,60 its retention and expansion were justified by considerations of equity underlying the condictio indebiti itself: ‘the historic nature of the remedy as one granted ex aequo   Stewart’s Assignee v Wall’s Trustee (1885) 3 SC 243.   Umhlebi v Estate Umhlebi (1905) 19 EDC 237. 55   cf Chapter 2 at III(B). The latter case in particular had ‘cleared the way for relief ’ in a range of subsequent cases: for example, where the parties to an antenuptial contract had been mistaken as to its effects (Ex parte Joannou et Uxor 1942 TPD 193) and in cases involving the exercise of an heir of his right to adiate or repudiate the terms of a will (Van Wyk v Van Wyk’s Estate 1943 OPD 117; Ex parte Estate Van Rensburg 1965 (3) SA 251 (C)). See Willis Faber Enthoven (Pty) Ltd v Receiver of Revenue, n 1 above, 221–22. 56   S v De Blom 1977 (3) SA 513 (A). 57   Willis Faber Enthoven (Pty) Ltd v Receiver of Revenue, n 1 above, 219. 58   Union Government v National Bank, n 24 above; Rahim v Minister of Justice, n 28 above; Miller v Bellville Municipality 1973 (1) SA 914 (C); Barker v Bentley, n 44 above; Rulten NO v Herald Industries (Pty) Ltd 1982 (3) SA 600 (D). 59   Willis Faber Enthoven (Pty) Ltd v Receiver of Revenue, n 1 above, 224. 60   Published criticism at the time included JC Van der Walt, ‘Die Condictio Indebiti as Verrykingsaksie’ (1966) 29 Tydskrif vir die Hedendaagse Romeins-Hollandse Reg 220, 226–28; DP Visser, Die Rol van Dwaling by die Condictio Indebiti: ‘n Regshistoriese Ondersoek met ‘n Regsvergelykende Ekskursus (Dr iur thesis, University of Leiden, 1985) 253–54, 294–98; W De Vos, Verrykingsaanspreeklikheid in die SuidAfrikaanse Reg, 3rd edn (Cape Town, Juta, 1987) 184–85. 53 54



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et bono should be preserved and care should be taken to avoid it being turned into a tool of injustice to the receiver of money paid indebite’.61 Regarding the exact meaning of ‘excusable mistake’, ‘all that need be said is that, if the payer’s conduct is so slack that he does not in the Court’s view deserve the protection of the law, he should, as a matter of policy, not receive it’.62 However, Hefer JA did specify a number of relevant considerations: Much will depend on the relationship between the parties; on the conduct of the defend­ant, who may or may not have been aware that there was no debitum and whose conduct may or may not have contributed to the plaintiff’s decision to pay; and on the plaintiff’s state of mind and the culpability of his ignorance in making the payment.63

Finally, concerning the question of onus, Hefer JA confirmed that as with the other elements of the condictio indebiti, the burden of proof rested on the plaintiff throughout:64 no consideration of policy or fairness militated against this, and the alternative would mean requiring the defendant to prove matters of which he had not the slightest knowledge.65 Applying these principles to the facts, Hefer JA concluded that the mistake made by the first company, Robert Enthoven, had indeed been an excusable one.66 The incorrect belief as to the company’s liability to pay the tax had been induced in the mind of Robert Enthoven’s agent by a circular distributed by the Registrar of Insurance; this belief was cemented by a conversation with the Assistant Registrar of Insurance, whom Robert Enthoven’s agent had consulted after he found the provisions of the relevant statute to be unclear. However, concerning the second company, Willis Faber, here there was no direct evidence concerning the circumstances of the payment.67 In particular, there was no evidence to show that it was the Registrar’s circular that had induced it, or that Willis Faber had made inquiries on the point. Thus, there was insufficient information to justify a finding that the mistake was excusable. Willis Faber failed to recover, despite the fact that its view of the statute had been accepted and acted on for years by every broker in its position. In her minority judgment concerning Robert Enthoven’s claim, Van den Heever JA went still further.68 She held that in a case like this one, taxpayers were under a duty to take reasonable steps to establish the true legal position: ‘[m]ere casual enquiry will not suffice to excuse ignorance’.69 Thus, the fact that Robert Enthoven’s agent had made positive inquiries as to the meaning of the circular, and that the Assistant Registrar had misrepresented to him the true legal position,   Willis Faber Enthoven (Pty) Ltd v Receiver of Revenue, n 1 above, 224.   At 224. 63   At 224. 64   Recsey v Reiche 1927 AD 554. 65   Willis Faber Enthoven (Pty) Ltd v Receiver of Revenue, n 1 above, 224–25. 66  At 225. 67   Willis Faber Enthoven (Pty) Ltd v Receiver of Revenue, n 1 above, 226. 68   ibid 226–27. 69  At 227. 61 62

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was not sufficient to discharge that duty. In fact, Van den Heever JA appeared to be swayed by the fact that the Assistant Registrar’s misrepresentation was subjectively excusable under the circumstances.70 Thus, the approach adopted by Hefer JA in Willis Faber Enthoven (Pty) Ltd v Receiver of Revenue – the culmination of a line of authority in South African law beginning with the decisions of De Villiers CJ in the last decade of the nineteenth century – required that excusable mistake be positively demonstrated in every case: ‘equity’ required that the plaintiff’s mistake be shown to be one that deserved ‘the protection of the law’. As we have seen, Hefer JA referred (in the context of the mistake of law rule) to a number of cases in which the remedy of restitutio in integrum had been applied, either on the basis of iustus error or for some other reason. Although he did not specifically relate these cases to the excusable mistake question, it is difficult to resist the conclusion that he was influenced in this respect by the reasoning employed there. As for the circumstances in which a mistake could be said to be excusable, as in Divisional Council of Aliwal North v De Wet, Logan v Beit71 and the series of twentieth-century cases considered in the previous section, inducement of the plaintiff’s mistakes by the defendant’s agents seems to have been regarded as a crucial factor in determining whether the condictio indebiti would lie. In addition, Hefer JA specifically enumerated as a factor relevant to excusability whether or not the defendant had been aware of the plaintiff’s mistake. In both cases his focus appears to have been exclusively on the conduct of the defendant. The plaintiff’s state of mind and the culpability of his ignorance in making the payment were treated as a third, independent factor, in addition to inducement of the mistake or knowledge of the mistake on the part of the defendant. Thus, it seems that Hefer JA did not view the inducement of the error by the recipient of the transfer solely as an indicator of the plaintiff’s culpability. Rather, he saw each of these three factors as considerations relevant in themselves.

IV  Twenty-first Century: Excusable Mistake In the 15 years since it was decided, Willis Faber Enthoven v Receiver of Revenue has frequently been followed in the High Court of South Africa. For example, in Firstrand Bank Ltd v Absa Bank Ltd, a bank was denied recovery of an amount paid out in consequence of a complex fraud on the ground that it was unable to demonstrate that its mistake as to its liability to make the payment had been excusable.72 Heher J regarded as decisive the failure of one of the bank’s employees to obtain confirmation of its indebtedness, having been alerted to the possibility of fraud by a 70   ibid: ‘What, in all honesty, could any agent expect an official administering the law to say, other than that his view, shared and applied by his colleagues and predecessors for decades, is the correct one?’. 71   Divisional Council of Aliwal North v De Wet, n 2 above; Logan v Beit (1890) 7 SC 197. 72   Firstrand Bank Ltd v Absa Bank Ltd 2001 (1) SA 803 (W). See also, most recently, Nel v Jonker [2011] ZAWHC 5.



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third party. He concluded that ‘the applicant’s ignorance . . . was culpable and selfinduced. Such excuses as were offered . . . fall a long way short of persuading me that the Court should come to the applicant’s assistance’.73 Moreover, the restrictive approach applied in Willis Faber Enthoven v Receiver of Revenue has very recently been confirmed by the Supreme Court of Appeal, in Affirmative Portfolios CC v Transnet Ltd t/a Metrorail.74 A labour broker, the appellant, had entered into a contract with the respondent to supply access controllers to be deployed on station platforms. According to their agreement, which contained a non-variation clause entrenching the pricing provisions against oral or tacit variation, the appellant was to be paid a fixed monthly rate, but even prior to the signing of the agreement the appellant increased the rate, and the respondent paid without complaint for six months. At that point, however, the respondent notified the appellant that it had been charging in excess of what was permitted in terms of the agreement and reverted to the lower rate. The appellant ultimately terminated the agreement for breach and instituted a contractual claim for the difference between the higher and lower rates; the respondent in turn instituted a counterclaim in the form of a condictio indebiti in respect of the alleged six months’ overpayment. Giving the judgment of the Court, Boruchowitz AJA held with respect to the main claim that even if there had been an oral variation of the contractual terms, both the parol evidence rule and the non-variation clause meant that the appellant was unable to hold the respondent to the higher rate.75 As for the condictio, this required the respondent to prove not only that the transfers had been made in the mistaken belief that they were owing but also that this mistake had been an excusable one, as laid down in the Willis Faber case. Although the excusability requirement had been subject to considerable criticism by academic writers,76 this was not an appropriate case in which to deviate from existing authority, since the question of abolishing the requirement had not been raised or argued by the parties. Turning to the facts of the case, Boruchowitz AJA held that while there had in fact been no obligation on the respondent to pay the amounts claimed, and while the overpayments had clearly been made in error, the reason for this error was unclear. Whereas the Willis Faber Enthoven case established that a plaintiff seeking to invoke the condictio indebiti must prove sufficient facts to justify a finding that the error giving rise to the payment was excusable, the respondent had failed to provide any explanation as to why the mistake had occurred. It appeared that the respondent’s officials’ failure to detect the increase could only be attributed to extreme slackness or negligence. In particular, there was no evidence that the appellant had induced the mistake.   At 815 (emphasis added).   Affirmative Portfolios CC v Transnet Ltd t/a Metrorail [2008] ZASCA 127, 2009 (1) SA 196 (SCA). 75   Boruchowitz AJA cited SA Sentrale Ko-Op Graanmaatskappy Bpk v Shifren and others 1964 (4) SA 760 (A). 76   Boruchowitz AJA referred specifically to H Scott, ‘The Requirement of Excusable Mistake in the Context of the Condictio Indebiti: Scottish and South African Law Compared’ (2007) 124 South African Law Journal 827 and DP Visser, Unjustified Enrichment, n 44 above, 316–18. 73 74

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V  Analysis: Excusable Mistake in South African Law A  Excusable Mistake and Iustus Error According to Daniel Visser the requirement of excusable mistake adopted in Willis Faber Enthoven v Receiver of Revenue merely brought to a close the sequence of developments set in motion by Kotzé CJ in Rooth v The State, completing the reception of the Pandectist criterion of error excusabilis begun more than a century before.77 But Chapters 2 and 3 have been devoted to developing the theory that the conception of the condictio indebiti adopted in the Willis Faber Enthoven case had little to do with the thinking of the German Historical School. As we have seen, the iustus error (reasonable mistake) concept derives from the extraordinary RomanDutch remedy of restitutio in integrum. Whatever its Roman roots, in Roman-Dutch law restitutio in integrum appears to have been recognised as an independent remedy in its own right, primarily restitutionary in effect, and triggered by a wide range of factors, including dolus (fraud), metus (fear), minority and iustus error. As a result, in early South African law it was available to effect the recovery of mistaken transfers: both the restitution of contractual performance and the recovery of payments and other transfers outside contract. In other words, its sphere of application overlapped with the traditional territory of the condictio indebiti. As we have seen, restitutio in integrum on grounds of iustus error served as a conduit for the introduction of certain rules of English contract law into nineteenth-century South Africa: in particular, the English doctrine of Equitable mistake has profoundly influenced the South African law of contract. But even in cases outside the contractual context, cases in which the condictio indebiti was explicitly applied, the iustus error concept was extremely influential. Thus iustus error, its content informed by English Equity, was transplanted from restitutio in integrum to the condictio. Restitutio in integrum itself is no longer widely used to effect the restitution of mistaken transfers in modern South African law. However, its continuing influence is clear: in both the contractual and enrichment contexts the courts continue to insist on iustus error, either explicitly78 or in effect. The interpretation of the excusable mistake requirement applied to the modern condictio indebiti which is advanced here – that it has its origins in the iustus error concept associated with the extraordinary remedy of restitutio in integrum – derives considerable support 77   DP Visser ‘Error of Law and Mistaken Payments: A Milestone’ (1992) 109 South African Law Journal 177,  182–5; ‘Unjustified Enrichment’ in R Zimmerman and DP Visser (eds), Southern Cross: Civil Law and Common Law in South Africa (Cape Town, Juta, 1996) 529–33; Unjustified Enrichment, n 44 above, 302–16. cf Chapter 2 at II(A) and (B)(i). 78   For the use of the term ‘iustus error’ in modern South African contract law see Chapter 2 at IV(D). Regarding the condictio indebiti, see, eg, HK Outfitters (Pty) Ltd v Legal & General Assurance Society Ltd 1975 (1) 55 (T) 67; Rane Finance (Pty) Ltd v Queenstown Municipality, n 42 above, 199: ‘It is not every payment made under a mistake of fact that is recoverable. There must be both solutio indebiti . . . and justus error’.



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from the reasoning of Hefer JA in Willis Faber Enthoven (Pty) Ltd v Receiver of Revenue itself. On the one hand, in reaching the conclusion that the mistake of law rule should no longer apply in South African law – and that all mistakes, whether of fact or of law, should be required to be excusable – Hefer JA adopted a version of the excusable mistake requirement clearly derived from iustus error in the context of restitutio integrum. Hence his statement that: Much will depend on the relationship between the parties; on the conduct of the defendant, who may or may not have been aware that there was no debitum and whose conduct may or may not have contributed to the plaintiff’s decision to pay; and on the plaintiff’s state of mind and the culpability of his ignorance in making the payment.79

On the other hand, in reaching the conclusion that the mistake of law rule should no longer apply in South African law, Hefer JA placed great emphasis on the analysis of mistake adopted in Stewart’s Assignee v Wall’s Trustee and Umhlebi v Estate Umhlebi. His primary aim in this respect was to show that the mistake of law rule had not been universally applied in South African law. However, these cases imply also a particular conception of the claim to recover a mistaken transfer, derived from restitutio in integrum, namely, that the plaintiff’s iustus error constitutes the basis for the granting of discretionary, equitable relief.80 As we saw in Chapter 2, the line between the equitable remedy of restitutio in integrum and the condictio indebiti became very thin indeed in Umhlebi v Estate Umhlebi, where the relief claimed through the mechanism of restitutio in integrum took the form of the restitution of property.81 Similarly, in Willis Faber Enthoven (Pty) Ltd v Receiver of Revenue, Hefer JA clearly did not distinguish Umhlebi v Estate Umhlebi from the case before him on the basis of the different procedural mechanisms at issue. Thus, the conception of the claim to recover mistaken transfers adopted by Hefer JA in Willis Faber Enthoven (Pty) Ltd v Receiver of Revenue in 1992 appears to have been directly informed by that adopted by Sir John Kotzé in Umhlebi v Estate Umhlebi in 1905. Indeed, Kotzé JP’s statement of the law in that case – that ‘ignor­ ance of one’s rights, if it be a just and probable ignorance, is a good ground for restitution or relief’82 – could equally be applied to the modern condictio indebiti.

B  Two Senses of Equity The argument summarised in the previous section is that the iustus error requirement of modern South African law was transplanted to the condictio indebiti from 79   Willis Faber Enthoven (Pty) Ltd v Receiver of Revenue, n 1 above, 224. See also CJ Pretorius, ‘The Condictio Indebiti, Error of Law and Excusability: Willis Faber Enthoven (Pty) Ltd v Receiver of Revenue’ (1993) 56 Tydskrif vir die Hedendaagse Romeins-Hollandse Reg 315, 317–18: ‘It is a remedy born of equity and in keeping with this, the Appellate Division trusted that the element of excusability would imbue the condictio with enough flexibility to ensure that the needs of justice are met’. 80   It is presumably for precisely this reason that the mistake of law rule was not rigidly applied in Umhlebi v Estate Umhlebi: see Chapter 2 at III(B). 81  ibid. 82   Umhlebi v Estate Umhlebi, n 54 above, 249, quoted by Hefer JA in Willis Faber Enthoven (Pty) Ltd v Receiver of Revenue, n 1 above, 222.

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restitutio in integrum, making it alien to the condictio in a purely historical sense. However, the question remains whether this requirement is defensible in normative terms – either in principle or as a matter of policy. As we have seen, the condictio indebiti, like restitutio in integrum, has often been described as an ‘equitable action’. Indeed, the consideration that weighed most heavily with Hefer JA in introducing a universal excusability requirement applicable to both mistakes of law and mistakes of fact was the need to avoid turning the condictio into ‘a tool of injustice’ towards the recipient, and to preserve ‘the historic nature of the remedy as one granted ex aequo et bono’.83 This characterisation of the condictio indebiti as an equitable action dates from Pomponius: ‘by the law of nature it is fair that no-one become richer by the loss and injury of another’.84 Used in this first sense, equity refers to the value of justice in individual cases. However, in describing the condictio as an ‘equitable doctrine’, Hefer JA appeared to have something more extensive in mind. He appeared to regard it as a corrective to the general legal order: a mechanism which was technically extraordinary. It is in this second sense that restitutio in integrum has been described as an ‘equitable remedy’. The applicant for such equitable relief will succeed only if he can demonstrate that he deserves the special assistance of the court. Once this distinction between the two senses of equity is appreciated, it becomes easier to understand the character of the iustus error requirement in modern South African law. In particular, this second sense of equity helps to explain the emphasis placed on the inducement of the plaintiff’s error by the defendant. On the one hand, where the mistake has been induced by the defendant (or by a third party) it is clear that the plaintiff himself is blameless. This fact in itself suggests that the plaintiff deserves to be relieved of the consequences of the transfer. On the other hand, where it is demonstrated that the defendant himself induced the plaintiff’s mistake, or that the defendant knew of the mistake at the time of the transfer, it appears that it would be unconscionable for the defendant to retain it. Such unconscionability on the part of the defendant provides an even more compelling basis for equitable intervention in favour of the plaintiff. Where the circumstances are such that relief is granted, the plaintiff’s mistake is designated an ‘excusable’ or ‘reasonable’ or ‘iustus’ mistake. But in truth this term is a misnomer, since the focus of this approach is on the knowledge and conduct of the defendant. This conception of the condictio indebiti as an equitable remedy in the second sense identified above not only illuminates the character of the iustus error requirement in modern South African law. It also serves to show that in its present form the requirement is alien to the principles underlying the condictio indebiti itself. Fundamentally, to regard the restitution of mistaken transfers as a species of extraordinary equitable intervention triggered by blamelessness on the   Willis Faber Enthoven (Pty) Ltd v Receiver of Revenue, n 1 above, 224.   D 12.6.14 (Pomponius, On Sabinus, Book 21) and D 50.17.206 (Pomponius, Various Readings, Book 9) (Watson’s translation). 83 84



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part of the plaintiff or unconscionable conduct on the part of the defendant appears to mean denying the existence of the law of unjust or unjustified enrichment altogether. At best it gives rise to an over-determined cause of action. Whether the elements of the condictio indebiti are correctly analysed as mistake together with the payment of an indebitum, or whether mistake is enough to found the claim, these elements are sufficient in themselves to give rise to a substantive cause of action. The vitiation of the transferor’s intention is at least part of the reason why the transfer must be returned. Having made out a mistake, the plaintiff succeeds by right. There is no need for extraordinary remedial intervention. In this respect it is illuminating to consider once again parallels with the law of contract in South Africa. As we saw in Chapter 2, the version of the excusable mistake requirement currently applied to the condictio indebiti shares a common historical origin (restitutio in integrum) with the contractual doctrine of iustus error which determines the validity of contracts where one of the parties labours under a unilateral mistake as to terms. The concept of iustus error in modern contract law still carries essentially the same meaning as it does in the context of the law of enrichment. Can these strong parallels between iustus error in the law of contract and excusable mistake in the law of enrichment be justified? The answer, of course, is that these similarities are indefensible. In contract the requirement that the plaintiff’s unilateral mistake be iustus has been rationalised through the doctrine of quasi-mutual assent, in terms of which the primary source of the contractual obligation, consensus, is supplemented by a secondary doctrine of reasonable reliance.85 But this reliance doctrine has little application to the condictio indebiti. While a party to a contract makes conscious representations as to his contractual intention which are received as such by the other party, in the case of one who mistakenly makes a transfer which is not owed, the representation as to the other party’s entitlement is inherent in the transfer itself. Whatever protection the reliance of the recipient of the transfer on that inherent representation deserves, it is certainly less deserving than the reliance of a contracting party on the appearance of consensus created by a contractual document or other objective agreement. It is frankly perverse for South African law to apply a similar doctrine of reliance in both contexts.86 Finally, the question arises whether the excusable mistake requirement in its current form can be justified insofar as it applies to the restitution of tax. In Willis Faber Enthoven (Pty) Ltd v Receiver of Revenue itself, neither Hefer JA nor Van den Heever JA appears to have considered it significant that that the case concerned tax wrongly levied; yet even prior to the enactment of the South African Constitution87 this might have been considered sufficient justification to waive the requirement of excusability, if not the mistake requirement itself, in cases of   See Chapter 2 at IV(D).   See further Scott, ‘The Requirement of Excusable Mistake’, n 76 above, 862–63. 87   Constitution of the Republic of South Africa, Act 108 of 1996. 85 86

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this kind.88 Whereas the mere fact that a payment is not due is insufficient to trigger restitution generally, in the case of payments exacted by the state, the principle of legality in state action requires restitution regardless of whether the payment was involuntarily made.89 On the other hand, even if the excusable mistake requirement could be justified in cases involving private defendants, arguments based on equity or on the protection of reliance would be ineffective as against the state. There may be scope for a specific defence in cases involving tax wrongly levied in order to avoid the disruption of public finance, an issue as yet unexplored in South African law.90 But whatever the specific policies underlying such a defence, it is certain that they are only coincidentally advanced by means of a general excusable mistake requirement.

C  A Defence of Careless Mistake The conclusion reached above was that the highly restrictive version of the excusable mistake requirement currently applied in South African law is wholly inconsistent with the principles underlying the condictio indebiti. This requirement has often served to defeat claims to recover mistaken transfers: examples of appellate decisions in which the condictio indebiti failed for this reason are Rahim v Minister of Justice,91 Affirmative Portfolios CC v Transnet Ltd t/a Metrorail 92 and of course Willis Faber Enthoven v Receiver of Revenue itself. Indeed, the fact that such a stringent requirement is unique among legal systems which treat mistake as a ground of restitution in itself renders it suspect. However, the question arises whether it might not be possible to justify retaining the excusable mistake requirement in some more moderate form. As we have seen, English law rejects the excusable mistake requirement out of hand: all that is required is that the claimant’s mistake be genuine.93 The same approach is taken in the Third Restatement of Restitution and Unjust Enrichment recently published by the American Law Institute.94 In Scots law, however, although proof of excusable mistake is not required in itself, the careless nature of the pursuer’s mistake may function as a defence.95 88   cf the speech of Lord Goff in Woolwich Equitable Building Society v IRC [1993] AC 70 (HL) and more recently Deutsche Morgan Grenfell plc v IRC [2006] UKHL 49, [2007] 1 AC 558; Test Claimants in the Franked Investment Group Litigation v Commissioner of Inland Revenue and others [2012] UKSC 19, [2012] 2 AC 337. See generally A Burrows, The Law of Restitution, 3rd edn (Oxford, Oxford University Press, 2011) ch 20. 89   The specific constitutional provisions applicable here are discussed in more detail in Chapter 4 at V(C). 90   See Visser, Unjustified Enrichment, n 44 above, 402; Burrows, The Law of Restitution, n 88 above, 514–17. 91   Rahim v Minister of Justice 1964 (4) SA 630 (A). 92   Affirmative Portfolios CC v Transnet Ltd t/a Metrorail [2008] ZASCA 127, 2009 (1) SA 196 (SCA). 93   Kelly v Solari (1841) 9 M&W 54. cf II(A) above. 94   Restatement Third, Restitution and Unjust Enrichment (American Law Institute, 2010) s 5 comment f. 95   Morgan Guaranty Trust Company of New York v Lothian Regional Council 1995 SC 151 (IH). See generally R Evans-Jones, Unjustified Enrichment, vol 1, Enrichment by Deliberate Conferral: Condictio (Edinburgh, W Green & Son, 2003) 3.84–3.110.



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This approach was made explicit in the decision of the Court of Session in 1994 in Morgan Guaranty Trust Co of New York v Lothian Regional Council,96 one of the void swaps cases generated by the decision of the House of Lords in Hazell v Hammersmith and Fulham LBC,97 in 1994. Having abrogated the mistake of law rule, Lord Hope went on to hold that ‘it is not part of the law of Scotland that the error must be shown to be excusable’.98 On the other hand, the court did not go so far as to reject entirely the idea of a substantive excusability requirement.99 Rather, the substantive inexcusability of the transferor’s mistake was regarded as one of several factors to which the recipient of a transfer might point in order to show that equity (the value of justice in individual cases) favoured its retention: [O]nce the pursuer has averred the necessary ingredients to show that prima facie he is entitled to a remedy, it is for the defender to raise the issues which may lead to a decision that the remedy should be refused on grounds of equity.100

Lord Clyde expressed the matter in similar terms: Excusability is not an essential ingredient in the principle but may be an element in the decision to grant a remedy in particular circumstances. While I would hesitate to lay down any absolute principle on the specific requirements of pleading so far as excusability is concerned, because cases might occur where the circumstances in which the payment was made might require the pursuer to explain why it was equitable in such a context that he should be repaid, it seems to me that almost always the onus will technically lie on the defender.101

The thinking underlying this version of the excusable mistake requirement is that while the mistaken transfer of goods or money not owed is sufficient in itself to found a restitutionary claim, carelessness on the part of the transferor in believing himself liable to make the transfer might disqualify him from succeeding on equitable grounds, where ‘equity’ is used in the first sense identified above. This version of the requirement is closely associated with the rule precluding restitution on grounds of mistake of law, since the mistake of law rule is often justified on the basis that such mistakes are necessarily careless.102 As we have seen, it is the version of the requirement found in the Roman sources themselves;103 in the work of the Roman-Dutch writer Voet;104 in the writings of the German Pandectists;105 and in the judgment of Chief Justice Kotzé in Rooth v The State. The recasting of the current, very restrictive version of the excusable mistake requirement as a 96   Morgan Guaranty Trust Company of New York v Lothian Regional Council, n 95 above, 165–67 (Lord Hope), 173 (Lord Clyde), 175 (Lord Cullen). 97   Hazell v Hammersmith and Fulham London Borough Council [1992] 2 AC 1. 98   Morgan Guaranty Trust Company of New York v Lothian Regional Council, n 95 above, 166. 99   ibid: ‘This is not to say that the nature of the error and the question whether it could have been avoided may not play a part in a decision as to where the equities may lie if the point is raised in answer to the pursuer’s claim’. 100  ibid. 101  At 173. 102   This was the justification for the rule offered by the Roman jurist Labeo: see Chapter 2 at II(A). 103   See Chapter 2 at II(A). 104   Morgan Guaranty Trust Company of New York v Lothian Regional Council, n 95 above, 173. 105  ibid.

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defence of careless mistake appears to offer a way forward for South African law, at once consistent with the historical sources and compatible with the principles underlying the condictio. The careless mistake defence recognised in the Morgan Guaranty case has been subject to criticism.106 It is unclear what the equitable significance of carelessness on the part of the transferor is, especially since the careless error in question is often shared by the recipient.107 In fact, the significance accorded to carelessness in the context of the condictio indebiti appears to rest on a loose analogy between mistake as a reason for restitution and mistake as an excuse for wrongful conduct. According to Aristotle, wrongful conduct which is performed in a state of ignor­ance ought not to be punished, since ignorance excuses the act in question, but this is true only where the actor’s ignorance was not careless, in the sense that it was in his power to avoid it.108 It seems to follow from this that careless mistake is inadequate to found the restitution of transfers. However, any analogy between mistake as an excuse and mistake as a reason for restitution is misplaced: to borrow the language of Herbert Hart, mistakes which found the condictio indebiti are invalidating mistakes, not excusing mistakes.109 The purpose of mistake in the context of the condictio indebiti is to show that the plaintiff’s transfer is involuntary, or at least not voluntary, and thus the carelessness of his mistake can have no bearing on whether or not the plaintiff ought to recover. Indeed, the equitable defence of careless mistake has only very seldom influenced the outcomes of cases in Scottish law.110 Nevertheless, as Lord Clyde acknowledged in the Morgan Guaranty case, the defence might occasionally provide a context in which equitable considerations not already taken into account could be factored into the court’s decision. Affirmative Portfolios CC v Transnet Ltd t/a Metrorail, discussed in the previous section, appears to provide a rare example of an instance in which the careless mistake defence played a useful role in excluding an undeserving claim. The payments which the respondent in that case sought to recover had been made in accordance with an oral variation to the rate of remuneration for employees originally specified in the parties’ contract. However, owing to the inclusion of a nonvariation clause in the contract, that oral variation was without contractual effect. Boruchowitz AJA found that the respondent’s error in making the payments in the face of the non-variation clause could only be attributed to extreme slackness, and that the claim must fail for this reason. It certainly seems that it would have been inequitable to order restitution in these circumstances. However, what appears truly significant insofar as far as the  Evans-Jones, Unjustified Enrichment, n 95 above, 3.104–3.110   ibid 3.108–3.110; Visser, ‘Error of Law and Mistaken Payments’, n 77 above, 185; Unjustified Enrichment, n 44 above, 316–18. 108   Nicomachean Ethics 1110b18–1111a2; 1113b22–1114a3 cf Chapter 2 at II(A). 109   HLA Hart, Punishment and Responsibility: Essays in the Philosophy of Law (1968) ch 2, especially 29. See also EA Farnsworth, Alleviating Mistakes: Reversal and Forgiveness for Flawed Perceptions (2004) 12–17 and ch 12. 110  Evans-Jones, Unjustified Enrichment, n 95 above, 3.108–3.110. See further Scott, ‘The Requirement of Excusable Mistake’, n 76 above, 834–39. 106 107



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equities in the Affirmative Portfolios case are concerned is that the respondent had explicitly agreed to make the payments in question; that in making the payments it implicitly represented that it regarded itself bound by the oral variation; and – most importantly – that the appellant relied on that representation in paying salaries to the employees according to the higher rate.111 It is these facts, rather than the carelessness or otherwise of the respondent’s error, which justify the refusal of the claim. Thus, the careless mistake defence seems at best a proxy for other, stronger equitable arguments. In fact, as Boruchowitz AJA himself acknowledged, the respondent’s condictio would in all likelihood have been defeated by the defence of loss of enrichment in any event. The finding on excusability rendered it unnecessary to determine the extent of the appellant’s surviving enrichment, but it appeared that most of the overpayment had been passed on to its employees and the relevant regulatory authorities; even if the condictio had succeeded in principle, the appellant would have been liable only for that part of the sum paid to it which remained in its hands at the time at which the action was instituted, according to the principles enunciated in African Diamond Exporters (Pty) Ltd v Barclays Bank International Ltd.112 In conclusion, the defence of careless mistake does not appear to be capable of performing any useful work not already done by the defence of loss of enrichment.113 Admittedly, in the Affirmative Portfolios case, the excusability requirement served to relieve the appellant of the burden of proving that he had passed on the extra money; one might argue that the loss of enrichment defence would have fallen short of providing adequate protection to the reliance of the recipient on the appellant’s implicit representation insofar as it required him to do this. However, it seems that such concerns are perhaps best addressed not through a defence of careless mistake but through the expansion of the loss of enrichment defence itself, or the evolution of other defences such as estoppel.114 In Scottish law, for example, the defender may raise the defence of change of position in order to defeat the condictio indebiti where he had reasonable grounds for believing that he was entitled to the transfer and that he acted upon that belief in such a way as to ‘make repetition unjust’.115 Similarly, the English defence of change of 111   Indeed, one could even go so far as to assert that the parties’ oral agreement had generated a species of natural obligation sufficient to justify the payments: the rule in SA Sentrale Ko-Op Graanmaatskappy Bpk v Shifren 1964 (4) SA 760 (A) rendered this agreement unenforceable in contract, but it was nevertheless sufficient to preclude restitution. 112   African Diamond Exporters (Pty) Ltd v Barclays Bank International Ltd 1978 (3) SA 699 (A); Senwes Ltd and others v Jan van Heerden and Sons CC and others [2007] 3 All SA 24 (SCA). 113   Indeed, the demise of the defence of careless mistake in Scottish law may be directly linked to the rise of the defence of change of position, particularly after the decision in Credit Lyonnais v George Stevenson & Co Ltd (1901) 9 SLT 93. See further Scott, ‘The Requirement of Excusable Mistake’, n 95 above, 834–39, 855–58. For a detailed account of the loss of enrichment defence in modern South African law see Visser, Unjustified Enrichment, n 44 above, 728–36. 114   The relationship between the excusable mistake requirement and the defence of estoppel is discussed by me in detail in ‘The Requirement of Excusable Mistake’, n 95 above, 855–57. See also Visser, Unjustified Enrichment, n 44 above, 741–47. 115   See, eg, Credit Lyonnais v George Stevenson and Co, n 113 above (the phrase appears at 95); Royal Bank of Scotland plc v Watt 1991 SC 48; Evans-Jones, Unjustified Enrichment, n 95 above, 9.56–9.94.

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position may extend beyond mere loss of enrichment to include a range of other circumstances in which the recipient’s position has so changed that it would be inequitable to order restitution.116 If it were judged necessary, South Africa could provide greater protection to the recipient’s interest in the security of his receipt in a rational way by widening the scope of its loss of enrichment defence. It need not rely in this respect on the artificial limitation on recovery represented by a defence of careless mistake..117 In particular, the rights and values enshrined in the South African Constitution might play an important role in shaping the loss of enrichment defence in future.118 In the recent decision of the Western Cape High Court in Nel v Jonker,119 Gamble J held that the onus in respect of loss of enrichment should fall on the plaintiff rather than the defendant, requiring the plaintiff to demonstrate that the defendant had been personally enriched by maintenance payments made to her for the benefit of her minor child.120 In this way he sought to promote the right of the couple’s child and children generally to family and parental care in terms of section 28 of the Constitution.121 A similar result could have been reached through the application of the excusable mistake requirement: indeed, Gamble J based his decision on the fact that the plaintiff had failed to establish that his mistake was justified to the extent that it entitled him to ‘judicial exculpation’.122 Yet this decision demonstrates that greater flexibility in the operation of the loss of enrichment defence, and in particular closer attention to the ‘spirit, purport and objects of the Bill of Rights’, would render a defence of careless mistake superfluous.

116   This is suggested by the interpretation taken by Lord Goff in Lipkin Gorman (a firm) v Karpnale Ltd [1991] 2 AC 548, 580. See further P Birks Unjust Enrichment, 2nd edn (Oxford, Oxford University Press, 2005) 258–61; G Virgo, The Principles of the Law of Restitution, 2nd edn (Oxford, Oxford University Press, 2006) 691–93; Burrows, The Law of Restitution, n 88 above, 526–27 (on disenrichment as an essential justification for the change of position defence) and 527–28 (‘Not a general hardship defence’). 117   Regarding possible future developments in the loss of enrichment defence see Visser, Unjustified Enrichment, n 44 above, 736–40. 118   South African Constitution (Act 108 of 1996), s 39(2) requires courts to promote the spirit, purport and objects of the Bill of Rights when developing the common law. 119   Nel v Jonker [2011] ZAWCHC 5. 120   In terms of the parties’ divorce order the plaintiff (the respondent in the High Court) was ordered to pay maintenance in respect of their minor child, N. He continued to make maintenance payments until N underwent a paternity test which proved that the plaintiff was not her natural father. Pursuant to an application brought by the plaintiff, in July 2007 the Magistrate’s Court issued an order declaring that he was not the natural father of N and varying the parties’ divorce order by the deletion of the plaintiff ’s maintenance obligations. The plaintiff then brought a successful action against the defendant (the appellant in the High Court) to recover the maintenance which he had already paid, whereupon the defendant appealed to the Western Cape High Court. 121   According to Gamble J, ‘courts may in the future be wary of recognising claims in circumstances such as the present which necessitate an enquiry into paternity and which may have the tendency to destroy an otherwise loving and caring parental relationship with a child whose rights to family and parental care are protected under section 28 of the Constitution’ (para [79]). 122   Nel v Jonker, n 119 above, para [63].

Introduction: Taking Stock In Chapters 2 and 3, I considered the origins of certain restrictions on the type of mistakes capable of founding the condictio indebiti in modern South African law. In particular, I considered the rule that in order to found the condictio indebiti a mistake must be excusable. This excusable mistake requirement has generally been thought to derive from the concept of error excusabilis employed by the nineteenth-century German Pandectists in order to try to reconcile the apparently conflicting views on mistake of law reflected in Justinian’s Corpus Juris Civilis. But in Chapters 2 and 3, I argued that the requirement of excusable mistake or iustus error (reasonable mistake) applied to the condictio indebiti in South African law in fact has an entirely separate origin, namely, the extraordinary Roman-Dutch remedy of restitutio in integrum. At least in early South African law, restitutio in integrum competed with the condictio indebiti, in the sense that it too was used to effect the restitution of mistaken transfers, whether wholly extracontractual or in the form of performance rendered under a contract invalidated by unilateral mistake. During the course of the twentieth century the role played by restitutio in integrum as an independent remedy has diminished, but as the cases show, its influence on the elements of the condictio indebiti has remained profound. The iustus error requirement in its modern form flows from a particular conception of the plaintiff’s restitutionary claim as a corrective to the general legal order; a mechanism which is technically extraordinary. But this conception of the claim is alien to the modern principle against unjust (or unjustified) enrichment. Having made out his cause of action, the plaintiff succeeds as of right, not merely by virtue of the court’s equitable discretion. It follows that the iustus error requirement is alien to the condictio indebiti not only in a purely historical sense but also as a matter of fundamental principle. The primary focus of these chapters was, of course, the excusable mistake or iustus error requirement. However, the research presented there has wider implications also. As pointed out in Chapter 1, an analysis of the South African law of enrichment which is explicitly founded on unjust factors permits the ambit of enrichment by transfer to be extended beyond the condictiones to include also other species of restitutionary claim. In particular, it permits the inclusion of restitutio in integrum, which as we have seen is organised around unjust factors such as mistake, compulsion (metus) and minority. However, the converse is also true. The influence of restitutio in integrum on the condictio indebiti, and the use of restitutio in integrum itself to effect the restitution of mistaken transfers, means

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that the only way to make sense of the South African law regarding the restitution of mistaken transfers is to recognise the central analytical role played by the plaintiff’s mistake. Given the weight attributed to the error requirement in the case law, mistake cannot be regarded simply as part of the factual background to the plaintiff’s claim, as is argued by proponents of the absence of legal ground analysis. Thus, the research presented in Chapters 2 and 3 vindicates the mixed analysis of claims to recover mistaken transfer in South African law. Recognition of the fact that mistake in itself provides a reason for restitution permits the reevaluation of the excusable mistake requirement according to the principles underlying unjust enrichment itself: in the case of mistake, the vitiation of the transferor’s intention. Such re-evaluation is impossible if the analytical significance of mistake itself is discounted. As explained in Chapter 1, in the next two chapters I will take as my starting point certain alternatives to the mistake requirement in the context of the condictio indebiti, namely, those cases in which the transfer in question has been made under compulsion1 or by a minor or one suffering from some form of juristic incapacity. I will argue that these alternatives to the mistake requirement in the context of the condictio are due at least in part to the influence of the extraordinary remedy of restitutio in integrum, specifically restitutio on grounds of metus and minority. However, I will consider also the role played by restitutio in integrum itself in effecting the restitution of enrichment by transfer in South African law on grounds of compulsion and minority. I will seek to show that restitutio in integrum continues to function as an independent restitutionary remedy in respect of compelled transfers and minors’ transfers even in modern South African law; and that the decisions of the South African courts reveal a highly integrated approach to restitutionary claims founded on compulsion and minority, in the sense that the same approach appears to be adopted whether the remedy applied was restitutio in integrum or the condictio. Thus, I will argue that, as in the case of mistake itself, compulsion and incapacity function as specific unjust factors in South African law. Put more strongly, it is only by means of an approach that takes some account of unjust factors that the modern South African law of enrichment by transfer can be explained. On the one hand, scepticism concerning the principled basis of restitutionary claims is met if it can be shown that what had previously been understood as a proliferating range of casuistically determined requirements can in fact be explained according to a coherent taxonomy. On the other hand, once again, an unjust factors analysis of enrichment by transfer permits the re-evaluation of certain features of modern South African law according to the principles underlying unjust enrichment itself. Regarding compelled transfers in particular, as in the case of mistake, the fundamental reason for restitution is to be found in the vitiation of the transferor’s intention. Additional requirements for recovery, such as the protest requirement 1   I have used ‘compulsion’ as a general term in preference to ‘duress’, especially when referring to the unjust factor, but have retained ‘duress’ in the context of the phrase ‘duress of goods’ and when quoting or paraphrasing.



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associated with compulsion, require specific justification if they are to be retained. An analysis which takes account of unjust factors thus enables the principled critique of problematic rules such as this one without demanding a root-and-branch revision of the subject.

4 Compulsion I Introduction The orthodox position regarding the restitution of compelled transfers can be briefly stated as follows. As we saw in Chapter 1, writers on the South African law of enrichment admit the existence of a number of alternatives to the mistake requirement in the context of the condictio indebiti. One of these is the rule that the condictio indebiti is available to a plaintiff who has consciously paid an indebitum under compulsion. For Wouter De Vos, in cases where a transfer has been made under pressure, compulsion takes the place of the mistake which would usually be required, as a species of exception.1 For Daniel Visser, mistaken and compelled transfers are just two factual instances in which the purpose of the plaintiff’s performance might fail, resulting in the absence of a legal ground to support the transfer.2 Jacques du Plessis admits the analytical significance of ‘pressure and protest’ in the context of the South African condictio indebiti while arguing for an analysis organised around the absence of a relationship of indebtedness between the parties.3 In this chapter I hope to refute these views, showing that compulsion, like mistake, functions as an unjust factor in the South African law of enrichment by transfer. As in Chapters 2 and 3, I will focus on the role played in South African law by restitutio in integrum as a technique for effecting the restitution of enrichment by transfer, and on the interaction between restitutio and the traditional enrichment remedy, the condictio indebiti. The purpose of the next section is largely to set this inquiry in its historical context. However, this account of the historical background will also lend support to the argument that the orthodox view of the relationship between enrichment by transfer and the condictiones is flawed, and that the condictiones are not after all the only actions available to reverse unjustified (unjust) enrichment in South

1   W De Vos, Verrykingsaanspreeklikheid in die Suid-Afrikaanse Reg, 3rd edn (Cape Town, Juta, 1987) 172. 2   DP Visser, Unjustified Enrichment (Cape Town, Juta, 2008) 229–30 and ch 6. 3   J Du Plessis, ‘Towards a Rational Structure of Liability for Unjustified Enrichment: Thoughts From Two Mixed Jurisdictions’ (2005) 122 South African Law Journal 142, 170–71; The South African Law of Unjustified Enrichment (Cape Town, Juta, 2012) 139–48, 168–76.

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African law.4 Next, I will consider the role of restitutio in integrum as a mechanism for reversing compelled transfers in nineteenth-century South African law. I will argue that the early decisions of the South African courts reveal a unified approach to restitutionary claims, applying restitutio in integrum regardless of whether the transfer sought to be recovered was made in performance of a contract or not. Then in the following section I will deal with twentieth-century developments: I will examine the circumstances under which the condictio indebiti first came to be applied to the restitution of extra-contractual compelled transfers in South African law, and the extent to which even now the South African courts adopt an integrated approach to the recovery of compelled transfers, regardless of whether the remedy applied is restitutio in integrum or the condictio, and regardless of whether the transfer sought to be recovered has been made in performance of a contract or not. An important subsidiary issue also considered in this chapter is the origin and function of the protest requirement which is associated with compulsion in South African law. I will argue that, as in the case of excusable mistake or iustus error, this requirement stems from a particular conception of the restitutionary claim as a corrective to the general legal order, a mechanism which is technically extraordinary; and that like iustus error, the protest requirement is alien to the principles underlying enrichment liability.

II  Historical Background A  Restitution of Compelled Transfers in Roman Law (i)  Praetorian Remedies for Metus: Restitutio in Integrum From their inception, parties to bonae fidei contracts – contracts governed by the principle of good faith – could plead compulsion as a defence. The reason for this was apparent from the formula of the contractual action itself: it could not be said that the defendant ought ‘in good faith’ to perform his obligations under the contract if indeed he had been compelled by the plaintiff to enter into it. However, until late in the first century BC no remedy was available to someone who had entered into a formal transaction such as a stipulation as a result of compulsion.5 The validity of such transactions was unaffected by the fact that the will of one of 4   I have already briefly considered the nature of restitutio in integrum in Roman law and RomanDutch law in Chapter 2 at III(A), as background to the discussion of restitutio in integrum on grounds of iustus error in early South African law. In this section, I consider the evolution of restitutio in integrum in more depth. I have chosen to do this in the context of compulsion in particular because it is largely with respect to metus (fear) and dolus (fraud) that restitutio in integrum is discussed in the Roman and Roman-Dutch sources, although as I will show in Chapter 5, restitutio in integrum on grounds of minority is also considered in some detail. 5   See, eg, Justinian, Institutes 4.13.1.



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the parties had been coerced. Nor could benefits actually transferred in pursuance of such formal transactions be recovered. The Roman Praetor took steps to alleviate this harsh regime. According to Ulpian, the Praetor’s Edict ran as follows: ‘What is done through fear I will not uphold’.6 Metus (fear) had to be iustus (reasonable or justified) in order to found relief:7 the jurists insisted on the standard of the homo constantissimus, a man of the most steadfast character.8 This standard was particularised: Paul mentions fear of enslavement as an instance of iustus metus;9 Ulpian, fear of death and imprisonment.10 Conversely, fear of infamia, institutionalised disgrace, did not attract relief,11 nor did fear of mere inconvenience,12 nor fear arising from a threat of prosecution.13 Ulpian specifies as an independent requirement that the compulsion had to be wrongful.14 As for the remedy provided by the Praetor to enforce his Edict, there is no doubt that ‘the short Digest title 4.2 presents unusual difficulties’.15 The traditional view is that the Praetor originally furnished a range of remedies with different purposes.16 Formal acts performed under compulsion were effectively annulled by means of a defence (the exceptio metus). To an action on a stipulation, for example, the defendant could now reply that he had been compelled to contract. At the same time, the victim of extortion could use the extraordinary restitutionary remedy of restitutio in integrum to reverse the effects of any formal act which he had concluded: for example, where he had transferred ownership in a thing by formal conveyance (eg, mancipatio), the Praetor would annul the transfer by granting him a vindicatory action (the rei vindicatio).17 Finally, the principal remedy made available by the Praetor was an action, the actio quod metus causa. Unlike restitutio in integrum, which was essentially restitutionary, this was a penal action which lay within a year for four times the total loss suffered,18 and thereafter only for the loss itself.19 Moreover, while the other remedy was available even against innocent third parties who happened to have got hold of the extorted object (in rem scripta), according to the traditional view the actio quod metus causa was available only against the extortioner himself. 6   Ait praetor: ‘Quod metus causa gestum erit, ratum non habebo’. Justinian, Digest 4.2.1 (Ulpian, On the Edict, Book 11). 7   See, eg, Ulpian’s use of the phrase ‘iustus metus’ in D 4.2.7.1 (Ulpian, On the Edict, Book 11). 8   D 4.2.6 (Gaius, On the Provincial Edict, Book 4). 9   D 4.2.4 (Paul, On the Edict, Book 11). 10   D 4.2.7.1 (Ulpian, On the Edict, Book 11). 11   D 4.2.7 pr (Ulpian, On the Edict, Book 11, citing Pedius). 12  ibid. 13  Justinian, Code 2.19.10 (Diocletian and Maximian). 14   D 4.2.3.1 (Ulpian On the Edict, Book 11). 15   F Schulz, Classical Roman Law (Oxford, Clarendon Press, 1951) 604. 16   cf Chapter 2 at III(A). For an account of this traditional view of the classical law see R Zimmermann, The Law of Obligations: Roman Foundations of the Civilian Tradition (Cape Town, Juta, 1990) 654–58. 17   D 4.2.9.4, 6, 7 (Ulpian, On the Edict, Book 11). See Zimmermann, The Law of Obligations, n 16 above, 656; Schulz, Classical Roman Law, n 15 above, 602–3. 18   This included not only the value of the object but also its fruits and any lost profits: see, eg, D 4.2.12 pr (Ulpian, On the Edict, Book 11). 19   D 4.2.14.1 (Ulpian, On the Edict, Book 11).

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Yet this account is at odds with the classical sources as we have them. There is in fact little consistency in the way the various remedies are described: the restitutio in integrum is referred to throughout as an action rather than an extraordinary remedy, while the actio quod metus causa is said to lie against third parties. Thus, Fritz Schulz was compelled to hypothesise an amalgamation of restitutio in integrum and the actio quod metus causa under Justinian, in terms of which the action became an actio mixta (an action having both penal and reipersecutory functions) available against anyone who had acquired the extorted thing.20 However, apart from the far-­reaching interpolation upon which this view relies, there are certain features of the actio quod metus causa which are inconsistent with the view that it fulfilled a purely penal function in classical law.21 Thus, more recently a new interpretation of the sources has been proposed, namely, that even in classical law the actio quod metus causa was simply the principal means which the Praetor made available in order to effect restitutio in integrum, the aim of restitution itself.22 While on its face Digest 4.2 gives the impression that restitutio in integrum was an independent remedy, although identical in scope to the actio quod metus causa, in fact in integrum restitutio – putting things back the way they were – was the response that metus engendered.23 Despite the fact that it lay for fourfold, the main objective of the actio quod metus causa was not the punishment of the extortioner’s wrongdoing but rather the restitution of the benefit extorted.24 Given the restitutionary goal of the actio, it is not surprising that the relief granted by the Praetor was available against third parties. Regarding the scope of the remedy (or remedies), the Edict itself does not specify the kinds of acts in respect of which the Praetor might grant relief. In line with his general thesis, it has been suggested by Berthold Kupisch that the act referred to in the Edict was neither extortioner’s nor victim’s, but rather any legal transaction or other act concluded literally ‘as a result of fear’, including the act of a third party.25 20   D 4.2.9.1, 6, 8; D 4.2.14.3; D 4.2.16.2 (all Ulpian, On the Edict, Book 11) must then be dismissed as interpolations: Schulz, Classical Roman Law, n 15 above, 604–5. 21   First, condemnation under the actio did not involve infamia. As Schulz admitted, this appears anomalous in the context of the other delicts: ‘the mildness of this procedure when compared with the actio furti and legis Aquiliae certainly comes as a surprise’: Schulz, Classical Roman Law, n 15 above, 602. Secondly, the action was an actio arbitraria, ie, the formula contained a clause which authorised the judge to acquit the defendant and absolve him of the fourfold penalty provided that he restored the extorted thing: D 4.2.14.4 (Ulpian, On the Edict, Book 11). 22   The theory is propounded by Berthold Kupisch, In integrum restitutio und vindicatio utilis bei Eigentumsübertragungen im klassischen römischen Recht (Berlin, De Gruyter, 1974). For an overview in English, see Zimmermann, The Law of Obligations, n 16 above, 654–58; JE Du Plessis, Compulsion and Restitution: A Historical and Comparative Study of the Treatment of Compulsion in Scottish Private Law with Particular Emphasis on its Relevance to the Law of Restitution or Unjustified Enrichment (unpublished PhD thesis, University of Aberdeen, 1997) 12–16. 23   Other remedies available to effect in integrum restitutio were the rescissory actions based on the fiction that the act in question had not occurred: this is the rei vindicatio rescissa mancipatione mentioned above. See, eg, Zimmermann, Law of Obligations, n 16 above, 656 n 46. 24   However, it is the former conception of metus which explains its classification as a delict in later law. See Du Plessis, Compulsion and Restitution, n 22 above, 12, citing Kupisch, In Integrum Restitutio, n 22 above, 148. 25   See Du Plessis, Compulsion and Restitution, n 22 above, 12, citing Kupisch, In Integrum Restitutio, n 22 above, 146 ff.



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Where the extortioner (or a third party) sought to enforce an obligation flowing from a formal transaction entered into under compulsion, it was enough for the victim to raise the exceptio metus to defeat the enforcing action (as we have seen, this exceptio was inherent in the good faith contracts). However, in other cases active relief was necessary. Relief might be granted in respect of the manumission of a slave, the building of a structure on someone else’s land, or the demolition of another’s building.26 In particular, where the victim had been compelled actually to give something, whether in pursuance of an extorted contract or otherwise, help was available.27 As elsewhere, iustus metus (reasonable fear) was necessary to found relief.28 On the other hand, even where the transfer had been extorted, the praetorian remedies would not avail the plaintiff if he had actually owed the sum extorted in terms of a valid prior obligation. In that case he had suffered no loss (damnum) corresponding to the defendant’s gain, damnum being described as a requirement for a successful action: ‘a person who brings force to bear on his debtor in order to make the latter pay him is not liable under this edict on account of the nature of the action which requires loss on the ground of duress [metus causa]’.29

(ii)  Condictio There were, of course, other legal responses to compulsion in Roman law: for example, the actio vi bonorum raptorum available to victims of robbery. However, it seems that there was only one other restitutionary action besides the actio quod metus causa which might have been applicable in cases of compulsion per se, namely, the condictio. As discussed briefly in Chapter 1, in classical Roman law the condictio was used to enforce a range of obligations, whether arising from contract, delict or from the enrichment of the defendant.30 By Justinian’s time these enrichment condictiones had been specifically identified by name, each being the subject of a separate title of the Digest in Book 12. In practice the most important of these was the condictio indebiti, the condictio to recover a transfer not owing.31 On its face, this condictio was well suited to the restitution of transfers made in discharge of a putative liability, including the performance of a coerced contract, although as we have seen such performance would not necessarily be indebitum: a coerced stipulatio remained technically valid.32 However, even in classical law the   D 4.2.9 pr, 2 (Ulpian, On the Edict, Book 11).   See Ulpian’s discussion of the distinction between executory and executed contracts in D 4.2.9.3 (Ulpian, On the Edict, Book 11). 28   D 4.2.23.1 (Ulpian, Opinions, Book 5). 29   D 4.2.12.2 (Ulpian, On the Edict, Book 11, reporting the view of Julian; Watson’s translation). 30   See Chapter 1 at I. 31   D 12.6. 32   For a detailed discussion of this application of the condictio indebiti to compelled transfers see Du Plessis, Compulsion and Restitution, n 22 above, 16–26. While the formal modes of conveyance were abstract and therefore functioned independently of any underlying causa, traditio may have been causal, at least in classical law. Even then, however, traditio was effective to pass ownership as long as transfer was made in discharge of liability (solutionis causa). See Zimmermann, The Law of Obligations, n 16 above, 841 n 51. 26 27

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condictio indebiti appears to have been denied where the transferor knew that the sum he had paid was not owing,33 and Justinian certainly insisted on error as a positive requirement.34 It follows that it would have been precluded in cases where the plaintiff had made the transfer in question under compulsion, since there the plaintiff knew that he was not liable to render performance. However, the condictio indebiti was not the only species of condictio potentially applicable to compelled transfers. Also available was the condictio ob rem or causa data causa non secuta: the claim to recover a transfer made in the expectation of some extra-contractual counter-performance or other event (the regime of specific contracts in classical Roman law meant that this category was much larger than its modern counterpart). Generally speaking, where this extra-contractual consideration ensued the purpose of the transfer succeeded and the transfer was therefore in principle irrecoverable.35 But if that consideration or purpose was morally offensive (turpis causa) the transfer remained recoverable in any event,36 provided that the plaintiff himself was not tainted with turpitude.37 Thus, in a case where the plaintiff paid a certain sum or handed over certain property in order to avert the negative consequence threatened by the recipient, he could recover using this condictio ob turpem causam, a sub-species of the condictio ob rem. Moreover, recovery on this basis seems not to have been limited to cases where the transfer had been made against some immoral consideration. By Justinian’s time the fact that the parties’ agreement contravened a statutory provision was sufficient in itself to found the recovery of performance tendered:38 the condictio ob turpem causam was widened to become the condictio ob turpem vel iniustam causam, the condictio to recover transfers made for an immoral or illegal purpose.39 In conclusion, there appears to have been a limited degree of overlap in the fields of application of the condictio and the actio quod metus causa.40 While what would come to be called the condictio ob turpem vel iniustam causam may have been available in classical law to recover certain compelled transfers, in practice it must have been confined to milder cases of compulsion not amounting to metus, such as transfers induced by threats to commit a crime, or the withholding of a right. On the other hand, the condictio indebiti was never applied to compelled 33   See, eg, D 12.6.1 (Ulpian, On the Edict, Book 26). See Zimmermann, The Law of Obligations, n 16 above, 849–50. 34   See, eg, D 22.3.25 pr (Paul, Questions, Book 3). On the interpolation of this text see Zimmermann, The Law of Obligations, n 16 above, 850. 35   D 12.5.1.1 (Paul, On Sabinus, Book 10). 36   D 12.5.1.2 (Paul, On Sabinus, Book 10). 37   D 12.5.3 (Paul, On Sabinus, Book 10). 38   This followed from the abolition by Theodosius II of the distinction between imperfect and perfect statutory prohibitions. See D Liebs, ‘The History of the Roman Condictio up to Justinian’ in N MacCormick and P Birks (eds), The Legal Mind: Essays for Tony Honoré (Oxford, Clarendon Press, 1986) 165, 175. 39   Liebs, ‘History of the Roman Condictio’, n 38 above, 174 ff. It followed that where a stipulation had been exacted by force and the innocent party had subsequently paid under compulsion, he could recover the money, despite the existence of the stipulation, as having been made ex iniusta causa (for an illegal purpose): D 12.5.7 (Pomponius, On Sabinus, Book 22). 40   Du Plessis, Compulsion and Restitution, n 22 above, 25 ff.



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transfers because of the error requirement. For the most part, the restitution of transfers made under compulsion was effected by means of the praetorian remedies for metus.

B  Restitution of Compelled Transfers in Roman-Dutch Law (i)  Restitutio in Integrum The fundamental differences in procedure between Roman law and the law of the United Provinces in the seventeenth and early eighteenth centuries inevitably affected the character of the substantive Roman-Dutch law. The evolution of a general law of contract from the specific contracts of classical Roman law meant that, first, all seriously intended agreements were now actionable contracts and, secondly, that all contracts were governed by the principle of good faith. Nevertheless, much of what was said in the previous section applies equally here: in large part, the Roman-Dutch writers were content to restate and amplify the Roman law as they found it in the Corpus Juris Civilis. As we have seen, on its face Digest 4.2 gives the impression that restitutio in integrum was an independent praetorian remedy. As a result, whatever the actual position in classical Roman law, in Roman-Dutch law restitutio in integrum was regarded as a restitutionary remedy in its own right, more-or-less identical in scope to the actio quod metus causa.41 Specifically, there appears to have been little change in the meaning of iustus metus as defined in the Roman sources. Voet42 and Van Leeuwen43 expressly enumerate the general test of the homo constans, although Voet admits a degree of subjectivisation in this standard: the judge retained a discretion to take into account age, sex and standing.44 Moreover, the contents of the list of particular instances remained very much the same too. These were ‘fear of death, of loss of reason, of wounds, of debauchery, of slavery, of chains’ etc.45 On the other hand, neither metus reverentialis,46 the fear induced by respect for authority, threats of infamia47 nor threats of annoyance48 were enough. However, Du Plessis correctly points to the evolution of a distinct requirement for relief in Voet’s treatment of Digest 4.2, namely, that fear be inspired illegally or at least contrary to public 41   MA Lambiris, Orders of Specific Performance and Restitutio in Integrum in South African Law (Durban, Butterworths, 1989) 191–92; DP Visser, ‘Rethinking Unjustified Enrichment: a Perspective of the Competition between Contractual and Enrichment Remedies’ (1992) Acta Juridica 203, 220–21; Visser, Unjustified Enrichment, n 2 above, 108–11. 42  Voet, Ad Pandectas 4.2 n 11. 43   Van Leeuwen, Censura Forensis I.4.41.2. 44  Voet, Ad Pandectas 4.2 n 11. 45   The list is Voet’s: see Ad Pandectas 4.2 n 11 (Gane’s translation). Also Grotius, Inleydinge tot de Hollandsche Rechtsgeleertheid 3.48.6. 46   See, eg, Voet, Ad Pandectas 4.2 n 11; Huber, Heedendaegse Rechtsgeleertheyt 4.38.4. 47   Discussed in some detail by Voet, Ad Pandectas 4.2 n 12. 48  Voet, Ad Pandectas 4.2 n 13.

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policy, contra bonos mores.49 In section 10, prior to his discussion of iustus metus in section 11, Voet enumerates a number of cases in which restitutio will be denied on this basis: for example, where an act is induced by the fear which a magistrate rightfully and lawfully inspires by virtue of his office – by fear of physical summons or imprisonment – it will remain proof against rescission. This additional requirement is inherent in the passage of Ulpian50 on which Voet relies, but Voet elevates it to greater prominence.51 As for the scope of restitutio in integrum, as we saw in Chapter 2, here opinions differed.52 Voet, in line with his generally conservative stance, envisaged the granting of restitutio on grounds of metus in respect of a wide variety of transactions and acts: ‘It is open . . . to him who suffered loss through intimidation by having given, promised or left undone something to his detriment’.53 On the other hand, Grotius speaks only of obligations, ie, contracts induced by compulsion: ‘We have seen how obligations are determined: let us now see how they are rendered inoperative by legal remedies’.54 The views of Van Leeuwen and Van der Linden appear to be similar.55 In any case, the remedy continued to be regarded as an extraordinary one. As Grotius says in the course of his discussion of restitutio, such herstelling in het geheel was effected by means of an order of relief obtained from the Hooge Raad, as representative of the sovereign.56 This involved a direction to the judge to weigh up all the equities of the case.57 It remains to consider the element of loss or prejudice expressly required by most of the Roman-Dutch writers. As we have seen, this requirement figures in Digest 4.2 itself: Julian is reported to have said that where the plaintiff was induced by metus to pay a debt, he could not obtain restitutio, although the creditor might be hit by the provisions of the lex Julia de vi.58 The reason for this was that he had suffered no loss (damnum) as a result of the creditor’s metus. Voet cites this text in his Commentary on Digest 4.2 as an illustration of the loss requirement: ‘Since the nature of the actio quod metus causa demands a loss which can be repaired, and in such cases the sufferer from fear has parted with nothing, this edict is bound not to apply’.59 Moreover, he discusses this text in another context also, namely, in his Commentary on Digest 12.6, the title devoted to the condictio indebiti: [I]f things at once naturally and civilly due have been exacted by a creditor in defiance of the style recognised by custom or law, and have thus been paid by the debtor, there is   Du Plessis, Compulsion and Restitution, n 22 above, 116.   D 4.2.3.1 (On the Edict, Book 11) . 51   Du Plessis, Compulsion and Restitution, n 22 above, 116. See here also the decision of the Hooge Raad reported by Van der Keessel, Praelectiones 3.48.6. 52   See Chapter 2 at III(A). 53   Ad Pandectas 4.2.n 3 (Gane’s translation). 54  Grotius, Inleydinge 3.48.1, speaking of herstellinge generally (Lee’s translation). 55   Van Leeuwen, Roomsch Hollandsch Recht 4.42.4; Van der Linden, Koopmans Handboek 1.18.10. 56  Grotius, Inleydinge 3.48.5. See also Huber, Heedendaegse Rechtsgeleertheyt, 4.37; Van Leeuwen, Roomsch Hollandsch Recht 4.42.2; Van der Keessel, Praelectiones 3.48.5. 57   See Chapter 2 at III(A). 58   D 4.2.12.2 (Ulpian, On the Edict, Book 11). 59   Ad Pandectas 4.2 n 17 (Gane’s translation). 49 50



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no room for this form of action. It cannot be said that mere offence in the exaction of it made it not due. And he who pays no more than he truly owes suffers no damage.60

Thus, it is clear that for Voet at least there was a strong affinity between the condictio indebiti and the actio quod metus causa: like the condictio, the actio could not lie where the sum paid was in fact owing, because here there had been neither gain nor loss. Moreover, there seemed to be a relationship between this requirement of loss or impoverishment and that of unlawfulness, emphasised by Voet in note 10 of his commentary on Digest 4.2: in many cases, whether or not the sum paid was due would determine the lawfulness of the pressure used to extract it.61

(ii)  Condictio Indebiti and Condictio ob Turpem vel Iniustam Causam The scope of the condictio causa data causa non secuta was much diminished in Roman-Dutch law.62 Since all agreements to which the parties intended to attach contractual force were now contracts, where the recipient of a bargained-for benefit failed to render counter-performance, the plaintiff could simply sue on the contract. On the other hand, where counter-performance was forthcoming but the parties’ contract was judged by law to be immoral or illegal, in theory the appropriate action ought to have been the condictio indebiti, the claim to recover a transfer made in discharge of a non-existent liability, the scope of which ought logically to have increased alongside that of the range of actionable agreements.63 However, this was not in fact the position adopted by the Roman-Dutch writers.64 First, the Roman-Dutch writers followed the Justinianic sources in requiring that the plaintiff must have been mistaken as to his liability to make the transfer in order to succeed under this action.65 This in itself precluded the application of the condictio indebiti in this context: if the plaintiff’s transfer had indeed been made in response to compulsion, ex hypothesi he had not believed himself liable to make it. But more fundamentally, the Roman-Dutch writers do not appear to have regarded the condictio indebiti as the appropriate action to recover performance under immoral or illegal contracts, even in theory. Instead, they appear to have retained the condictio ob turpem vel iniustam causam in such cases, continuing to analyse performance under such a contract as a transfer made against a future consideration, that is reciprocation by the other party.66   Ad Pandectas 12.6 n 2 (Gane’s translation).   Ad Pandectas, 4.2 n 10. 62   See generally R Zimmermann, ‘Roman-Dutch Jurisprudence and its Contribution to European Private Law’ (1992) 66 Tulane L Rev 1685, 1689 ff. 63   Du Plessis, Compulsion and Restitution, n 22 above, 121 ff. 64  ibid. 65   See generally DP Visser, Die Rol van Dwaling by die Condictio Indebiti: ‘n Regshistoriese Ondersoek met ‘n Regsvergelykende Ekskursus (Dr iur thesis, University of Leiden, 1985) 145–52. 66   For example, Voet retained the condictio ob turpem vel iniustam causam in cases where something had been transferred as a result of threats to commit a crime: Voet, Ad Pandectas 12.5 n 1. Moreover, following Ulpian and Paul, Voet expressly distinguished between bonae fidei iudicia and transactions stricti iuris for these purposes: in the former, ‘what has been given with a view to restoration can also be reclaimed by action on the contract itself, and thus such actions may run together with this action 60 61

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Thus, as in Roman law there appears to have been a limited degree of overlap in the fields of application of restitutio in integrum and the condictio in RomanDutch law. While the condictio ob turpem vel iniustam causam was used to recover compelled transfers, its scope was again rather narrow: in practice it must have been confined to milder cases of compulsion not amounting to metus. For the most part the restitution of transfers made under compulsion, whether in per­ formance of a putative contractual obligation or otherwise, was effected by the actio quod metus causa or the functionally-equivalent restitutio in integrum. On the other hand, as in Roman law, the error requirement meant that the condictio indebiti was never applied to compelled transfers.

III  Restitution of Compelled Transfers: Nineteenth Century Jacques Du Plessis begins his account of compulsion in South African law with the statement, ‘[u]nlike Roman and Roman Dutch law, modern South African law draws a clear distinction between the content and effect of compulsion in a contractual and non-contractual context’.67 In this section I will take the contrary view, arguing that the early decisions of the South African courts in particular reveal a highly integrated approach to restitutionary claims, applying the extra­ ordinary remedy of restitutio in integrum whether the transfer sought to be recovered was made in performance of a contract or not. In this sense they followed the conservative, Romanist approach of Voet, rather than the emerging view – articulated, amongst others, by Grotius – of restitutio in integrum as an exclusively ‘contractual’ remedy. However, as I will discuss below, it appears that the condictio indebiti gradually took over the extra-contractual ground as the law developed. Whereas previously insistence on the mistake requirement had precluded the application of this condictio to compelled transfers, compulsion now came to be seen as an alternative to mistake, fulfilling the same analytical function in the context of the claim. The condictio ob turpem vel iniustam causam, on the other hand, retreated: insofar as it had been used in Roman and Roman-Dutch law to recover transfers made under milder forms of compulsion not constituting metus in the strict sense, this function was now usurped, first by restitutio in integrum and later by the expanded condictio indebiti. on a base cause [condictio ob turpem vel iniustam causam], a thing which does not so happen in transactions stricti iuris’ (Gane’s translation). This was the same, conservative view of contract which he implicitly adopted in his account of restitution for metus in Digest 4.2: where a bonae fide contract had been exacted by means of compulsion, whether mild or severe, neither the condictio nor restitutio in integrum was necessary, and an action on the contract would suffice. 67   Du Plessis, Compulsion and Restitution, n 22 above, 127. See also DP Visser, ‘Rethinking Unjustified Enrichment’, n 41 above, 220–21.



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A  White Bros v Treasurer-General The decision of the Cape Supreme Court in White Bros v Treasurer-General 68 has already been considered in the context of mistake in Chapter 2.69 As we saw there, this is the first reported discussion (although obiter) of restitutio in integrum on grounds of iustus error in South African law. However, it also appears to have been the first decision in South African law in which restitutio in integrum on grounds of metus was considered in any detail. The plaintiffs were merchants who carried on business at Port St John’s, situated in what was then called Pondoland.70 In 1878 the Governor and High Commissioner of the Cape Colony summarily issued a Proclamation declaring sovereignty over the port and tidal estuary of the river to be vested in the British Government, and stating that ‘officers will be appointed on behalf of that Government to control its navigation and to levy any customs or port dues which it may be determined to impose’.71 Measures were subsequently taken to appoint such officers, and a further Proclamation was issued specifying that the rates to be levied would be those of the Cape Colony. Between November 1878 and June 1880 the plaintiffs paid duty on goods landed by them at Port St John’s to the British customs official. However, in July 1881 the plaintiffs wrote a letter to the Collector of Customs, contesting the authority of the Cape Government to collect customs duties, and on the same day forcibly removed their goods from the Customs House where they had been landed without paying any duty. As a result of this action, a Commission was issued appointing the Governor of the Cape Colony the Governor of the St John’s River territory and empowering him to legislate: in a Proclamation issued in August 1881, the Governor reissued the Proclamations of 1878, proclaimed St John’s a free port and confirmed the appointment of the customs officer. Thus, there was no question as to the legality of duties collected from the plaintiffs after the August 1881 Proclamation. However, the position regarding the earlier levy remained unclear. There were two issues to be decided by the three members of the court: whether or not the duties paid between 1878 and 1881 had been illegally levied; and assuming this to be the case, whether the plaintiffs could recover those payments.72 For Smith J, the second question turned on whether or not the payments had been made under ‘undue pressure’ and were consequently ‘involuntary’:

  White Bros v Treasurer-General (1883) 2 SC 322.   See Chapter 2 at III(B). 70   The facts are taken from the judgment of De Villiers CJ: White Bros v Treasurer-General, n 68 above, 339–45. 71   At 325. 72   The court was divided on both issues. Dwyer J found for the plaintiffs; Smith J found that the claim must fail because the duties had been lawfully levied; De Villiers CJ held that even if the Colonial Government had not been entitled to collect the money, the plaintiffs were precluded from recovering because of the absence of protest. 68 69

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Compulsion [I]f goods are wrongfully taken and a sum of money is paid simply for the purpose of obtaining possession of those goods, especially if it be under protest, that money can be recovered back on the ground that it is not a voluntary payment.73

As authority for this proposition, he cited the decision of Lord Wensleydale in Atlee v Backhouse.74 Moreover, he expressly distinguished such restitution on grounds of duress from the ‘Civil Law’ rule, laid down by Lord Mansfield in Moses v Macferlan,75 that illegal transfers could be recovered back by means of the action for money had and received if equity and natural justice demanded it. He concluded that the transfers were in fact involuntary and would have been recoverable on that basis had the custom duty been illegally levied: in fact, it had not been, and the claim failed for that reason. It is clear that Smith J based his decision on the English doctrine of duress of goods: not only did he cite Atlee v Backhouse; English authorities were extensively cited by counsel for both parties in their heads of argument, counsel for the plaintiff relying on several duress of goods cases to support the claim.76 In this respect the judgment of Smith J differs markedly from that of Chief Justice De Villiers. Admittedly, English authority was crucial to the decision of the Chief Justice in that he too recognised the doctrine of duress of goods, at least insofar as the restitution of transfers was concerned: ‘although mere duress of goods will not avoid a contract, a payment of money in order to obtain goods improperly detained is not considered to be a voluntary transfer, and is therefore recoverable’.77 But in resolving the fundamental question of the nature and basis of the claim at issue, he referred exclusively to the Roman-Dutch sources, and in particular to the remedy of restitutio in integrum: To obtain the benefit of this relief [restitutio in integrum], the plaintiffs must show that one or more of the grounds for restitution exist in their case. These grounds are stated by the Roman and Dutch Law writers to be metus [fear], dolus [fraud], minor aetas [minority], Capitis diminutio [loss of civil status], absentia [absence], alienatio judicii mutandi causa [alienation with the object of frustrating a judicial proceeding], and justus error [reasonable mistake]: Voet 4.1.26.78

The case had initially been argued as one of iustus error, but that ground was later abandoned in favour of metus. Thus De Villiers CJ substantially expanded the concept of metus to include duress of goods while still affirming restitutio in integrum as the appropriate remedy. At the same time, in describing the plaintiffs’ cause of action, De Villiers CJ quoted a passage from Vinnius’ Praelectiones which clearly   White Bros v Treasurer-General, n 68 above, 337.   Atlee v Backhouse (1838) 3 M&W 633.   Moses v Macferlan (1760) 2 Burr 1005, 1012. See White Bros v Treasurer-General, n 68 above, 337. 76   Marriott v Hampton (1797) 7 TR 269; Valpy v Manley (1845) 1 CB 594; Parker v Great Western Rly Co (1844) 7 M&G 253, as well as Atlee v Backhouse, n 74 above. 77   Chief Justice De Villiers quoted a substantial passage from the speech of Lord Denman in Skeate v Beale (1841) 11 Ad&E 983: White Bros v Treasurer-General, n 68 above, 351. Regarding the influence of English law in this respect see Du Plessis, Compulsion and Restitution, n 22 above, 107; The South African Law of Unjustified Enrichment, n 3 above, 139–40. 78   White Bros v Treasurer-General, n 68 above, 349, quoting Voet, Ad Pandectas 4.1 n 26. 73 74 75



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refers to the condictio indebiti.79 Thus, first, mistake in the context of the condictio indebiti was equated with iustus error in the context of restitutio in integrum; and, secondly, metus was presented as an alternative to iustus error as a ground of restitution. Moreover, the basis for such restitution was expressly identified: It is clear from what is said by [Voet] and other Dutch writers on this point, that it is the want of free consent on the part of the person entering into the contract, or making the payment, which lies at the root of the rule which invalidates contracts or payments extorted by force or intimidation . . . inasmuch as his consent is forced and not free, the payment is treated as involuntary, and therefore subject to restitution.80

However, the Chief Justice again relied on several English cases, Parker v Great Western Rly Co 81 and Parker v Bristol and Exeter Rly Co,82 to provide support for the proposition that duress of goods could be established only by protest on the part of the plaintiff. Although such protest was unnecessary in cases of duress of the person, as this would ‘per se . . . be enough to prove the absence of free consent’, in the case of duress of goods ‘it is impossible to know whether the transfer is voluntarily or involuntarily made unless some unequivocal objection to the transfer is raised at the time it is made’.83 But although in both the English cases cited the plaintiff had protested against the payments in issue, in neither case does protest appear to have been treated as a requirement for recovery in its own right.84 Thus, it appears that De Villiers CJ elevated to the status of a rule a circumstance which in English law has generally been treated only as a factual indicator of involuntariness. Moreover, although the knowledge referred to here appeared to be the Court’s knowledge of the plaintiff’s state of mind, in imposing this requirement De Villiers CJ seemed to have in mind also the subjective knowledge of the recipient at the time at which the transfer was made. On the facts of the White Brothers case, an unequivocal protest would have resulted in the withdrawal of the British authority, or in immediate steps by the Government to remove all technical objections to the levying of the duties – indeed, this is exactly what happened when the plaintiffs finally did lodge a protest. De Villiers CJ found that the plaintiffs had deliberately refrained from such protest because it suited 79   At 349: ‘If a person makes a payment knowing he is not indebted, it is agreed on all hands that he has not any right of repetition; for a payment which is subject to repetition, if made by mistake, amounts to a donation, if made with full knowledge’. 80   At 350–51. 81   Parker v Great Western Rly Co, n 76 above. 82   Parker v Bristol and Exeter Rly Co (1851) 6 Ex 702. 83   At 351–52. 84   Admittedly, certain nineteenth-century English decisions do appear to have treated the protest requirement in this way. According to Goff and Jones in their account of the recovery of benefits conferred under duress, ‘[i]n some of the old cases the fact that the plaintiff has protested at the time of his payment is stressed by the court as though it were a necessary and integral part of the plaintiff ’s case’: Lord Goff of Chieveley and Gareth Jones, The Law of Restitution, 7th edn (London, Sweet & Maxwell, 2007) para 10–055. See Pratt v Vizard (1833) 5 B&Ad 808, 812 per Parke J. Goff and Jones cite also Valpy v Manley (1845) 1 CB 594, which was cited by counsel for the defendants in White Bros v Treasurer-General. Yet this does not ever appear to have emerged as a majority view. Certainly, protest is not so regarded in modern English law. See below at V(8).

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them to have representatives of the British Government present at the Port. ‘By their conduct the plaintiffs led the Colonial Government to believe that no objection to the transfers existed, or at all events, prevented the Government from clearing the matter of doubt.’85 De Villiers CJ concluded his remarks about protest by quoting extensively from the judgment of Gibbs J in Brisbane v Dacres: [B]y submitting to the demand, [the claimant] closes the transaction . . . He who receives [the payment] has a right to consider it as his without dispute; he spends it in confidence that it is his; and it would be most mischievous and unjust, if he who has acquiesced in the right by such voluntary payment should be at liberty . . . to rip up the matter and recover back the money.86

These remarks were ‘peculiarly applicable to the present case’.87 Thus, it seems that the protest requirement imposed by De Villiers CJ was intended to protect the interests of the recipient of the compelled payment. Where the compulsion at issue was of the milder kind, ie, where the recipient might reasonably have believed himself to be acting within his rights in exerting pressure on the plaintiff, it was for the plaintiff to draw the recipient’s attention to the fact that he disputed his liability to make the transfer in question and was not paying voluntarily.88 Whether the interests of the British Government in the White Bros case merited such elaborate protection is another question.89 In fact, notwithstanding the Chief Justice’s reference to English case law, the protest requirement established in the White Bros case appears also to have had its roots in the Roman-Dutch remedy of restitutio in integrum. As discussed in Chapters 2 and 3, in early South African law restitutio in integrum was regarded as an ‘equitable’ remedy in the sense that it acted as a corrective to the general legal order; a mechanism which was technically extraordinary.90 The applicant for such equitable relief would succeed only if he was able to demonstrate that he deserved the special assistance of the court. In the case of mistake, it is the origin of iustus error (reasonable mistake) in restitutio in integrum – and the conception of the restitutionary remedy which this origin implies – which explains the character of the excusable mistake requirement in modern South African law. Similarly, in the White Bros case, it is the application of restitutio in integrum and in particular its character as an equitable remedy in the sense described above which explains the requirement of ‘unequivocal protest’. Where the defendant was alerted by protest to the fact that the plaintiff disputed his liability, and where the plaintiff’s view of the matter was subsequently vindicated, this knowledge would render the defendant’s retention of the transfer unconscionable. Conversely, in the absence of   At 352.   Brisbane v Dacres (1813) 5 Taunt 143, quoted in White Bros v Treasurer-General, n 68 above, 352. 87   White Bros v Treasurer-General, n 68 above, 352–53. 88   At 353. Again, such protection seems to have been considered unnecessary in more serious cases of duress, eg, duress of the person. This is presumably attributable to the fact that the defendant in such cases would invariably realise that his conduct was unlawful. 89   cf V(C) above. 90   See in particular Chapter 3 at V(B). 85 86



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actual or at least constructive knowledge on the part of the defendant that the plaintiff disputed his liability and was not paying voluntarily, it seemed inequitable to order restitution.

B 1883–1915 (i)  Clarification of the Compulsion and Protest Requirements Restitutio in integrum on grounds of metus or duress was widely applied by the Cape Courts following White Bros v Treasurer-General.91 In a series of decisions over the course of the next two decades the key features of the remedy were clarified. As we have seen, in the White Bros case De Villiers CJ appeared to regard protest as performing a dual function: it served both as evidence of involuntariness and as a technique for alerting the recipient of the transfer to the fact that the plaintiff disputed liability and was not paying voluntarily. The question of the function of protest came into sharper focus in Leicester Brilliant Syndicate v Colonial Government, another decision of the Chief Justice in 1898.92 Here, the appellant, a mining syndicate, was sued by the respondents for money due under the relevant legislation in respect of certain depositing sites attached to their licensed claims in the Leicester Diamond Mine. The appellant launched a claim in reconvention in respect of rental its members had paid on those sites. De Villiers CJ accepted that until an authoritative plan indicating the land to be used as depositing sites had been drawn up, the appellant’s members had not technically been liable to make the payments under the relevant legislation. Moreover, they had lodged a formal protest against each of the payments. However, De Villiers CJ refused to grant the ‘relief of restitutio in integrum’ on grounds of duress.93 The protests of the appellants had been directed not against the absence of an authoritative plan indicating the land to be used as depositing sites but rather against payment without beneficial occupation: they had continued to protest even after such a plan had been drawn up. It followed from the principles laid down in White Bros v Treasurer-General that their protests were ‘wholly insufficient’ to found recovery, because they had failed to furnish the respondents with the opportunity to remedy the defect: ‘more especially in a case, like the present, where the person receiving the payment could immediately have cured the illegality if the wrong ground had not been insisted upon’.94 In Benning v Union Government in 1914, the Cape Provincial Division took a similar approach to the protest requirement. Searle J pointed out that the value of protest consisted not only in helping to establish the state of facts which would constitute duress, but: 91   See, eg, De Beer’s Mining Co v Colonial Government (1888) 6 SC 155; Knapp v Loonguana (1892) 7 EDC 61. 92   Leicester Brilliant Syndicate v Colonial Government (1898) 15 SC 121. 93   At 127–28. Buchanan J and Maasdorp J concurred. 94   At 128.

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Compulsion in enabling the person receiving the money to understand and recognise the basis on which the payment was being made, so that he might have an opportunity to put himself in the right in future, and consequently be able legally to demand payment for similar services, or to claim it under similar conditions.95

Thus, it seems that during the decades following White Bros v Treasurer-General, the equitable function of protest was at least as important as its evidentiary function. Indeed, it is difficult to explain the insistence on protest as an inevitable requirement for recovery unless it is understood in this way. Moreover, the decision of De Villiers CJ in Vergotinie v Ceres Municipality96 in 1904 served to clarify a more fundamental question, namely, whether it was the involuntary nature of the transfer which triggered relief or whether payment under protest of a sum not owing was sufficient in itself to found recovery. Here, the plaintiff had paid certain grazing fees under protest, reserving his right to recover them: the magistrate in the court below had denied his action for recovery on the basis that the plaintiff had been liable to pay the fees. On appeal before De Villiers CJ, it was argued that the fees had in fact been levied ultra vires, but he did not find it necessary to consider this question in order to reach a decision. The plaintiff could not recover the fees for the simple reason that there had been no compulsion: at no stage had the municipality threatened to detain the cattle, for example. ‘No doubt at the time he paid the money he said that he paid it under protest, and he reserved the right to recover the money back. But that is not enough to make the payment involuntary.’97 Subsequent courts continued to treat compulsion as the basis of liability. In Verster v Beaufort West Municipality,98 the plaintiff had paid a fine under protest in order to prevent the defendant municipality from impounding certain donkeys belonging to him. Maasdorp J held as follows: The demand at that time was illegal, and the Court must now hold that they had no right to insist upon payment of money before they released the animals and, the payment having been made under duress, the plaintiff is entitled to recover the money as it was improperly obtained from him.

Similarly in Kama v Rose-Innes,99 where the defendant deputy sheriff had demanded a sum from the plaintiff as his fee for the execution of a writ, Searle J began by addressing the question whether this case could be distinguished from Vergotinie v Ceres Municipality, ie, whether the payment, though made under protest, was a voluntary payment and therefore irrecoverable from the start. Again, it was specifically stated that the defence of voluntary payment could be upheld without investigating the other aspects of the claim. In fact, Searle J decided that the threat of the imminent execution of the writ amounted to suffi  Benning v Union Government (Minister of Finance) 1914 CPD 422. Maasdorp JP concurred.   Vergotinie v Ceres Municipality (1904) 21 SC 28. 97   At 29. Hopley J concurred. 98   Verster v Beaufort West Municipality 1911 CPD 356. 99   Kama v Rose-Innes 1913 CPD 393. 95 96



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cient duress to substantiate the claim for recovery.100 Finally, in Benning v Union Government, the Cape Provincial Division refused restitution on the basis that there was no sufficient proof of duress. As we have seen, the court in this case emphasised the defendant-sided aspect of the protest requirement. However, Searle J insisted also upon proof that the payment had been caused by the apprehension of some actual ‘impending detriment’ at the hands of the defendant. On the facts, it appeared that the plaintiff’s agent had paid the duty in issue simply in order to expedite the processing of a machine through customs and not because any pressure had been brought to bear by the customs officials. The agent had submitted the machine for inspection at the docks so that the authorities at Pretoria could decide whether the machine was subject to duty or not, and had shown a clear willingness to abide by that decision. Thus, it appears that compulsion (duress or metus) and, at least in the case of lesser forms of compulsion, protest were identified as necessary elements of the restitutionary claim during this period. This approach to the basis of restitution in such cases appears to have flowed directly from the choice of restitutio in integrum as the appropriate remedy, rather than the condictio indebiti or condictio ob turpem vel iniustam causam. On the other hand, although restitution was only ever granted in respect of transfers which the plaintiff had not in fact been liable to make, the absence of a relationship of indebtedness between the parties does not appear to have been treated as an element of the restitutionary claim in itself. Admittedly, this omission may have been due simply to the fact that whereas metus (threats to the person, etc) is invariably unlawful, regardless of any entitlement on the part of the recipient, duress of goods does not amount to unlawful compulsion where the benefit transferred by the plaintiff is owed to the recipient. There is simply no basis for litigation if the recipient was actually entitled to the transfer. Furthermore, the loss or prejudice suffered by the plaintiff in the form of the unowed transfer undoubtedly served to engage the remedy of restitutio in integrum.101 However, the fact that this – the absence of entitlement on the part of the recipient – was not emphasised by the courts during this period suggests that it was not considered analytically significant.

(ii)  Restitutio in Integrum of Contractual Performance: a Unified Approach In keeping with its Roman and Roman-Dutch roots, the doctrine of metus continued to be applied in a wide variety of instances: not only in respect of extracontractual transfers, as in the cases considered above, but also where the plaintiff had been coerced into making a contract, or indeed in other situations entirely.102   Hopley J concurred.   cf II(B)(i) above. 102  A case such as Steiger v Union Government 1919 NPD 75 shows that restitutio in integrum retained its general character. Here, the plaintiff sought restitutio in integrum of his resignation, under protest, from the civil service, on grounds of metus, ie, fear of public disgrace if he were to be dismissed. The same argument was run here as in Lilienfeld & Co v Bourke 1921 TPD 365 (see IV(B) below): had the plaintiff known his rights, he would have known that the defendant was not entitled to 100 101

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Despite the differing standard of compulsion in each case – again, duress of goods was not regarded as sufficient to invalidate a contract – no distinction was drawn in principle between the rescission of contracts on grounds of metus and the restitution of extra-contractual transfers: in both cases the remedy applied was restitutio in integrum. The unlawfulness of the pressure exerted was sometimes recognised as an independent requirement. Alternatively, in cases of duress of goods, it was elided with the requirement of reasonable fear (iustus metus).103 Moreover, restitutio would fail if it appeared that the compulsion exerted had given rise to no loss or prejudice to the other party. This created a further implicit parallel with the extra-contractual cases, where the recipient of the transfer invariably lacked any entitlement to it. These points can be illustrated with reference to three early twentieth-century decisions. Freedman v Kruger, heard by the Transvaal Supreme Court in 1906, involved an action for damages for wrongful arrest.104 The defendant had somehow procured the arrest of the plaintiff, and had extracted from him both a money payment and a promissory note. In response to the plaintiff’s claim for damages for wrongful arrest, the defendant counter-claimed on the note; in turn the plaintiff sought to resist the defendant’s counter-claim on the basis that it had been ‘obtained from him illegally by intimidation and duress’. The main claim succeeded.105 Wessels J upheld the magistrate’s finding that the plaintiff had indeed been coerced into giving the note by his wrongful arrest at the defendant’s instance. Moreover, he dismissed the defendant’s further argument, based on Voet’s Commentary on Digest 4.2,106 that the note must stand because the plaintiff had suffered no loss as a result of the intimidation. While he accepted, with Voet, that where someone uses intimidation simply to obtain what is owed to him there can be no recovery of the amount so paid over, in this case the defendant had in fact obtained a significant advantage at the plaintiff’s expense by wrongfully procuring his arrest, namely, the liquid document itself.107 Thus, the requirement of loss/gain at the plaintiff’s expense was satisfied. On the other hand, in Salter v Haskins,108 decided in the Transvaal Provincial Division in 1914, the court upheld the defendant’s exception to a claim by the plaintiff to cancel the sale of his partnership interest to the defendant on grounds dismiss him. Thus, the metus alleged was not reasonable (iustus), ie, not ‘such as to overcome a mind of ordinary firmness’. However, Dove-Wilson JP was prepared in principle to admit a claim for restitutio in integrum. 103   cf II(B)(i) above. 104   Freedman v Kruger 1906 TS 817. 105   At 821–22: ‘The defendant knew that he had no grounds for arresting the plaintiff, and . . . the arrest was made by him in bad faith in order to intimidate the plaintiff into paying him’. 106  Voet, Ad Pandectas D 4.2 n 17. ‘Since the nature of the actio quod metus causa demands a loss which can be repaired, and in such cases the sufferer from fear has parted with nothing, this edict is bound not to apply’. See II(B)(i) above. 107   Freedman v Kruger, n 104 above, 821: ‘Before the defendant was in possession of the promissory note all claim that he had was based upon his own word and upon the surrounding circumstances. By getting this promissory note he obtained a liquid claim against the plaintiff ’. 108   Salter v Haskins 1914 TPD 264.



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of metus, despite the fact that the sale had been induced by threats to cite the plaintiff as co-respondent in divorce proceedings. The basis for the decision was twofold. First, applying Voet,109 Gregorowksi J held that the requirement of iustus metus was not satisfied. Even if duress of goods were admitted as a ground of rescission in South African law, the metus must still be produced by a threat of a very serious nature: the threat of a future action for damages was hardly sufficient. Secondly, Gregorowski J followed Voet110 in holding that neither was there any sense in which the defendant’s threat could be said to be contra bonos mores: he had a right both to put an end to the partnership and to sue the plaintiff for damages for adultery.111 Thus, there was neither iustus metus on the part of the plaintiff nor any unlawful threat on the part of the defendant. Finally, in Block v Dogon, Dreier and Co,112 the defendants were ordered to restore to the plaintiff certain promissory notes which they themselves had issued to him as wages. These they had extracted from the plaintiff, their book-keeper, by means of threats of imprisonment, making out to him that they held him responsible for a deficiency in their accounts. In fact, there was no deficiency: the defendants were merely attempting to extort money in order to improve their financial circumstances. Thus, Curlewis J found they were not entitled to the money exacted – ‘no deficiency could have been proved; no legal arrest could have been made’113 – that the threats made had been wrongful, and that they had induced the plaintiff to do what he would not have done voluntarily, ie, he had not acted as a free agent.114 He did not ‘go into the law’, but counsel for the plaintiff based his submissions, inter alia, on White Bros v Treasurer-General and Freedman v Kruger.115

IV  Restitution of Compelled Transfers: Twentieth Century A  Union Government v Gowar The question of the nature and elements of the claim to recover compelled transfers was considered for the first time by the newly-constituted Appellate Division in 1915, in Union Government v Gowar.116 In fact, the issue had briefly come before  Voet, Ad Pandectas 4.2 n 11.  Voet, Ad Pandectas 4.2 n 10.   Salter v Haskins, n 108 above, 266. See here also the later case of Houtappel v Kersten 1940 EDL 221, where it was held, expressly relying on Voet, Ad Pandectas D 4.2 n 10, that a mere threat to commence legal action on the principal debt was not sufficient to invalidate a cheque issued as a result. 112   Block v Dogon, Dreier and Co 1910 WLD 330. 113   See heads of argument of counsel for the plaintiff (Stallard) at 330. 114   At 333. 115   See heads of argument of counsel for the plaintiff (Stallard) at 331. 116   Union Government (Minister of Finance) v Gowar 1915 AD 426. 109 110 111

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the Court the year before, in an application for special leave to appeal from the decision of the Cape Provincial Division in Benning v Union Government, heard by Lord De Villiers (as he now was) and Innes JA, formerly of the Transvaal Bench.117 Because of the nature of the proceedings, Lord De Villiers’ remarks were brief. He simply reiterated the twin requirements of compulsion and protest, concluding that the plaintiff’s action must fail. He also expressly distinguished this action – ‘restitutio in integrum on the ground that the payment of customs duty made by the plaintiff was an involuntary payment forced from him by duress’ – from the condictio indebiti ‘to recover money paid in ignorance’.118 Clearly, he continued to regard restitutio as the appropriate remedy to effect the restitution of all compelled transfers In Union Government v Gowar itself, on the other hand, this conception of the appropriate remedy and its juristic basis was called into question in two out of the five judgments delivered.119 The plaintiff in this case was seeking to recover certain transfer duty paid under protest in order to procure the registration of a usufruct by the Registrar at Cape Town. The plaintiff having succeeded in the court a quo, the defendant appealed, arguing, first, that in terms of the relevant legislation the plaintiff was in fact bound to pay the duty claimed; and, secondly, that even if she had not been so bound the money could not be recovered in the absence of proof of metus. All but one member of the court agreed that the demand by the Registrar had been unlawful – that the plaintiff had been entitled to have her usufruct registered free of duty – and that the plaintiff could recover it. (Juta AJA thought that the duty was payable.) However, these four differed substantially in their reasons for reaching this second conclusion. One, Solomon JA, closely followed the approach adopted by De Villiers CJ in White Bros v Treasurer-General, holding that ‘the payment of duty by the plaintiff is indistinguishable in principle from a payment made under duress of goods’ and that the money was recoverable on this basis.120 The remaining three, however, each took remarkably differing approaches, both with respect to that taken by De Villiers CJ in the White Bros v TreasurerGeneral case and with respect to one another.

(i)  Wessels AJA The most conservative of the three judgments was that of Wessels AJA. He attempted to demonstrate the existence of a doctrine of duress of goods in Roman-Dutch law, without drawing on English authority, furnishing a detailed survey of the authorities and citing Christinaeus, Zoesius and Van Leeuwen as writers who were exceptionally prepared to grant restitutio in integrum on the basis of fear of the loss of goods.121 He referred also to the doctrine of metus reverentialis:   Benning v Union Government 1914 AD 420.   ibid 422. 119   Judgments were delivered by Innes CJ, Solomon JA, De Villiers AJA, Juta AJA and Wessels AJA. 120   At 440–41. 121   At 451–52. 117 118



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Not only did many of the later jurists consider the fear of losing one’s goods as a good ground for restitution, but they also held that an act could be set aside where it was induced by fear of authority.122

He concluded not only that the approach taken by De Villiers CJ in White Bros v Treasurer-General could be reconciled with the principles of the Roman-Dutch law, but also that the court ought to hold that a payment was recoverable even if not strictly induced by duress of goods, where it had been made at the demand of one in authority who had it in his power to withhold the property or to suspend the rights of the person making the payment.123

(ii)  Innes CJ Innes, now Chief Justice, began by specifying that although the plaintiff had not been subject to metus in the sense of fear or intimidation,124 this was of course not fatal to her claim: he distinguished the duress of goods recognised as a basis for the recovery of payments in White Bros v Treasurer-General from ‘such metus as would justify the setting aside of a contract by way of restitutio in integrum’.125 According to the English cases cited in the White Brothers decision, a payment was recoverable if it had been involuntary, not in the sense that the will of the payer had been overmastered, but in the sense that he was driven to make the payment as the only way of obtaining immediate possession of the goods to which he was entitled without it and he did so reserving his rights.126 Admittedly, restitutio in integrum on grounds of metus had in fact been the mechanism used by De Villiers CJ in order to import the English doctrine of duress of goods into South African law.127 But this reconciliation could also have been brought about differently, by means of the condictio indebiti.128 Like the condictio, the action for money had and received applied in the English cases cited was granted ‘by reason of the quasicontractual relationship created by the receipt by one person of the money which rightfully belongs to another’, as recognised by Lord Mansfield in Moses v Macfarlane,129 and not on the basis of the ‘principle of what we should call restitutio in integrum’ at all.130 It is implicit in Innes CJ’s remarks that he would have chosen this path in preference to the one taken by De Villiers CJ. Having characterised the claim in this way, Innes CJ then went on to analyse its basis more closely:

  At 452.   At 453.   At 433. 125   At 433. 126   Innes CJ cited Ashmole v Wainwright (1842) 2 QB 837 and Parker v Great Western Rly Co, n 76 above, 434. 127   Here the Chief Justice cited Skeate v Beale, n 77 above and Green v Duckett (1883) 11 QBD 275. 128   Union Government v Gowar, n 116 above, 434. 129   Moses v Macfarlane, n 75 above. 130   Union Government v Gowar, n 116 above, 433–34. 122 123 124

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Where goods have been wrongly detained and where the owner has been driven to pay money in order to obtain possession, and where he has done so not voluntarily, as by way of gift or compromise, but with an expressed reservation of his legal rights, payments so made can be recovered back, as having been exacted under duress of goods.131

It appears from passages such as this one that he understood the gist of this claim rather differently from the way it had been understood in White Bros v TreasurerGeneral and those cases following it. Rather than seeing the compulsion suffered by the plaintiff as the trigger for restitution, he appears to have seen it merely as the factual background to a different analysis, one focused on the absence of any entitlement to the money on the part of the Treasury – ‘[i]t would be in the highest degree inequitable that the Treasury should be permitted to retain what it had no right to claim’.132 Where the plaintiff had paid money in order to obtain possession of goods wrongfully detained or even, as here, in order to obtain delivery of a right wrongly withheld, and especially where she had explicitly reserved her rights, it would be clear not only that the defendant had had no claim to the payment in the first place, but also that it could not seek to retain the payment on the basis that it had been a voluntary one, made regardless of the other’s entitlement or to compromise the claim. Thus, for Innes CJ the true gist of the plaintiff’s action appears to have been the non-voluntary payment of an indebitum.133 The compulsion experienced by the plaintiff was simply an important fact which served to preclude the possibility that the payment had been a voluntary one. In light of this conception of the claim, it would perhaps have been natural to place the burden of showing that the payment had been voluntary on the defend­ ant rather than the plaintiff. Nevertheless, ‘the onus of showing that the payment had been made involuntarily and that there had been no abandonment of rights would, of course, be upon the person seeking to recover’.134 This distribution of the burden of proof had substantive consequences. If indeed the payment had not been voluntarily made, then there must have been some other, positive reason for the plaintiff to have made it. It was for the plaintiff to establish what that reason was. In applying his analysis to the case itself, Innes CJ found that: [T]he fact that [the plaintiff ] elects to part with his money shows that, in his opinion, his interests will be prejudiced by the delay which preliminary legal proceedings would entail . . . I can find . . . [no] warrant for meticulous inquiry as to the extent or nature of the prejudice.135

Although he expressed himself in rather subjective terms, Innes CJ concluded that the plaintiff’s payment had been genuinely involuntary, in the sense that it had been induced by the defendant’s withholding of her right.   At 434.   At 433.   That is the payment (under protest) of transfer duty not legally claimable in order to secure registration of the usufruct. See 435. 134   At 434. 135   At 436. 131 132 133



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(iii)  De Villiers AJA If Innes CJ implicitly rejected the characterisation and basis of the claim adopted by De Villiers CJ in White Bros v Treasurer-General, De Villiers AJA did so expressly. First, he categorically asserted that the applicable action in this case was the condictio indebiti, not restitutio in integrum: It is not necessary to consider whether in the present case the actio quod metus causa would lie, or whether the extraordinary remedy of restitutio in integrum could be resorted to, for where money has been paid under protest the condictio indebiti lies.136

Secondly, he denied that duress or compulsion was an element of the claim at all. Rather, the condictio indebiti arose from the payment of an amount not owed. Normally it would be precluded where the plaintiff had been aware at the time of the payment that the sum in question was not owed. However, recovery would nevertheless be permitted where the plaintiff had protested at the time of the payment.137 Why was this? On the one hand, ‘protest is inconsistent either with the idea of a gift or of a compromise between the parties’.138 However, De Villiers AJA went further: ‘if a person takes [a payment tendered under protest] he takes it under [a] condition’.139 Similarly, ‘[t]he other party was not bound to accept money so paid, but if he accepts it he must be considered to have agreed that it should be recoverable if not due’.140 Thus, De Villiers AJA took the view that recovery depended on an agreement between the parties that the transfer should be recoverable if it turned out not to be due, but appeared to think that such an agreement could be inferred from the mere fact of protest by the payer. In support of this view, De Villiers AJA cited Ulpian Book 16 On Sabinus, preserved in Digest 12.6.2, as well as the works of various writers of the ius commune and German Historical School.141 There are several difficulties with this view. First, it is not clear whether De Villiers AJA was referring to a tacit but genuine agreement or one implied by law. If the former, his analysis would often be at odds with the realities of the situation: the recipient of a transfer might well accept it under protest in the firm belief that it constituted the discharge of a valid obligation and without any tacit undertaking to return it if this belief turned out to be incorrect; under these circumstances, no tacit agreement could be inferred. In any event, any claim arising from a genuine but tacit agreement would presumably be contractual rather than enrichment based. On the other hand, if De Villiers AJA meant that such an agreement could   At 444.   At 446: ‘As the payment in the present case was made under protest, and the defendant had no right under the Act to exact it, I agree that the appeal must be dismissed with costs’. 138   At 446. 139   At 445. 140   At 446. 141   See, eg, Voet, Ad Pandectas 12.6 n 6 in fin; Hugo Donellus, Commentarii de Iure Civile 14.14.2 (?) and 3 [there is no note 52]; Robert-Joseph Pothier, Pandectae Iustinianae 12.6 Art 3, XXXIV; Christian Friedrich Glück, Ausfürliche Erläuterung der Pandecten 12.6 [not 7], para 834 [not 824] 122–25. See Visser, Unjustified Enrichment, n 2 above, 392–93 on the influence of Donellus in particular. 136 137

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be implied by law in every case from the mere fact of protest, his analysis appears to rest on a rather brutal fiction. Furthermore, given his overall analysis of the claim, this explanation for recovery was unnecessary: if indeed the non-voluntary transfer of an indebitum was sufficient in itself to trigger an enrichment claim in the form of the condictio indebiti, then payment under protest on the part of the payer should have been enough to demonstrate the absence of gift or compromise; no such agreement between the parties was necessary. In any case, the view of De Villiers AJA – that the condictio indebiti would lie if the parties had agreed that the transfer should be recoverable if it turned out not to be due, but that such an agreement could be inferred from the mere fact of protest by the payer – does not after all appear to be supported by the Ulpian text preserved in Digest 12.6.2 pr, or indeed by any of the other civilian authorities he cited.142 According to Ulpian, ‘If a man makes a payment on the basis that if it turns out not to be owed or to be caught by the lex Falcidia it must be given back, an action will lie for its recovery’.143 The justification for this restitutionary claim given by Ulpian was translated by De Villiers AJA as, ‘because the negotium [transaction, dealing] between the parties is a contractus [contract]’. However, this translation appears to be incorrect. In fact the reason Ulpian gives is, ‘because a negotium has been concluded between the parties’.144 The ‘negotium’ referred to here is a pactum, a genuine agreement falling outside the scope of the specific contracts of classical Roman law.145 Thus, Ulpian appears to have been referring only to that situation in which a transfer is made on the basis that it will be recoverable if it turns out not to have been owed and is in fact accepted on that basis. In the main the civilian authorities cited by De Villiers AJA merely spell out Ulpian’s view more fully. According to Voet, commenting on D 12.6.2: ‘Hence also it was sometimes provided by express conventio that if the payment should be shown not to have been due it should be returned’.146 ‘Conventio’, like ‘negotium’ in D 12.6.2, refers to a genuine agreement. According to Donellus, again dis­

142   cf G Glover, ‘“Methinks He Doth Protest Too Much’? Recovering Unjustified Payments Made under Duress and Protest’ (2006) 1 Tydskrif vir Suid-Afrikaanse Reg 135, 141–42; Visser, Unjustified Enrichment, n 2 above, 392–93; Du Plessis, The South African Law of Unjustified Enrichment, n 3 above, 172 n 516. 143   My translation, adapted from the Watson Digest – De Villiers AJA quoted only the original Latin. 144   In order for the clause to bear De Villiers AJA’s meaning, it would have to read something like, ‘negotium enim inter eos contractus est’. The fact that contractum is used shows that it is a participle agreeing with negotium, not a noun. As Glover points out (Glover, ‘“Methinks He Doth Protest Too Much”?’, n 142 above, 142 n 42), Monro translates the phrase, ‘as there is a contract concluded between the parties’ (‘contract’ translates ‘negotium’, ‘concluded’ translates ‘contractum’). The clause is left untranslated in the original edition of the Watson Digest, presumably because it was suspected by the translator of interpolation. But Otto Lenel appears to have regarded it as genuine: see O Lenel, Palingenesia Iuris Civilis (Graz, Akademische Druck- und Verlagsanstalt, 1960, reprinted from the 1889 edition) vol II, 1056, para 2544 . 145   See S Heine, Condictio Sine Datione (Berlin, Duncker & Hamblot, 2006) 26–40, especially 29 and n 34. 146  Voet, Ad Pandectas 12.6 n 6 in fin (Gane’s translation, slightly modified).



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cussing D 12.6.2, one who knowingly paid an amount not owed could recover it provided that he had entered into a pactum with the recipient.147 The appropriate restitutionary action in such a case was not the condictio but rather the actio praescriptis verbis:148 that is, the action available in later Roman law to enforce agreements falling outside the scope of the specific contracts.149 According to Glück, on the other hand, when a payment was made in the knowledge that it was not owed a donation was presumed unless the payer ‘had protested at the time of payment that he was reserving his right when he paid indebite’.150 Glück appeared to dispense with the contract explanation entirely, instead taking the view that the condictio indebiti arose directly from unilateral protest or reservation of rights by the transferor.151 Thus, it appears that De Villiers AJA created a hybrid of the two views present in the authorities cited: that of Ulpian (and Donellus and Voet), on the one hand, and that of Glück on the other. His view – that the condictio indebiti would lie if the parties had agreed that the transfer should be recoverable if it turned out not to be due, but that such an agreement could be inferred from the mere fact of protest by the payer – has no basis in authority, and indeed appears to have originated in a mistranslation of Digest 12.6.2 pr.

(iv) Conclusion In summary, the effect of the decision in Union Government v Gowar was to distinguish for the first time the metus necessary to trigger restitutio in integrum from the compulsion necessary to found the restitution of extra-contractual payments by means of the condictio indebiti, the judgments of Solomon JA and Wessels AJA notwithstanding. Although the outcome could have been explained on the basis of the principle in White Bros v Treasurer-General, this explanation was rejected – implicitly and explicitly – by Innes CJ and De Villiers AJA. Moreover, the claim appears to have been regarded by both judges as arising in principle from the payment of an amount not owed, an indebitum. However, like Solomon JA and Wessels AJA, Innes CJ nevertheless continued to require proof of compulsion in order to exclude the possibility of voluntary payment. De Villiers AJA, on the other hand, took the view that it was possible to infer from the mere fact of protest by the plaintiff and receipt of that payment by the defendant an agreement that the money paid would be recoverable if it turned out not to be owed. He regarded this agreement as sufficient to trigger restitution of an indebitum, even in the absence of compulsion.

 Donellus, Commentarii 14.14.3.  ibid. 149   See, eg, Zimmermann, The Law of Obligations, n 16 above, ch 17. 150  Glück, Pandecten 12.6 para 834, especially I(2)(b) at 125. 151   Glück cites D 12.6.2 pr and Voet, Ad Pandectas 12.6 n 6 as authority. 147 148

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C  Impact of Union Government v Gowar The conception of the condictio indebiti adopted by Innes CJ and De Villiers AJA in Union Government v Gowar could have formed the basis for a general revision of restitution for enrichment by transfer in South African law. The specific manifestations of involuntariness – compulsion, and even the more entrenched mistake – could have been abandoned in favour of a more objective approach based on the absence of a relationship of indebtedness between the parties, with protest serving merely to exclude the possibility that the payment had been voluntarily made. However, examination of the case law in the years following Union Government v Gowar shows that the unjust factor approach of the older cases persisted. Nor did De Villiers AJA’s analysis of the restitution of transfers under protest find favour with the courts. In Wilken v Holloway,152 decided in the Cape Provincial Division only a few months after Union Government v Gowar, Juta JP (as he now was) attempted to apply the analysis adopted by De Villiers AJA in that case. H had sued W for commission due on the sale of a farm. W offered the amount in full, but despite this H persisted in his action, and then sued W for the recovery of costs incurred in the suit. W then paid this further amount also, in order to prevent the incurring of further costs disproportionate to the amount in issue, but at the same time notified H that he would seek to recover the amount paid in respect of costs in a separ­ate action. W’s claim was expressly formulated as a condictio indebiti : it was alleged simply that the payment had been made under protest ‘and on condition that plaintiff should recover it’. However, H excepted to W’s action on the basis that having settled the costs in the previous action he was now ‘estopped’ from claiming the amount so paid. Moreover, there had been no duress of goods or withholding of a right, as in Union Government v Gowar. Juta JP, who had himself sat as an appellate judge in that case, briefly summarised the judgments delivered there and took the view that the analysis of De Villiers AJA – ie, ‘the principle that by accepting the money so paid an agreement is contracted’ between the parties153 – was the only basis on which W could conceivably recover the amount paid.154 However, this approach led to difficulties. First, Juta JP concluded, following English law, that a tender under protest was not the same as a conditional tender: W’s tender had in fact been ‘a perfectly good tender’ since he had undertaken to recover the costs in a separate action. It followed that if H had refused it he would have been liable for all the costs of litigation incurred after that date. No agreement to restore could be inferred where the

  Wilken v Holloway 1915 CPD 418.   As this analysis of the claim shows, Juta JP translated the passage of Ulpian relied on by De Villiers AJA in Union Government v Gowar, n 116 above, correctly. 154   Wilken v Holloway, n 152 above, 422: ‘For the decision of this case only, I am prepared to accept the law as laid down by De Villiers JP, as it is the furthest limit to which the law can go’. 152 153



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recipient of the payment had had no choice but to accept the payment.155 Thus, the only basis on which the analysis could be applied here would be if such an agreement were implied by law, on the strength of the protest alone, and in the teeth of the evid­ence to the contrary. Unsurprisingly, Juta JP was unwilling to do this, and so W’s claim failed, despite the fact that the sum in question had not been owed – Juta JP made a clear finding that W had not been liable in law for the costs paid – that W had paid it under protest, and there was no evidence to suggest that the payment had been a voluntary one – indeed, W had clearly paid only in order to avoid ‘an impending detriment’, ie, being held responsible by H for yet further costs for which he was not liable. Other contemporary decisions suggest that the South African courts continued to insist on actual compulsion, rejecting the milder approach hinted at by Innes CJ in the Gower decision. Even the recasting of the claim as a condictio indebiti seemed in question. In Kilroe v Bayer,156 another decision of Juta JP decided in October of the same year, a claim to recover a payment made under threat of criminal proceedings was dealt with explicitly as an instance of restitutio in integrum. Here, the defendant had accused the plaintiff of stealing certain livestock from him and, having threatened to bring criminal proceedings against him, had managed to extract from him a sum representing the alleged value of the animals. In this action the plaintiff attempted to recover the money as having been paid under duress (inter alia, there was also an allegation of fraudulent misrepresentation). However, the claim failed. Juta JP treated it as a case for restitutio in integrum, and dismissed it on the basis that no ground of restitutio in integrum had been made out: the only ground on which restitutio in integrum could conceivably be sought was that of fear of the inconvenience caused by threatened criminal prosecution, but fear of mere annoyance could not constitute ‘metus justus’, as required by Voet.157 Again, there was certainly sufficient evidence to show that the payment was not a voluntary one. It was clear that the plaintiff would have suffered considerable inconvenience and financial loss in defending the criminal charge. Nevertheless, the absence of a fear sufficiently grave to trigger restitutio in integrum was held to be fatal to the claim. Moreover, no attention was paid to the question whether the sums in question had been owing: this was presumably in part because it was obvious that they were not, but may also have been due to the fact that the claim was formulated as one for restitutio in integrum, rather than as an instance of the condictio indebiti. Finally, in Lilienfeld & Co v Bourke,158 the Transvaal Provincial Division characterised the claim as an instance of the condictio indebiti but nevertheless insisted on iustus metus as a substantive requirement of recovery. Here, the plaintiffs 155   At 423: ‘I cannot see how the doctrine of Roman law can apply. It cannot be said that there was any negotium contracted between them, when the plaintiff could not refuse to accept the payment without being penalised in costs’. 156   Kilroe v Bayer 1915 CPD 717. 157   ie, Voet, Ad Pandectas 4.2 n 11, 13 and 14. See Kilroe v Bayer, n 156 above, 719. 158   Lilienfeld & Co v Bourke 1921 TPD 365.

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sought to recover certain payments in the form of rates levied on property which they leased from the defendant. In fact, the plaintiffs had believed that it was the defendant who was liable to pay these rates according to statute, but the lease contained a clause obliging the plaintiffs to pay them, the defendant had threatened to cancel the lease if they refused, and so they paid the amounts in question under protest.159 Counsel for the plaintiff argued that the threatened inconvenience or detriment represented by the cancellation was sufficient duress for the purposes of the action.160 However, the defendant excepted to the declaration, inter alia, on the basis that the payment was ‘in a legal sense’ a voluntary one, relying on Voet’s commentary on Digest 4.2161 and the Benning v Union Government, White Bros v Treasurer-General, Leicester Brilliant Syndicate v Colonial Government, Vergotinie v Ceres Municipality and Kama v Rose-Innes cases to support the proposition that ‘a mere threat of cancellation can never amount to duress’.162 Wessels JP, who like Juta JP had been a member of the Union Government v Gowar court, agreed. He began by examining the relevant legislation, and concluded that the plaintiffs had not been liable to make the payment.163 It followed from this that the defendant had not been entitled to cancel the lease, and that if the plaintiffs had fully grasped the legal position, they would have experienced no compulsion. Such pressure as they had felt was ‘a phantom of their own minds’, as Stratford J put it in a concurring judgment,164 and could therefore not amount to duress in the sense necessary to found recovery. Moreover, mere protest by the plaintiff was not sufficient to found recovery: to hold the opposite would be ‘contrary to all the decisions that have been quoted from the Bar’, eg, Benning v Union Government, White Bros v Treasurer-General, Vergotinie v Ceres Municipality and Kama v Rose-Innes.165 Although De Villiers JP in Union Government v Gowar might be understood to have said as much, ‘I do not think that the learned Judge meant to lay down the general rule that a protest always makes a payment made under it an involuntary payment’.166 Several important points arise from these decisions. First, in the years following Union Government v Gowar, the South African courts do not appear to have been prepared to accept in its entirety the analysis of De Villiers AJA in that case: if the parties had in fact agreed that the payment was to be refundable in the event that 159   Nothing appears to have been made of the fact that the payments were made to a third party in discharge of the defendant’s liability, and not to the defendant himself. 160   Lilienfeld & Co v Bourke, n 158 above, 369. 161   Ad Pandectas 4.2.11, 13 and 14. 162   Lilienfeld & Co v Bourke, n 158 above, 366–67, 369. 163   ibid 367–69. 164   In fact, Stratford J took a rather mechanical approach to the question. At 372: ‘The law presuming a knowledge of law on the part of the plaintiffs must presume that the plaintiffs knew that they were being threatened with brutum fulmen. The plaintiffs are invoking their ignorance of law, and the law will not allow them do to so’. 165   Lilienfeld & Co v Bourke, n 158 above, 370. 166   ibid: ‘[I]f he meant that any payment made which is accompanied by words protesting against the payment is sufficient to enable the solvens to get the money back again, I do not agree with such a view. I do not think that if a person pays money simply saying that he pays it under protest, that that is equivalent to payment under pressure’.



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it turned out not to have been owed, then it could of course be recovered, but in neither Wilken v Holloway nor Lilienfeld & Co v Bourke was the court willing to accept that protest without more could trigger the restitution of an amount not owed, whether such protest was viewed as significant in itself or seen as creating an implied agreement between the parties. In Wilken v Holloway in particular, this restrictive approach appears to have operated very harshly, and indeed, the judgment of Juta JP in that case is not free of circularity: W was barred from recovering the money paid precisely because he had notified the defendant that he would recover it in a separate action, rather than tendering it conditionally. Yet the doctrinal foundation on which this decision rests is clear: a payer cannot recover an amount paid, even if it was not due, in the absence of either genuine compulsion or a genuine agreement between the parties that the transfer will be returned if it turns out not to be due. Admittedly, the reanalysis of the claim as an instance of the condictio indebiti does appear to have produced a shift towards an absence of basis analysis, as is illustrated by the Lilienfeld case. A further result of this relabelling of the claim was that the recovery of extra-contractual payments and the restitution of contractual performance began to be treated separately, the former regarded as the domain of the condictio and the latter restitutio in integrum, although as Kilroe v Bayer shows, this process was far from complete.167 Nevertheless, objectively-determined compulsion continued to be understood as a substantive requirement for recovery. A plaintiff would not succeed unless he could demonstrate at least duress of goods in the English sense or the withholding of a right: such legally significant pressure as would compel a reasonable person to make the payment in question.168 It follows that the treatment of compulsion in this context was exactly aligned with the analysis of mistake as a specific unjust factor founding recovery under the condictio indebiti. Thus, in Gluckman v Jagger & Co, decided by Watermeyer J in the Cape Provincial Division in 1929, it was accepted as uncontroversial that: As a general rule this action [the condictio indebiti] is available whenever a man pays money which is not due if he pays it by mistake or under duress or when it is made a condition of the payment that if it is found not to be due it is to be returned.169

  In fact, the headnote to Kilroe v Bayer, n 156 above, refers to both these possibilities.   cf the judgment of Gey Van Pittius J in Brakpan Municipality v Androulakis and another 1926 TPD 658. Here, the plaintiff had made a payment under protest in pursuance of an illegal order of costs. Although his decision on this point was obiter dictum, the judge distinguished Lilienfeld & Co v Bourke on the basis that the fear of legal proceedings which induced the payment in this case did amount to duress: despite the invalidity of the original order, the plaintiff had every reason to believe that a writ would in fact be issued. See Brakpan Municipality v Androulakis 662–64. It is not clear that this decision is consistent with Wilken v Holloway and Kilroe v Bayer. The language of the judgment at 663–64 suggests that Gey Van Pittius J regarded it as sufficient that the plaintiff had clearly not acquiesced in the order. 169   Gluckman v Jagger & Co 1929 CPD 44, 47. The claim failed because the payment had been supported by a decision of the Master, analogous to a judicial ruling, and thus could not be described as an indebitum [not owed]. This decision also shows the analytical shift towards an absence of basis approach characteristic of this period: cf Lilienfeld & Co v Bourke, n 158 above. 167 168

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D  Mid-twentieth Century The principles of modern South African law were already substantially in place by the third decade of the twentieth century, following the watershed in Union Government v Gower. However, a series of Appellate Division decisions during the second half of the century helped to clarify both the requirements and the theoretical basis of the claim to recover compelled transfers. Pre-eminent among these is the most recent, the decision in Commissioner of Inland Revenue v First National Bank Industrial Ltd170 in 1990, discussed below. A pair of earlier decisions, Port Elizabeth Municipality v Uitenhage Municipality171 and Kruger v Sekretaris van Binnelandse Inkomste,172 are discussed briefly here. First, after a long hiatus during which there appear to have been no reported decisions on the restitution of compelled transfers, the principles of Lilienfeld & Co v Bourke were reaffirmed in Port Elizabeth Municipality v Uitenhage Municipality, decided by the Appellate Division in 1970. The case concerned a claim for the recovery of certain charges, levied by the appellant in respect of electricity supplied to the respondent, which were held to have been invalid because effected for purposes not contemplated in the applicable regulations. With regard to the question whether the plaintiffs could recover what they had paid using the condictio indebiti, Muller AJA accepted on the basis of Union Government v Gowar that the plaintiffs had to demonstrate either that the money had been paid under duress or that it had been paid subject to a condition that it should be recoverable if found not to be due.173 In fact, he held, the payments had been ‘voluntary’ in the sense that there had been no genuine compulsion: there had been no pressure brought to bear by the appellant, such as the withholding of property, or a right, or a refusal to continue to supply electricity under the contract. Indeed, the respondent had paid primarily in order to get the benefit of the discount allowed under the contract for prompt payment.174 Yet the money was nevertheless recoverable on the alternative basis. Having reproduced the dicta of De Villiers AJA in Union Government v Gowar and of Wessels JP in Lilienfeld & Co v Bourke concerning payment ‘under protest’, Muller AJA explicitly endorsed the view adopted by the latter, namely, that protest by the plaintiff was in itself insufficient to give rise to a restitutionary claim.175 However, in accepting payment the defendants had explicitly acknowledged the plaintiffs’ reservations, raising no objection to them,176 and from this acknowledgement could be inferred an actual agreement

170   Commissioner of Inland Revenue v First National Bank Industrial Ltd [1990] ZASCA 49, 1990 (3) SA 641 (A). 171   Port Elizabeth Municipality v Uitenhage Municipality 1971 (1) SA 724 (A). 172   Kruger v Sekretaris van Binnelandse Inkomste 1973 (1) SA 394 (A). 173   Port Elizabeth Municipality v Uitenhage Municipality, n 171 above, 741. 174  ibid. 175   At 741–42. 176   At 742.



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between the parties that the defendants were accepting the payments subject to the plaintiffs’ reservation. Accordingly the money paid in excess of what was legally due could be recovered.177 In Kruger v Sekretaris van Binnelandse Inkomste, decided two years later, the Appellate Division considered the relationship between the condictio indebiti and restitutio in integrum, as Innes CJ himself had done in Union Government v Gowar. Here, certain tax had been levied by the Commissioner of Inland Revenue (CIR) against the plaintiff under the Income Tax Act 31 of 1941. Ultimately, the CIR invoked section 91 of the Act, in terms of which their statement as to the amount owed was clothed with the effect of a civil judgment, and a writ of execution was issued for the amount claimed plus interest. The plaintiff resisted service, making it clear to the CIR through his representatives on a number of occasions that he did not believe the money to be owing. Ultimately, however, he made arrangements to satisfy the writ, in the form of an instruction to his bank to issue a banker’s guarantee, in order to avoid the attachment of his movable property. When the plaintiff’s challenge to the section 91 entry in the Magistrate’s Court failed, the bank paid the amount claimed without consulting him. Having instituted several unsuccessful appeals against the magistrate’s decision, he now sought to recover the money on the grounds that it had been paid involuntarily, in response to the threat of distraint of goods. The claim was formulated by Jansen JA as an instance of the actio quod metus causa, founded on metus in the form of duress of goods accepted as adequate in White Bros v Treasurer-General and Union Government v Gowar.178 The terminology ‘actio quod metus causa’ appears to have been used more-or-less synonymously with the restitutio in integrum of earlier decisions such as White Bros v Treasurer-General itself.179 The approach adopted in that case was accepted by Van Winsen J in the court a quo and by Jansen JA on appeal.180 However, the claim foundered on the requirement that the fear or threat to which the plaintiff had been subjected be unlawful or contrary to public policy, contra bonos mores.181 A person who paid a judgment debt in fear of its enforcement could hardly be said to have been the victim of unlawful duress (‘vreesaanjaging ’).182 There was also the difficulty that the plaintiff had suffered no loss, an additional requirement for restitutio in integrum in Roman-Dutch law.183 And looking at the claim as an  ibid.   Kruger v Sekretaris van Binnelandse Inkomste, n 172 above, 410. 179   Over the course of the twentieth century the terminology of restitutio in integrum came to be used less and less in cases of compulsion. In Tjollo Ateljees (Eins) Bpk v Small 1949 (1) SA 856 (A) 871–72, Van den Heever JA had expressly denied that the Roman-Dutch conception of restitutio in integrum applied in South African law: ‘We do not petition for restitutio in integrum to relieve us from the obligations induced by fear, force of fraud. We raise these negations of free volition as direct defences or causes of action. The duality of Roman law has ceased to exist’. cf Chapter 1 at V. 180   Kruger v Sekretaris van Binnelandse Inkomste, n 172 above, 397–98 (Van Winsen J), 410 (Jansen JA). 181   ibid 398 (Van Winsen J), 410 (Jansen JA). See II(B)(i). 182   Kruger v Sekretaris van Binnelandse Inkomste, n 172 above, 410 (Jansen JA). 183   eg Voet, Ad Pandectas D 4.2 n 17. Kruger v Sekretaris van Binnelandse Inkomste, n 172 above, 398 (Van Winsen J), 410 (Jansen JA). II(B)(i) above. 177 178

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instance of the condictio indebiti, payment in terms of a valid judgment could not be said to have been unowed.184 Thus, there was no basis on which the restitutionary claim could succeed. The most significant feature of this decision is that the overlap between the actio quod metus causa (ie, restitutio in integrum) and the condictio indebiti was here expressly acknowledged. Commentators have tended to categorise this case as one involving the restitution of contractual performance, presumably because of the formulation of the claim as an instance of the ‘actio quod metus causa’ or ‘restitutio in integrum’.185 Yet the claim was in fact treated by the Court as an action to recover an extra-contractual payment: the question of unwinding contracts induced by compulsion was never raised. Clearly, Jansen JA did not see the actio quod metus causa as an exclusively contractual action, nor did he regard the classification of the claim as particularly signific­ant: whether it was seen as an instance of restitutio in integrum or the condictio indebiti, the claim had to fail. However, Kruger v Sekretaris van Binnelandse Inkomste is significant for a second reason also. The decision of Van Winsen J here, coupled with his judgment in Miller v Bellville Municipality186 two years later, provides insight into the nature and purpose of the protest requirement in modern South African law. In Kruger v Sekretaris van Binnelandse Inkomste, as we have seen, the payment at issue was in fact made by the plaintiff’s bank, consequent on the adverse decision of the magistrate. The plaintiff himself was ignorant of the payment at the time it was made, and he did not lodge any express protest either at this point or when the guarantee was arranged. However, Van Winsen J did not consider the absence of protest in itself to be fatal to the plaintiff’s claim, provided that compulsion could have been sufficiently established by other evidence.187 He found that there could have been no doubt but that the plaintiff was ‘strenuously opposed to making the payment and made it evident to [defendant’s] officials throughout’.188 What he appeared to consider decisive was the fact that the defendant had known of the plaintiff’s objections at the time of the payment and indeed all along. This impression is confirmed by the judgment of Van Winsen J in Miller v Bellville Municipality.189 Here, the plaintiffs were seeking to recover land transferred by them to the defendant municipality free of charge. The municipality had refused to pass the plaintiffs’ building plans unless such a transfer was made, but this condition had sub­sequently been held by the Appellate Division to be invalid because ultra vires the municipality’s town plan: in fact, compensation ought to have been paid. Yet 184   Gluckman v Jagger & Co, n 169 above. Jansen JA cited also D 17.1.29.5; C 4.5.1; Voet, Ad Pandectas, D 12.6.15 read with 10.2.34; Grotius, Inleydinge 3.30.10. Kruger v Sekretaris van Binnelandse Inkomste, n 172 above, 410. 185   cf eg DJ Joubert, General Principles of the Law of Contract (Cape Town, Juta, 1987) ch 10; Du Plessis, Compulsion and Restitution, n 22 above, 131 n 122; S Van der Merwe et al, Contract: General Principles, 3rd edn (Cape Town, Juta, 2007) 123 n 152. 186   Miller and others v Bellville Municipality 1973 (1) SA 914 (C). 187   Kruger v Sekretaris van Binnelandse Inkomste, n 172 above, 398. 188   Kruger v Sekretaris van Binnelandse Inkomste, n 172 above, 398–99. 189   See generally Miller v Bellville Municipality, n 186 above, 920–22.



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Van Winsen J found that there had not been such compulsion as would trigger restitution.190 The total absence of any protest on the part of the plaintiffs at the time of the transfer was an important piece of evidence in this respect, and indeed the absence of protest by the plaintiffs was treated as determinative of the issue.191 But Van Winsen J emphasised also that in order to be effective, the municipality would have had to have been made aware of the protest.192 The absence of any communication of the plaintiffs’ reservations to the defendant appears to have contributed to the failure of the claim. The approach to the protest requirement revealed by these decisions is similar to that adopted by De Villiers CJ in White Bros v Treasurer-General and in the cases following it.193 As we have seen, he appeared to believe that the purpose of protest, in addition to its evidentiary function, was to alert the recipient of a transfer to the possibility of a restitutionary claim. Only where the defendant knew when receiving the transfer that the plaintiff disputed his liability would it be equitable to order restitution. Whereas in neither case had the plaintiff raised a formal objection, in Kruger v Sekretaris van Binnelandse Inkomste it was established that the defendant was already aware of the plaintiff’s objection at the time of the payment. It is this fact that explains Van Winsen J’s rather lenient approach to the protest requirement in the Kruger case: if the defendant there knew of the plaintiff’s objection by other means, then no protest was necessary.

E  Commissioner for Inland Revenue v First National Industrial Bank Ltd In Commissioner for Inland Revenue v First National Industrial Bank Ltd, decided in 1990, the Appellate Division addressed directly the crucial question last considered in Union Government v Gowar, namely, the correct analysis of the claim to recover compelled transfers.194 Like Kruger v Sekretaris van Binnelandse Inkomste, this case concerned a payment to the Receiver, in this case stamp duty payable in terms of the Stamp Duties Act.195 It was found by the trial judge that there had indeed been an overpayment – the stamp duty paid over several years by the plaintiff had not been properly chargeable – and accordingly the Commissioner was obliged to repay the amounts in question. Furthermore, the Commissioner was liable to pay interest on the capital sum from the dates at which each payment 190   It appeared from the evidence that the plaintiffs had believed that they were obliged to transfer the land, ie, they had been mistaken as to the law governing the defendant’s entitlement to demand it, a state of mind inconsistent with a finding of duress. In fact the case was argued on this basis too. See Miller v Bellville Municipality, n 186 above, 918–20. 191   At 922: ‘Submission to pressure without evidence of unequivocal protest, whatever form the manifestation of such protest might take, will bar an action for recovery’. 192   At 921–22. 193   See III(A) and (B)(i) above. 194   Commissioner for Inland Revenue v First National Industrial Bank Ltd, n 170 above. 195   Stamp Duties Act 77 of 1968.

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had been made. This last was the only aspect of that decision which was challenged on appeal. It was contended by the appellant that section 32(1)(a) of the Act was the only possible basis for a refund and that, since the section did not expressly provide for interest, no interest was recoverable.196 However, the court held that section 32(1)(a), which provided for a refund by the appellant of an overpayment on duty ‘properly chargeable’, did not apply in the instant case, where there should not have been any payment of duty at all. It was held, further, that section 32(1)(a) was not the sole and exclusive vehicle for claiming repayment in a case such as the present and did not preclude an aggrieved party from advancing a claim for repayment at common law, nor did it preclude a claim for mora interest. The determination of the exact cause of action in such a case was crucial to the resolution of this issue.

(i)  Nienaber AJA Citing the judgments of Innes CJ, Wessels AJA and De Villiers AJA in Union Government v Gowar, Nienaber AJA noted that only De Villiers AJA had unequivocally labelled the action a condictio indebiti, that is, a claim arising in unjustified enrichment. But even if that was indeed the correct classification: the condictio indebiti is not, of course, confined to the recovery of an indebitum solutum which was involuntary because it was paid by mistake; it is now also available when the payment (or indeed any performance), although deliberate, perhaps even advised, was involuntary because it was effected under pressure and protest. (These are not, of course, the only instances where the condictio indebiti may be invoked.)197

However, it was not necessary to reach a firm conclusion on this point, nor on the precise range and requirements of the action: in particular, on whether the emphasis of the action properly fell on ‘the wrongfulness of the duress, on the involuntary nature of the performance or on the protest as an index to the one or the other or as an element in its own right’.198 This was because the case was in fact not one of duress of goods at all: the payments, ‘though expressed to be under protest, had been made voluntarily’, ie, in the absence of any threat by the Commissioner to detain the plaintiff’s goods or withhold his rights.199 At most, there was the prospect of the imposition of penalties, and even this fear had been ‘a phantom of their own minds’.200 ‘This is not, therefore, a case where an unjustified demand for payment, braced by inevitable statutory penalties, constitutes duress by implication.’201

  ibid s 32(1)(a) has since been repealed by s 103 of the Revenue Laws Amendment Act 60 of 2008.   At 647. 198   At 647. 199   At 647–48. 200   At 648. Here, Nienaber JA referred expressly to the judgment of Stratford J in Lilienfeld & Co v Bourke, n 158 above, where the phrase was first used. 201   At 648. 196 197



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However, there remained the possibility of an alternative cause of action in contract. To create such an alternative cause of action, it was necessary that the parties had entered into an agreement to the effect that the creditor undertook to repay the money if it is eventually determined not to have been due. Nienaber AJA expressly rejected the analysis adopted by De Villiers AJA in Union Government v Gowar, ie, that every payment under protest implies a contingent promise to repay. ‘By merely adding the words “under protest” to a payment a debtor cannot unilaterally foist an agreement to repay on his creditor.’202 However, in this particular case there appeared to be sufficient evidence to infer a tacit agreement between the parties that the sums would be repaid if the dispute were to be resolved in the Bank’s favour.203 Indeed, Nienaber AJA went further, stating obiter that where, as in this case, a public official had demanded payment in terms of a statutory provision, and payment was thereupon effected ‘under protest’ because the liability or the sum was disputed: it is more likely than not . . . that it was tacitly understood between the parties that the sum so paid would be refunded if the official view should subsequently prove to be the wrong one; such would certainly have been the taxpayer’s intention and since the official, bound as he is by the statute, would have had no statutory justification to retain what he should never have claimed, he can scarcely have held a contrary view.204

Crucially, for Nienaber AJA it was the recipient’s promise to repay that was conditional, not the payment itself.205 Thus, the plaintiff’s cause of action was not the unjustified enrichment of the defendant, but rather the parties’ agreement itself. The categorisation of the action as a condictio indebiti in Gluckman v Jagger had in fact been incorrect.206 As for the interest payable, in the nature of the contract interest could begin to run only once it had been decided that the money had been wrongly exacted. The Commissioner could not be in mora as regards repayment until such time as it was decided that a duty to repay existed. Therefore, no interest was recoverable in respect of the period prior to the decision in the court a quo that no stamp duties were payable. Finally, the significance of the words ‘under protest’ in the contractual context had to be clearly distinguished from their significance in respect of claims founded on unjustified enrichment. There, the words ‘under protest’ could fulfil one or more of two functions. First, they could serve as evidence that, in the broad sense, the payment had not been voluntarily made, and in the narrow sense, that it had been due to duress; and secondly, they could serve to ‘anticipate or negate an inference of acquiescence, lest it be thought that, by paying without protest, the   At 651.   At 651–52. Admittedly the bank did not expressly reserve its right to recover the sums paid, nor did it expressly invite the Commissioner to agree to a suggestion that the sums be repaid if the dispute should be resolved in its favour. Yet it was telling that the payments had been made under protest during the course of a continuing and genuine debate between the parties about the correct interpretation of the relevant statute. 204   At 652. 205  At 651. 206   See IV(B) above. 202 203

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solvens conceded the validity or the legality of the debt, or his liability to pay it, or the correctness of the amount claimed’.207 At first sight it was difficult to distinguish between these propositions, but whereas in its first form protest served as evid­ence of duress in particular, in the second it served as a general mechanism for protecting or preserving some independent cause of action, whether arising from mistake, duress or ‘any other recognised ground for invoking the condictio indebiti’.208 To summarise, for Nienaber AJA protest had no significance in itself within the law of unjustified enrichment. It was merely an adjunct to a claim arising from an unjust factor such as mistake or compulsion.

(ii)  Nicholas AJA Nicholas AJA took a different view of the basis of the restitutionary claim, and therefore reached a different conclusion on the issue before the Appellate Division, namely, what interest was recoverable. In the absence of protest, the rule barring restitution where the transferor was aware that the sum in question was not owed would have worked to preclude the operation of that action: there would have been no cause of action.209 However, acceptance of these payments by the Commissioner in itself brought into existence a ‘contract’ between the parties which served to displace the knowledge rule. The appropriate action to recover the money paid remained the condictio indebiti, and the plaintiff’s cause of action arose in unjustified enrichment.210 Thus, Nicholas AJA rejected the argument accepted by Nienaber AJA, that restitution arose from a tacit contract independent of the condictio indebiti, ie, a promise by the Commissioner to repay the money if it was eventually determined not to have been due.211 The contract brought into existence by the plaintiff’s protest was not independent but was ancillary or subsidiary to the condictio indebiti; it did not create a substantive right but rather ‘recognised’ that the Bank had the ‘procedural right’ to seek a condictio, despite the fact that the payment was made voluntarily and with knowledge that it was not owed.212 It followed that mora interest had in fact begun to run from the date of demand, in accordance with the ordinary rules regarding interest under the condictio indebiti.213

  At 649.   At 650. 209   At 658. 210  ibid. 211  ibid. 212  ibid. 213   Here, the court applied the common law rule that no interest was recoverable under the condictio indebiti unless the defendant was placed in mora: Baliol Investment Co (Pty) Ltd v Jacobs 1946 TPD 269. This has since been partially superseded by the provisions of s 2A of the Prescribed Rate of Interest Act 55 of 1975, as amended by the Prescribed Rate of Interest Amendment Act 7 of 1997, in terms of which every unliquidated debt is to bear interest from the date of summons or demand, whichever is the earlier. See Kudu Granite Operations (Pty) Ltd v Caterna Ltd 2003 (5) SA 193 (SCA) para [28]; Du Plessis, The South African Law of Unjustified Enrichment, n 3 above, 390–95. 207 208



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Thus, it appears that Nicholas AJA embraced in its entirety the analysis advanced by De Villiers AJA in Union Government v Gowar.214 Like that analysis, his proceeded from the starting point that the payment of an amount not owed is recoverable in principle, subject to a defence in cases where the plaintiff was aware that the transfer was not owing when he made it. Like De Villiers AJA, Nicholas AJA treated protest on the part of the plaintiff as sufficient in turn to displace that defence. And like De Villiers AJA, Nicholas AJA thought that such protest served without more to bring into existence an implied contract between the parties that the money would be restored if it turned out not to be owed. With respect, the account of the civilian authorities given by Nicholas AJA (in particular his account of Glück) is far more scholarly and accurate than that originally provided by De Villiers AJA in the Gower case itself.215 However, unfortunately, his account is nonetheless contaminated by that judge’s mistranslation of the Ulpian text preserved in Digest 12.6.2 pr, a mistranslation which gave rise to the third proposition set out above.216 Thus, like the analysis of De Villiers AJA, that of Nicholas AJA is flawed. If indeed restitution arises in principle from the payment of an amount not owed, then protest should be enough in itself to exclude the inference of gift or compromise (or more generally the inference of voluntary payment) in cases where the plaintiff was aware at the time of payment that the sum in question was not owing: there is no need for the implied contract analysis advanced here and in Union Government v Gowar. On the other hand, this analysis is itself unattractive, since the parties are deemed to have agreed even in the face of evid­ ence to the contrary.217

F  Restitution of Performance Tendered under Compelled Contracts The parallels between the rescission of compelled contracts and the restitution of compelled extra-contractual transfers remain very close indeed in modern law. On the one hand, in the contractual sphere the courts continue to adhere closely to the conception of rescission implied by the Roman-Dutch restitutio in integrum on grounds of metus. Thus, in Broodryk v Smuts, decided in 1942, Ramsbottom J followed Wessels’ The Law of Contract in South Africa218 in stating that ‘five elements’ were necessary in order to set aside a contract on grounds of compulsion, namely: actual violence or reasonable fear; the fear must have been caused by the threat of some considerable evil to the party or his family; it must be the threat of an imminent or   See IV(A)(iii) above.   At 655. cf my account of the use of the old authorities by De Villiers AJA at IV(A)(iii) above. 216   At 658: ‘The Commissioner, by accepting payment subject to that reservation, must be taken to have agreed thereto. In the words of D 12.6.2, negotium enim contractum est inter eos’. 217   cf my analysis of the judgment of De Villiers AJA at IV(A)(iii) above. 218   Most recently, JW Wessels, The Law of Contract in South Africa, 2nd edn (AA Roberts (ed), Butterworth & Co, Durban, 1951) vol 1, para 1167. 214 215

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inevitable evil; the threat or intimidation must be contra bonos mores; and the moral pressure used must have caused damage.219

These principles have frequently been restated by the provincial courts, for example, in Arend v Astra Furnishers (Pty) Ltd in 1974,220 and the Broodryk case cited with approval by the Supreme Court of Appeal in Medscheme Holdings (Pty) Ltd and another v Bhamjee.221 On the other hand, as we have seen, the courts have on occasion been willing to regard the action for the restitution of extra-contractual payments as an instance of the actio quod metus causa, as in Kilroe v Bayer and Kruger v Sekretaris van Binnelandse Inkomste. Thus, they have treated the involuntariness of the transfer, unlawfulness of the compulsion exerted and damage as independent questions.222 However, it is at best unclear whether duress of goods is sufficient to invalidate a contract in modern South African law.223 In Hendricks v Barnett, decided in 1974, Hoexter J appeared to accept a unified conception of the compulsion doctrine, citing White Bros v Treasurer-General and Union Government v Gowar, as well as Broodryk v Smuts and Arend v Astra Furnishers (Pty) Ltd in respect of an attempt by the defendant to resist the enforcement of a cheque.224 According to Hoexter J, ‘the defence here raised by the defendant was akin to the cause of action available to a plaintiff seeking recovery of money paid under duress of goods’.225 Not only compulsion but also protest was required to avoid the parties’ agreement; in the absence of such protest, the defence failed.226 In Van den Berg & Kie Rekenkundige Beamptes v Boomprops 1028 BK,227 decided in the Transvaal Provincial Division in 1999, Van den Heever AJ accepted obiter that modern writers generally agreed that there ought to be no distinction between duress to the person, life or body of the con  Broodryk v Smuts NO 1942 TPD 47, 51–52.   Arend v Astra Furnishers (Pty) Ltd 1974 (1) SA 298 (C). 221   Medscheme Holdings (Pty) Ltd and another v Bhamjee 2005 (5) SA 339 (SCA). 222   See also the discussion by Nienaber JA in Commissioner for Inland Revenue v First National Industrial Bank Ltd, n 170 above, of the question whether the emphasis fell properly on the involuntariness of the transferor or the unlawfulness of the duress exerted by the defendant (at 647). 223   See generally G Glover, ‘The Test for Duress in the South African Law of Contract’ (2006) 123 South African Law Journal 98; ‘Developing a Test for Economic Duress in the South African Law of Contract: a Comparative Perspective’ (2006) 123 South African Law Journal 285; ‘The Inducement of a Contract by “Duress of Goods”: a Reappraisal’ (2006) 18 South African Mercantile Law Journal 175; S Van der Merwe et al, Contract: General Principles, 3rd edn (Cape Town, Juta, 2007) 123–24; RH Christie and GB Bradfield, Christie’s The Law of Contract in South Africa, 6th edn (Durban, LexisNexis, 2011) 315–18. 224   Hendricks v Barnett 1975 (1) SA 765 (N). The plaintiff had threatened to withhold performance under his contract of employment unless the defendant promised to pay him an additional sum. 225   At 768. 226   Hendricks v Barnett, n 224 above, 769. Hoexter J cited the relevant passages from the judgments of De Villiers CJ in Benning v Union Government and Innes CJ in Union Government v Gowar. See also the application of this principle in Kapp v Valuta 1975 (3) SA 283 (T). 227   Van den Berg & Kie Rekenkundige Beamptes v Boomprops 1028 BK 1999 (1) SA 780 (T). This case concerned an agreement in terms of which the defendant agreed to pay the plaintiff a certain sum as introduction commission in respect of the sale of a farm. In response to the plaintiff ’s action to enforce the agreement, the defendant alleged that the agreement had been induced by the plaintiff ’s refusal to pass over certain information pertaining to the farm, and threats to influence the owner against the defendant. The court ultimately concluded that the commercial or financial pressure exerted did not amount to unlawful pressure, and that the contract must stand. 219 220

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tracting party, on the one hand, and threats to his goods, on the other, but expressed doubt as to whether duress of goods should be actionable in contract.228 Most recently, in Medscheme Holdings v Bhamjee, Nugent JA accepted in principle that economic duress might found the avoidance of a contract.229 Many South African academic writers take the view that ‘there is no reason why threats to property ought to be treated differently from other types of threat, and this anomalous position needs to be rectified’.230 However, in no South African case has a contract in fact been avoided on grounds of duress of goods.

V Analysis A  Modern Position The position regarding the restitution of compelled transfers in modern South African law can be summarised as follows. First, it is necessary to a restitutionary claim founded on the enrichment of the defendant that the transfer in question was made under unlawful compulsion.231 However, if the transfer was in fact owed – if it was supported by a valid contractual or statutory obligation – then restitution is precluded. Thus, the absence of such a relationship of indebtedness is undoubtedly a necessary condition for recovery. But the mere fact that the transfer was not owed is insufficient to found recovery, even where gratuitous intention on the part of the payer was demonstrably absent.232 Duress of the person is almost always unlawful, but duress of goods or a threat by the recipient to withhold the transferor’s rights is unlawful only where the defendant is not actually entitled to the transfer in question. Thus, the requirement of unlawful compulsion cannot be entirely divorced from the requirement that there be no relationship of indebtedness between the parties.233 On the other hand, unlawful pressure might not lead to restitution if the transfer was not truly involuntary, for example, if the plaintiff believed the defendant’s authority to be   Van den Berg & Kie Rekenkundige Beamptes v Boomprops 1028 BK, n 227 above, 784–85.   Medscheme Holdings v Bhamjee, n 221 above, para [18].   See, eg, Glover, ‘The Inducement of a Contract by “Duress of Goods”: a Reappraisal’, n 223 above, 185; Christie and Bradfield, Christie’s The Law of Contract in South Africa, n 223 above, 317. Indeed, D Hutchison et al, The Law of Contract in South Africa (Cape Town, Oxford University Press Southern Africa, 2009) 138–39 rely on White Brothers v Treasurer General (1883) 2 SC 322 in stating that duress of goods undoubtedly does render contracts voidable in modern law. 231   For example, in Goldroad (Pty) Ltd v Fidelity Bank (Pty) Ltd 1996 (4) SA 1151 (T), 1155–56, Ngoepe J applied Union Government v Gowar, Lilienfeld v Bourke and Miller v Bellville in concluding that the claim must fail, because the plaintiff could not show that the threats directed against him were ‘illegitimate’. 232  But cf Venter NO v Eastern Metropolitan Substructure of the Greater Johannesburg Transitional Council 1998 (3) SA 1076 (W), in which Flemming DJP appeared to suggest the contrary. 233   See III(B)(i) above. 228 229 230

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lawfully wielded. Equally, a payment which was actually made involuntarily might not have been made in response to any unlawful compulsion, for example, if the plaintiff wrongly believed that serious consequences would follow if no payment was made. In cases where a transfer is recoverable by virtue of the fact that it was made under compulsion, protest constitutes an additional, ancillary requirement. It appears to be a relatively inflexible one: generally there can be no recovery in the absence of protest by the plaintiff. On the other hand, protest is insufficient in itself to trigger recovery. It is not enough that the transfer was not voluntary, as indicated by the protest; it must be involuntary in the sense of having been compelled. However, a transfer made under protest alone can be recovered if the protest gives rise to a shared understanding between the parties that the transfer is to be recoverable if it is subsequently found (ie, by a competent court) not to have been owed. It has sometimes been held by the courts that such an agreement can be inferred from the mere fact of protest by the transferor.234 However, this view is both unsupported by authority and inherently flawed. In any case it has not been accepted: South African law requires a genuine if tacit agreement. As to the content and effect of such an agreement, according to one view the parties agree that the transfer is to be returned if it is subsequently found not to have been owed: in other words, the transfer itself is made conditional on the transferor’s indebtedness. Like the restitutionary claim founded on compulsion, this is seen as a condictio indebiti arising from the defendant’s enrichment. Although this view of the nature of the agreement has received support from the Appellate Division,235 more prominent in modern South African law is the view that a transfer made under protest is recoverable insofar as the recipient expressly or tacitly undertakes to return the money in the future if it turns out not to have been owed.236 On its face this appears to be the same as the previous interpretation, but whereas that view sees the parties’ agreement as a device for triggering the restitution of enrichment, according to the dominant view it constitutes a conditional promise by the recipient, giving rise to a contractual right to restitution: the claim does not arise from the recipient’s enrichment but from his promise to make restitution.

B  Influence of Restitutio in Integrum The reason for the prominence of compulsion in the modern South African law of enrichment is clear: the origins of the modern law lie in the Roman and Roman234   Advanced by De Villiers AJA in Union Government v Gowar, n 116 above, and accepted in a dissenting judgment by Nicholas AJA in Commissioner for Inland Revenue v First National Industrial Bank, n 170 above. 235  See Port Elizabeth Municipality v Uitenhage Municipality 1971 (1) SA 724 (A). 236   See the judgment of Nienaber JA in Commissioner for Inland Revenue v First National Industrial Bank, n 170 above.

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Dutch remedy of restitutio in integrum on grounds of metus. It is true that the action applicable in cases involving compelled transfers has often been identified as an instance of the condictio indebiti. This seems to imply a particular analysis of the claim in terms of which the restitution of compelled transfers is understood to arise primarily from the absence of a relationship of indebtedness between the parties. But having been presented with a version of the pure absence of legal ground approach in Union Government v Gowar, in which the claim to recover compelled transfers was formulated for the first time as an instance of the condictio indebiti, the South African courts have consistently rejected that approach in favour of a mixed analysis which takes account of both compulsion and the absence of a legal ground. Indeed, even in modern law the South African courts frequently refer to restitutio in integrum or alternatively the actio quod metus causa as the appropriate restitutionary remedy,237 or express doubt as to the appropriateness of the condictio.238 Similarly, the avoidance of compelled contracts is still sometimes conceived of as an instance of restitutio in integrum on grounds of metus in modern South African law, and the conditions of avoidance determined by the analytical contours of that remedy. It follows that the parallels between the restitution of compelled extra-contractual transfers and the avoidance of compelled contracts remain close, although it does not seem that duress of goods is sufficient to avoid contracts in modern South African law. Regarding the ancillary protest requirement, protest by the transferor appears to perform two functions. First, it serves as evidence that the transfer in question was indeed made involuntarily, under compulsion. In this form the protest requirement appears to have its roots in nineteenth-century English law pertaining to duress of goods.239 Indeed, protest still performs an important evidentiary function in modern English law.240 However, it is not treated as a requirement in its own right. Thus, South African law appears to have elevated to the status of a rule a circumstance which in English law is treated only as a factual indicator of involuntariness.241 If indeed protest is merely evidentiary, it is difficult to defend the South African position: it ought to be possible to establish compulsion with reference to other circumstantial indicators. The fact that protest and compulsion are construed as two separate, co-ordinating requirements in South African law,   As in Kruger v Sekretaris van Binnelandse Inkomste, n 172 above.   As in the majority judgment of Nienaber JA in Commissioner for Inland Revenue v First National Industrial Bank, n 170 above. 239   See III(A) above. 240   As was pointed out in Maskell v Horner [1915] 3 KB 106, 122 and 124–25, a protest is simply ‘some evidence, when accompanied by other circumstances, that the payment was not voluntarily made to end the matter’: Goff and Jones, The Law of Restitution, n 84 above, para 10–055 (7th edn, this discussion does not appear in the 8th edn). Similarly, with respect to the colore officii cases, now understood to comprise all those cases in which the defendant is in a quasi-public or monopolistic position and demands a money payment, to which he is not entitled, for the fulfilment of a duty owed by him, Goff and Jones state (7th edn) at para 10–019 that ‘[i]t is irrelevant that no protest was made or question raised at the time of the payment by the plaintiff ’. 241   cf Du Plessis, Compulsion and Restitution, n 22 above, 135–36 and The South African Law of Unjustified Enrichment, n 3 above, 143–44. See III(A) above. 237 238

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each requiring to be demonstrated by the plaintiff, suggests that protest is doing some other work. In truth it seems that protest serves also to alert the recipient of the transfer to the fact that the plaintiff disputes liability and is not making the transfer voluntarily. In this form the protest requirement appears to derive from a particular conception of restitutio in integrum as a species of extraordinary equitable remedy, according to which the applicant for relief succeeds only if he can demonstrate that he deserves the special assistance of the court. Where the defendant is alerted by protest to the fact that the plaintiff disputes his liability and is paying involuntarily, this know­ledge renders the defendant’s retention of the undue transfer unconscionable, if indeed it subsequently comes to light that the transfer was not owed. On the other hand, in the absence of actual or at least constructive knowledge on the part of the defendant that the plaintiff is making the transfer unwillingly, not in settlement of the recipient’s claim, it seems inequitable to order restitution. That this understanding of the protest requirement was present to the mind of De Villiers CJ in White Bros v Treasurer-General 242 in 1883 appears from the emphasis which he placed on the subjective knowledge of the agents of the Colonial Government at the time at which the payments were made, as well as his formulation of the claim as an instance of restitutio in integrum.243 Subsequent case law likewise suggests that the real purpose of the inflexible protest requirement is to ensure that the defendant is aware that the plaintiff’s transfer is involuntary at the time at which it is made. As in the case of the excusable mistake requirement, it is difficult to defend this conception of the protest requirement and of the restitutionary claim itself.244 As long as there is a reason for restitution in the fact that the transfer was made under compulsion (and was not owed), it should be unnecessary to find an additional justification for relief in the fact that the equities of the particular case favour the plaintiff. Indeed, to suggest that restitution is triggered by the unconscionable behaviour of the recipient is to deny the very existence of a law of unjustified enrichment. Having made out his claim, the plaintiff succeeds by right: there is no need for extraordinary remedial intervention. Like excusable mistake, the protest requirement is susceptible to a more sophisticated interpretation, namely, that it serves to protect the interests of the recipient in precluding his reliance on the appearance of finality created by the transfer itself. In this form the requirement is rooted in a specify policy of reliance protection. Yet, as in the case of excusable mistake, there appears to be no adequate justification for the retention by the recipient of a compelled transfer of enrichment which survives in his hands. As argued in Chapter 3, to the extent that the defence of loss of enrichment does not provide adequate protection for the recipient’s interests, that shortfall should be addressed in a rational way by widening   White Bros v Treasurer-General (1883) 2 SC 322.   cf III(A) above. 244   cf Chapter 3 at V(B). 242 243

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the scope of the loss of enrichment defence itself.245 Indeed, even if the interests of private defendants do require such additional protection, it is difficult to see why the state should enjoy a similar measure in respect of the restitution of incorrectly levied tax or other payments wrongly exacted by government at national, provincial or local level. The inequality in the positions of state and taxpayer makes the protest requirement doubly inappropriate here.

C  Unjust Factors and Legal Grounds Finally, it follows from the research presented in this chapter that compulsion constitutes a specific unjust factor in the modern South African law of enrichment, in the same series as mistake. Again, South African law embraces a mixed approach to the restitution of compelled transfers, in terms of which both compulsion and the absence of a legal ground are treated as ingredients of the plaintiff’s cause of action. In fact, this claim can be formulated more strongly. Although the existence of a valid relationship of indebtedness between the parties certainly precludes a restitutionary claim, it appears from the research presented here that the right to restitution arises in the first instance from compulsion. The parallels between and South African and English law in this respect are therefore very strong.246 The treatment of protest in modern South African law illustrates the degree to which the courts have embraced unjust factors. As we have seen, in cases where restitution is triggered by compulsion, protest serves as an additional, ancillary requirement. However, protest alone cannot found the restitution of an unowed transfer. A transfer made under protest but in the absence of compulsion can be recovered only if the protest gives rise to a shared understanding between the parties that the transfer is to be recoverable if it is subsequently found not to have been owed. In this respect South African law can be contrasted with German law, which operates according to a pure absence of legal ground approach, and English law, the home of unjust factors. As will be more fully discussed in Chapter 6, in German law the absence of a relationship of indebtedness between the parties is sufficient in principle to trigger a prima facie claim, at least insofar as enrichment by transfer [Leistung] is concerned.247 According to section 814 BGB, that claim can be met with a defence of knowledge in cases where the plaintiff was aware at the time of the transfer that he was not obliged to make it, but that defence can itself be displaced by evidence that the plaintiff made the transfer under an express

  See Chapter 3 at V(C).   Indeed, the test for compulsion applied in South African law appears to be similar to that applied in English law: it is understood to comprise duress of goods, and in cases involving demands colore officii the withholding of a right is regarded as sufficient to trigger restitution. See, eg, G Virgo, The Principles of the Law of Restitution, 2nd edn (Oxford, Oxford University Press, 2006) 190. 247   See Chapter 6 at III(A). 245 246

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reservation, regardless of the defendant’s response.248 Thus, restitution arises directly from the non-voluntary transfer of an amount not owed, in a way wholly characteristic of a law of unjustified enrichment.249 In English law, on the other hand, although protest on the part of the transferor serves as an important factual indicator of compulsion, it is insufficient in itself to found the restitution of an unowed transfer. However, where the claimant’s reservation or protest is accepted by the recipient, giving rise to an agreement between the parties that the transfer will be returned if it turns out not to be owed, the payment remains recoverable, should it indeed not be owed, despite the absence of an unjust factor.250 Although South African law takes a less flexible approach to protest in cases involving compelled transfers, it is clear from this brief summary that the English and South African regimes regarding protest are essentially identical: in neither system is mere protest sufficient to trigger restitution of an amount not owed. This similarity underlines the degree to which the South African law regarding compelled transfers adheres to an unjust-factors approach. Indeed, the commitment of the South African law of enrichment to unjust factors emerges particularly clearly from South Africa’s regime regarding payments wrongly exacted by the state. In English law payments exacted ultra vires by public authorities are recoverable without more on grounds of policy, following the decision of the House of Lords in Woolwich Equitable Building Society v IRC in 1993,251 ‘[t]he exaction of tax is implicitly backed by the coercive powers of the State so that the taxpayer knows that unpleasant economic and social consequences may be entailed if he does not pay’.252 In these cases, exceptionally, it is not necessary for the claimant to prove any legally significant compulsion (or other unjust factor) in order to recover. In other words, restitution is justified solely with reference to the absence of any legal ground underlying the payments. There is no reason why South Africa should not have its own Woolwich moment, as certain other common law jurisdictions have done, and dispense with the compulsion requirement in cases involving tax exacted ultra vires, or 248   See G Dannemann, The German Law of Unjustified Enrichment and Restitution: a Comparative Introduction (Oxford, Oxford University Press, 2009) 77–78, 204. For criticism of the English regime from a German perspective see S Meier, ‘No Basis: a Comparative View’ in A Burrows and Lord Roger of Earlsferry (eds), Mapping the Law: Essays in Memory of Peter Birks (Oxford, Oxford University Press, 2006) 351–52 and G Dannemann, ‘Unjust Enrichment as Absence of Basis: Can English Law Cope?’ in the same volume at 374–75. 249   cf eg Visser, Unjustified Enrichment, n 2 above, 393–94; Du Plessis, The South African Law of Unjustified Enrichment, n 3 above, 142–43. 250  See Nurdin & Peacock v DB Ramsden & Co Ltd [1999] 1 All ER 941, 957. ‘This effectively means that a contract is needed to justify recovery in unjust enrichment. This is diametrically opposed to an absence of basis approach, under which a contract (or other legal basis) is needed only to justify keeping the enrichment.’ Dannemann, The German Law of Unjustified Enrichment and Restitution, n 248 above, 204. 251   Woolwich Equitable Building Society v IRC [1993] AC 70 (HL); Deutsche Morgan Grenfell Group plc v IRC [2006] UKHL 49, [2006] 3 WLR 781. See generally A Burrows, The Law of Restitution, 3rd edn (Oxford, Oxford University Press, 2011) 498–517; C Mitchell et al (eds), Goff and Jones: The Law of Unjust Enrichment, 8th edn (London, Sweet & Maxwell, 2011) ch 22. 252  Burrows, The Law of Restitution, n 251 above, 503.

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indeed in all cases involving payments wrongly exacted by the state.253 Indeed, taking this step would be relatively simple for an uncodified civilian system which works with the condictio indebiti. However, the South African courts have consistently declined to follow suit.254 Instead, they have continued to require proof of actual compulsion to found an enrichment claim, permitting recovery in the absence of such compulsion only where it is possible to infer a tacit agreement between the parties at the time when the payments were made that they would be restored if they turned out not to have been owed.255 It is arguable that the South African courts’ heavy reliance on tacit agreements to explain the restitution of payments wrongly exacted by the state is evidence of analytical strain.256 After all, such tacit agreements to repay are readily inferred in cases involving the payment of tax under protest. Given that, it is reasonable to ask whether the contractual analysis applied in Commissioner for Inland Revenue v First National Industrial Bank Ltd is not in fact a cloak for an absence of legal ground analysis of the sort applied in German law, in terms of which protest is sufficient in itself to displace the defence of knowledge or, more generally, the possibility of voluntary payment.257 Furthermore, in many instances restitutionary actions to recover payments wrongly exacted by the state have been created by statute, a development which likewise diverts claims away from the common law of enrichment.258 Nevertheless, the formal commitment of the South African law of enrichment to unjust factors in cases involving payments wrongly exacted by the state is striking. The fact that the South African regime is in this respect significantly more conservative than that which prevails in English law should give us pause. In fact, it is unlikely that this restitutionary regime would survive constitutional scrutiny.259 It is submitted that insofar as they apply to payments wrongly exacted by the state, the requirements of compulsion and protest are inconsistent with   See, eg, Kingstreet Investments Ltd v New Brunswick (Investments) Ltd [2007] SCC 1.   cf Ellis NO v Commissioner of Taxes 1995 (4) SA 265 (ZS) 274. 255   See, eg, Port Elizabeth Municipality v Uitenhage Municipality 1971 (1) SA 724 (A) and Commissioner for Inland Revenue v First National Industrial Bank Ltd [1990] ZASCA 49, 1990 (3) SA 641 (A). 256   English law, having adopted the Woolwich Equitable Building Society v IRC solution (see n 251 above), is able to lean more lightly on this device. 257   cf Du Plessis, The South African Law of Unjustified Enrichment, n 3 above, 146, 151. 258   See the detailed discussion of these statutory regimes by Visser, Unjustified Enrichment, n 2 above, 405–13, as well as Du Plessis, The South African Law of Unjustified Enrichment, n 3 above, 114– 15, but note that s 102(1) of the Income Tax Act 58 of 1962 has now been repealed by Sch 1 to the Tax Administration Act 28 of 2011. It does not appear that the new Act recognises any equivalent restitutionary claim. 259   See Visser, Unjustified Enrichment, n 2 above, 400–2. According to s 8(3) of the South African Constitution, 1996, ‘When applying a provision of the Bill of Rights to a natural or juristic person . . . a court i­n order to give effect to a right in the Bill, must apply, or if necessary develop, the common law to the extent that legislation does not give effect to that right; and may develop rules of the common law to limit the right, provided that the limitation is in accordance with section 36(1)’. According to s 39(2), ‘When interpreting any legislation, and when developing the common law or customary law, every court, tribunal or forum must promote the spirit, purport and objects of the Bill of Rights’. On the application of s 39(2) see Carmichele v Minister of Safety and Security 2001 (4) SA 938 (CC); S v Thebus 2003 (6) SA 505 (CC), paras [23]–[32]. But see A Fagan, ‘The Secondary Role of the Spirit, Purport and Objects of the Bill of Rights in the Common Law’s Development’ (2010) 127 South African Law Journal 611. 253 254

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certain provisions contained in the South African Constitution; indeed, the same argument could be made in respect of the excusable mistake requirement in the context of mistaken payments of tax not owed.260 Specifically, section 1(c) asserts the primacy of the rule of law, section 33(1) asserts the right to lawful administrative action, and section 41(1)(c) obliges, ‘all spheres of government and all organs of state within each sphere . . . [to] provide effective, transparent, accountable and coherent government for the Republic as a whole’. Indeed, it is possible that the regime regarding payments wrongly exacted by the state amounts to an arbitrary deprivation of property in terms of section 25(1).261 Even if it is not actively inconsistent with any specific constitutional provision, the South African regime regarding incorrectly levied tax appears incompatible with the ‘objective normative value system’ underlying the Constitution.262 Whereas the mere fact that a payment is not due is insufficient to trigger restitution generally, in the case of payments exacted by the state the principle of legality in state action requires restitution regardless of whether the payment was involuntarily made. In any event, it is to be hoped that the Constitution will provide the stimulus for reform in this area.

  cf Chapter 3 at III(B).  But cf Eskom v Thabo Mofutsanyana Distriksraad OPD 18 March 2004 (case no 4184/2001), in which this argument was rejected. See the discussion of this issue by Visser, Unjustified Enrichment, n 2 above, 24–26 and further Chapter 7 at III, especially the recent decision at the Constitutional Court in National Credit Regulator v Opperman and others [2012] ZACC 29, 2013 (2) SA 1 (CC). 262   See, eg, S v Thebus, n 259 above, para [27]. 260 261

5 Incapacity: Minority and the Doctrine of Ultra Vires I Introduction An unassisted minor – in modern South African law, a person under 18 years of age – enters into a contract without the assistance of her guardian: for example, she buys a motorbike. She renders total or part performance under that contract, paying all or some of the purchase price. Now she seeks to recover her payment. There is unanimity among South African enrichment lawyers that at least part of the reason for restitution in such a case is to be found in the invalidity of the underlying contract: in the fact that her payment was not owed (indebitum) or, to put the matter more generally, was unjustified. However, enrichment theorists vary widely in the analytical significance which they assign to the plaintiff’s incapacity in such a case. In his analysis of the role of mistake in the condictio indebiti, published in 1985, Daniel Visser accepted that the mistake of law rule did not apply to the restitution of transfers made by minors or other persons of limited capacity but treated this as a localised exception.1 In his more recent account of the subject, Unjustified Enrichment, incapacity is treated briefly as a reason for contractual invalidity, but not recognised as a distinct ground of the condictio indebiti;2 in substantive terms, Visser does not assign incapacity – whether human or juristic – any analytical weight as a reason for restitution. The approach of Jacques Du Plessis is similar.3 By contrast, in his ground-breaking survey of the South African law of enrichment, Verrykingsaanspreeklikheid in die Suid-Afrikaanse Reg, Wouter De Vos characterises the restitution of minors’ transfers as an application of the condictio indebiti in which the minority of the transferor replaces mistake in the traditional analysis of the claim.4 In other words, Professor De Vos takes the view that both minority (or 1  DP Visser, Die Rol van Dwaling by die Condictio Indebiti: ‘n Regshistoriese Ondersoek met ‘n Regsvergelykende Ekskursus (Dr iur thesis, University of Leiden, 1985) 245 ff. Since the abrogation of the mistake of law rule in Willis Faber Enthoven (Pty) Ltd v Receiver of Revenue [1991] ZASCA 163, 1992 (4) SA 202 (A), Visser’s view is of historical interest only. 2   DP Visser, Unjustified Enrichment (Cape Town, Juta, 2008) 546–51. 3   J Du Plessis, The South African Law of Unjustified Enrichment (Cape Town, Juta, 2012) 78–84. 4   ‘The mistake requirement is waived in this case, as in the case of payment under compulsion and protest’ (my translation): W De Vos, Verrykingsaanspreeklikheid in die Suid-Afrikaanse Reg, 3rd edn (Cape Town, Juta, 1987) 183. But see further II(A) below regarding the condictio sine causa specialis.

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juristic incapacity) and the absence of a relationship of indebtedness constitute elements in the plaintiff’s cause of action. Contemporary accounts of the law of enrichment tend uncritically to adopt one or other of these views.5 In this chapter I broadly align myself with the view of De Vos. However, my focus, as in previous chapters, is the role played by the extraordinary, equitable remedy of restitutio in integrum in effecting the restitution of enrichment by transfer. As in Chapters 2, 3 and 4, I make the argument that the nature of the minor’s restitutionary claim in modern South African law cannot be understood unless the important role played by restitutio in integrum is taken into account. I start by considering the validity of minors’ contracts and restitution of minors’ transfers in Roman and Roman-Dutch law, as well as the so-called benefit theory of contractual validity in early South African law, investigating the roles played by the condictio and restitutio in integrum in the institutional sources. Having sketched out the historical background, I then consider the restitution of minors’ transfers in modern South African law. Although the case law is sparse, it appears that here it is restitutio in integrum rather than the condictio which has generally been used to effect the restitution of performance under minors’ unassisted contracts (ie, unassisted transfers). The courts appear to have adopted a unified approach to the restitution of minors’ transfers, in that the same approach is adopted whether the minor is seeking to rescind and recover performance under an assisted contract or under an unassisted one. As in the chapters concerning mistake and compulsion, it is argued here that the application of restitutio in integrum on grounds of minority implies a particular analysis of the minor’s restitutionary claim, one in terms of which minority functions as a specific unjust factor in South African law – certainly a necessary condition for restitution, and perhaps even a sufficient one. Finally, I consider the restitution of payments made ultra vires by natural or juristic persons, a novel cause of action developed by the South African courts on analogy with the restitution of minors’ transfers. Here, it is admittedly the condictio indebiti rather than restitutio in integrum that is applied. Nevertheless, it appears that both the ultra vires nature of the payment and the absence of a relationship of indebtedness between the parties must be demonstrated in order to found a restitutionary claim. Thus, here too, restitution is explicable only by means of an analysis which takes explicit account of unjust factors.

5   Thus, Eiselen and Pienaar specify five ‘requirements’ for a successful condictio indebiti: a transfer of property, money or possession; the absence of an enforceable or natural debt; excusable error; payment under duress and protest; and ultra vires payments and payments by minors: S Eiselen and G Pienaar, Unjustified Enrichment: a Casebook, 3rd edn (Durban, LexisNexis, 2008) 126–30. See also RW Lee and AM Honoré (eds), The South African Law of Obligations (Durban, Butterworths, 1950) para 684. But see JG Lotz (updated FDJ Brand), ‘Enrichment’ in The Law of South Africa, 2nd edn (Durban, LexisNexis Butterworths, 2005) vol 9, para 212; JC Sonnekus, Unjustified Enrichment in South African Law (JE Rhoodie (trans), Durban, LexisNexis, 2008) ch 8, where minority/incapacity is not recognised as a distinct ground of the condictio indebiti.



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II  Historical Background A Introduction As we have seen, there are two main bodies of opinion in modern South African law regarding the significance of the plaintiff’s incapacity to his or her restitutionary claim. The historical basis of the first view, the view attributed above to Danie Visser, is not difficult to find.6 In his general monograph on mistakes of fact and law, portions of which are preserved in Digest 22.6, Mistake of Law and Fact, the classical jurist Paul recognised exceptions to the mistake of law rule not only in the case of minors but also in the case of women and soldiers.7 Like the mistake of law rule itself, the ancient exceptions to this rule were applied in the ius commune to the restitution of mistaken payments by means of the condictio indebiti:8 for example, in his commentary on D 22.6, the Roman-Dutch writer Johannes Voet listed the payment of an amount not due as one of the instances in which these exceptions would apply.9 Similarly, the majority view among members of the German Historical School in the nineteenth century appears to have been that while mistakes of law were generally inexcusable, they would exceptionally found the condictio where the mistaken party belonged to a class of persons in whom mistakes of law were habitually tolerated.10 It was this view that Chief Justice Kotzé adopted in his decision in Rooth v The State in 1888, referring expressly to ‘women, minors, soldiers, etc’ as instances of ‘so-called privileged persons’ who were exempt from the operation of the mistake of law rule in the context of the condictio indebiti.11 There is, however, a second view of the analytical significance of incapacity inherent in the Roman sources. This is the view associated with Wouter De Vos. According to Ulpian, in a text from his Disputationes preserved in D 12.6, the title of the Digest dealing with the condictio indebiti: The cause for recovery is on occasion to be found in the character of the payer, as for instance, when a pupillus pays without his tutor’s authority, or a lunatic or one banned from dealing with his property. There is generally no argument against recovery in the case of people such as these. In fact, if the coins still exist they can be vindicated, while if they have been used up, the condictio lies.12

 Visser, Die Rol van Dwaling, n 1 above, 245 ff.  Paul, Mistake of Law and Fact; Justinian, Digest 22.6.9. Other fragments in this title mention rustics also. 8   See Chapter 2 at II(A). 9  Voet, Commentarius Ad Pandectas 22.6 n 3. 10   See Chapter 2 at II(B). 11   Rooth v The State (1888) 2 SAR 259, 265. See Chapter 2 at III(A). 12   D 12.6.29 (Ulpian, Disputations, Book 2) (Watson’s translation). 6 7

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Similarly, according to Neratius, in a text also preserved in D 12.6: What a pupillus promises a stipulator without his tutor’s authority can be recovered if paid; for there is not even a natural obligation.13

It appears from these texts that in classical Roman law, a condictio was available to recover transfers made by a minor regardless of whether he had also been mistaken. In the words of Ulpian, ‘the cause for recovery is on occasion to be found in the character of the payer, as for instance, when a pupillus pays without his tutor’s authority, or a lunatic or one banned from dealing with his property’. Because the compilers elected to place these fragments within D 12.6, the title dealing with what had come to be called the condictio indebiti, these texts were transmitted into the ius commune as instances of that condictio. Thus, Grotius (for example) includes minors’ payments in his discussion of ‘the restitution of what a person has unwittingly paid as a debt when he was not indebted’, simply paraphrasing Ulpian: If a minor makes an over-payment he does not make the receiver owner, not having legal capacity, and therefore, is entitled to vindicate the money or whatever was given in payment as still his own; if it cannot be found he can claim restitution.14

Similarly, Voet follows Neratius: [I]f a ward has paid what he had promised without the authority of his guardian, he can reclaim it by means of the condictio indebiti, just as though it had not been due even by nature.15

In fact this view requires further qualification. It has been argued, also by Professor De Vos, that the claim referred to by Ulpian in D 12.6.29 was not the condictio indebiti, the claim to recover an undue transfer, after all. He draws attention to the fact that it is the mixing of the money in the hands of the recipient rather than the transfer by the plaintiff which triggers the condictio in this case, since the plaintiff’s minority apparently impedes his ability even to effect a valid transfer. Yet it is a requirement of the condictio indebiti (as well as the condictio causa data causa non secuta and condictio ob turpem vel iniustam causam) that there be a valid transfer of ownership in the money or goods in question. In the absence of such a transfer, the condictio indebiti cannot lie. Thus, on proper analysis the action in question should instead be classified as the residual condictio sine causa specialis.16 Finally, it must be emphasised at the outset that the condictio – whether indebiti or sine causa specialis – was not the principal mechanism used to effect the restitution of minors’ payments in Roman law. In fact, its sphere of application as a   D 12.6.41 (Neratius, Parchments, Book 6) (Watson’s translation).  Grotius, Inleydinge tot de Hollandsche Rechtsgeleertheid 3.30.11 (Lee’s translation). 15  Voet, Ad Pandectas 26.8 n 4 (my translation). See also 4.4 n 21. 16   De Vos, Verrykingsaanspreeklikheid, n 4 above, 31–32 (especially n 23), 95, 183, whose views are somewhat misrepresented by Eiselen and Pienaar, Unjustified Enrichment, n 5 above, 172–73. Schulz points out in respect of Roman law that ‘the datio was at least the basis of the acquisition’ in such a case, which suggests that the condictio indebiti remains appropriate: F Schulz, Classical Roman Law (Oxford, Clarendon Press, 1951) 614. See further II(B) below. 13 14



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restitutionary action in this context appears to have been relatively narrow. Rather, as will appear from the discussion below, the mechanism generally used to effect the restitution of minors’ transfers in Roman law was restitutio in integrum. This was the wide-ranging restitutionary remedy introduced by the Praetor for the benefit of those under the age of 25, whether below or above the age of puberty, assisted or unassisted, and regardless of the nature of the transaction they sought to rescind. It is true that the condictio indebiti, recognised by Grotius as an enrichment action, has a much higher profile in the writings of the RomanDutch authorities. They distinguished clearly between void and voidable trans­ actions, and tended to treat the restitution of performance in the former case as a matter for the condictio alone. Nevertheless, as I have sought to demonstrate in Chapters 2 and 4, the restitutio in integrum of Roman-Dutch law was by no means confined to voidable contracts but extended also to performance under void contracts and indeed to transactions of all kinds. The discussion below reiterates this claim in the specific context of minority.

B  Restitution of Minors’ Transfers in Roman Law In classical Roman law, it was customary to appoint a guardian (tutor) to a child sui iuris (not subject to the power of any other) but still under the age of puberty (pupil or pupillus): this was generally done by will, by operation of law or through express appointment by a magistrate.17 A child of this age was capable of improving his position without assistance, for example, by accepting a donation, at least once he was old enough to understand the nature of the transaction, but was incapable of assuming obligations (whether unilateral or bilateral) or divesting himself of property without the assistance of his tutor.18 Where, as in the Neratius and Ulpian fragments discussed above, a child in tutela transferred money or goods, it appears that this was without effect: the goods or money (if the coins were still extant) could be vindicated. If not, the minor could recover the amount in question by means of a condictio.19 On the other hand, an obligation incurred 17   See generally eg Schulz, Classical Roman Law, n 16 above, 164–80; WW Buckland, A Text-book of Roman Law from Augustus to Justinian, 3rd edn (P Stein (ed), Cambridge, Cambridge University Press, 1963) 142–65; JAC Thomas, Textbook of Roman Law (Amsterdam, North-Holland, 1976) 453–63, 466–68. 18   See, eg, Justinian, Institutes 1.21 pr: ‘In some cases it is necessary that the tutor should authorise the acts of the pupil, in others not. When, for instance, the pupil stipulates for something to be given him, the authorisation of the tutor is not requisite; but if the pupil makes the promise, it is requisite; for the rule is, that pupils may make their condition better, even without the authorisation of their tutor, but not worse unless with the tutor’s authorisation. And therefore in all cases of reciprocal obligation, as in contracts of buying, selling, letting, hiring, bailment deposit, if the tutor does not authorise the pupil to enter into the contract, the person who contracts with the pupil is bound, but the pupil is not bound’ (Sandars’ translation). Also Gaius, Institutes 2.83, G 3.107, D 26.8.5 pr-1 (Ulpian, On Sabinus, Book 40) and D 26.8.9 (Gaius, On the Provincial Edict, Book 12). 19   G 2.82; D 12.1.19.1 (Julian, Digest, Book 10); D 12.6.29 (Ulpian, Disputations, Book 2). In such a case, since the pupil was not capable of transferring ownership the recipient of the coins acquired ownership through commixtio rather than through the transfer (datio) itself. However, Schulz claims

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by an unassisted minor had certain juristic consequences: for example, it would support a novation.20 It seems that a pupil remained liable to the extent of his enrichment received.21 However, once a child reached the age of puberty this position changed: he acquired full juristic capacity. This meant that he could incur obligations and alienate property without assistance, even though he was still well under the age of majority.22 The potential harshness of this regime was gradually ameliorated, first by the passage of a shadowy lex Plaetoria around 200 BC and later through the intervention of the Urban Praetor. He supplemented the provisions of the lex both with a defence (if a minor were sued) and by providing for the rescission – ie, restitutio in integrum – of transactions, initially in cases of fraud only (namely, where the minor had been tricked) but later in a range of circumstances, for example, where the minor had made a bad bargain owing to inexperience.23 Furthermore during the classical period the institution of guardianship (cura), previously applicable only to the insane and to prodigals,24 was extended to include persons sui iuris under the age of 25.25 Initially, a minor who acted without the assistance of his curator was in no way regarded as incapable: restitutio in integrum was simply more likely where he had acted without assistance, since assistance constituted prima facie evidence that the transaction was fair.26 Moreover, it seems that originally a curator was appointed for the purposes of a specific transaction only.27 However, towards the end of the classical period this position changed. It became customary to appoint a curator on the conclusion of the minor’s tutela to act for the whole remaining period of minority, and it seems that the curator would generally administer the minor’s affairs on his behalf, rather than merely assisting him.28 The presence of an adviser also offered some protection to the other party to the transaction. While it was still theoretically possible for a minor to act without a curator, a minor who had one lost his power of independent action.29 Thus, a minor above the age of puberty was now essentially in the same position as the that ‘the datio was at least the basis of the acquisition’: Classical Roman Law, n 16 above, 614. For references to more modern literature on this point see R Zimmermann, The Law of Obligations: Roman Foundations of the Civilian Tradition (Cape Town, Juta, 1990) 840 n 46. 20   D 46.2.1.1 (Ulpian, On Sabinus, Book 46). 21   See, eg, D 26.8.5 pr–1 (Ulpian, On Sabinus, Book 40). Schulz, Classical Roman Law, n 16 above, 177 doubts whether this rule is classical. 22   This odd (to us) rule reflects the original purpose of tutela, namely, to allow the person who would take the child’s property if he died while still impubes to protect his interest. According to Buckland, even before the Empire this view had been superseded by the more modern conception of guardianship, but the original rationale continued to be reflected in the rules governing the institution: Buckland, Textbook of Roman Law, n 17 above, 142–43. 23   See generally D 4.4, ‘On Persons Under 25’. 24   Indeed, the XII Tables made provision for the cura of furiosi and prodigi: see Buckland, Textbook of Roman Law, n 17 above, 168–69. 25   See, eg, Buckland, Textbook of Roman Law, n 17 above, 168–73. 26   ibid 170. 27  ibid. 28   ibid 171–72. 29  Justinian, Code 2.21(22).3 (Diocletian and Maximian). See generally Buckland, Textbook of Roman Law, n 17 above, 172.



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pupil of earlier times, ie, incapable of undertaking any onerous transaction without assistance. In practice, the two institutions had converged.30

C  Restitution of Minors’ Transfers in Roman-Dutch Law Following the erosion of the distinction between tutor and curator in the later Roman law, in Roman-Dutch law the institution of tutela disappeared entirely.31 The only relevant distinction was between infants, who were wholly incapable of acting, and minors – those between the age of seven and majority – whose capa­ city was limited. As in Roman law, while a minor needed no assistance to acquire rights – for example, he could validly accept a donation without his guardian’s consent32 – he could not assume any obligation or divest himself of any right without the assistance of his guardian.33 However, even where the minor had been assisted, his transaction remained subject to restitutio in integrum. In the words of Voet, ‘The just causes for restitution are fear, fraud, minority, loss of civil status, absence, alienation with the object of frustrating a judicial proceeding and justifiable mistake’.34 Upon reaching majority, the minor could recover any performance rendered by means of restitutio in integrum, ‘a composite action . . . consisting of the principles of Roman law grafted on to the Dutch mandament van relief  ’.35 Thus, the minor could effectively rescind a transaction by pointing to his minority, provided he could satisfy the requirements of that remedy.36 In particular, he must show that the transaction was prejudicial at the time at which it was made.37 Regarding transactions entered into without the guardian’s assistance, these lacked binding force, at least insofar as the minor himself was concerned.38 It followed that it was strictly speaking unnecessary for an unassisted minor to resort to restitutio in integrum in order to escape. In his chapter on restitutio in integrum, 30   As Borkowski/Du Plessis points out, this is evident from the language of many of the titles in Books 26 and Book 27 of the Digest, in which the terms tutor and curator are used as if they were interchangeable. See P Du Plessis, Borkowski’s Textbook on Roman Law, 4th edn (Oxford, Oxford University Press, 2010) 147. 31   RW Lee, An Introduction to Roman-Dutch Law, 4th edn (Oxford, Clarendon Press, 1946) 100; JW Wessels, The Law of Contract in South Africa, 2nd edn (AA Roberts (ed), Durban, Butterworths, 1951) vol 1, para 776. 32   See, eg, Voet, Ad Pandectas 39.5 n 7. 33   See generally Voet, Ad Pandectas 26.8. See also Lee, Roman-Dutch Law, n 31 above, ch 3; Margaret Donaldson, Minors in Roman-Dutch Law (Durban, Butterworth, 1955) ch 2 especially 34–37. 34  Voet, Ad Pandectas, 4.1 n 26 (Gane’s translation). 35   See, eg, Donaldson, Minors, n 33 above, 55–56. 36   See, eg, Grotius, Inleydinge 1.8.8, 3.48.10; Voet, Ad Pandectas 4.4 n 13. See also Donaldson, Minors, n 33 above, 54–57. 37   See, eg, Grotius, Inleydinge 3.48.11; Voet, Ad Pandectas 4.4 n 12, 13. 38  See, eg, Grotius, Inleydinge 1.8.5, 3.1.26, 3.48.10; Voet, Ad Pandectas 26.8 n 3, 4; Van Leeuwen, Censura Forensis 1.1.17.10, 1.4.3.2; Roomsch Hollandsch Recht 1.16.8, 4.2.3; Van der Keessel, Theses Selectae 128, 529; Van der Linden, Koopmans Handboek 1.4.1. See generally Lee, Roman-Dutch Law, n 31 above, ch 3; Donaldson, Minors, n 33 above, 9–14; MFB Reinecke, ‘Minderjariges se Kontrakte: ‘n Nuwe Gesigspunt’ (1964) 27 Tydskrif vir die Hedendaagse Romeins-Hollandse Reg 133.

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Grotius emphasises that ‘this is not to be understood of contracts entered into by minors unassisted by their guardians (for such are wholly void), but of contracts entered into by minors assisted by their guardians, or by the guardians alone’.39 In the words of Voet, the minor was ‘ipso iure safe’.40 However, an unassisted contract was not a complete nullity. As in Roman law, it had certain juristic consequences: it would support a suretyship or a novation.41 Rather, the contract was a ‘limping’ one – a negotium claudicans – enforceable at the minor’s instance only, either by the minor’s guardian or by the minor herself on attaining majority.42 In substantive language, it was partially or unilaterally invalid, in the sense that while the other party to the contract was bound, the minor herself was not: instead, she was said by Voet to be subject only to a natural obligation.43 As in Roman law, the minor remained liable to the other party to the contract to the extent of her surviving enrichment.44 As for the restitution of performance tendered under an unassisted contract, as we have already seen, the Roman-Dutch writers followed certain texts included by the compilers in D 12.645 in specifying the condictio indebiti as the appropriate action to recover these.46 However, this caused difficulties: the signal characteristic of the condictio indebiti in the civilian tradition is that it lies to recover a payment which is not owed; yet as we have just seen, Voet’s view was that the minor’s promise did indeed create a natural obligation to pay. His solution was to introduce a distinction between a ‘full’ natural obligation and one ‘less than full’:47 ‘it is however not to be doubted that in respect of the ward himself such a natural obligation is stripped of the effects of civil law which it is otherwise wont to win in the case of others’.48 The invention of this sub-category allowed Voet to reconcile to his satisfaction what appeared to him to be a contradiction in the Roman sources. In fact, the existence of an obligation on the minor to pay, and the exact nature of that obligation, was technically irrelevant to the question whether the minor could recover his performance. In Roman-Dutch law, a minor could not transfer ownership without assistance; the consequence of this was that the minor was incapable of performance itself.49 As Van Leeuwen says, echoing the Roman sources:50 39  Grotius, Inleydinge 3.48.10 (Lee’s translation). See also Groenewegen, De Legibus Abrogatis 2.40(41); Van Leeuwen, Censura Forensis 1.4.43.2. 40  Voet, Ad Pandectas 4.1 n 13, 4.4 n 52. 41   Van Leeuwen, Censura Forensis 1.4.3.2; 1.4.43.10; Voet, Ad Pandectas 26.8 n 4, 44.7 n 3. 42   Van Leeuwen ibid; Voet, Ad Pandectas 26.8 n 3. 43  Voet, Ad Pandectas 26.8 n 4, 44.7 n 3. 44   See, eg, Grotius, Inleydinge 1.8.5; 3.1.26, 30; 3.30.3. 45   Ie, D 12.6.29; D 12.6.41. 46  Grotius, Inleydinge 3.30.11; Voet, Ad Pandectas 26.8 n 4, 44.7 n 3. 47  Voet, Ad Pandectas 4.4 n 21. 48  Voet, Ad Pandectas 26.8 n 4 (Gane’s translation). Thus ‘if a ward has paid what he had promised without the authority of his guardian, he can reclaim it by means of the condictio indebiti, just as though it had not been due even by nature’ (my translation): Ad Pandectas 44.7 n 3. 49  Grotius, Inleydinge 2.5.3, 3.30.11; Van Leeuwen, Censura Forensis 1.2.12.7; Roomsch Hollandsch Recht 2.7.8; Voet, Ad Pandectas 4.4 n 21. A similar argument is made with respect to modern South African law by Reinecke, ‘Minderjariges se Kontrakte’, n 38 above, 137–38. 50   See, eg, D 12.6.29; G 2.82.



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pupils who lack their tutor’s authority, and others who cannot alienate, do not rightly pay, nor do they transfer ownership in a thing to the recipient, and so they are able to vindicate what has been paid, so that it may be recovered.51

As the same sources indicate, when money paid had been mixed with the recipient’s own, vindication was no longer possible, and a condictio had to be used instead, but this action does not appear to have depended on the absence of any liability to pay.52 On the other hand, whatever the formal position, it appears that in practice this issue – the existence and effect of an obligation on the minor to pay – did not arise. This is because it was customary in Roman-Dutch law to invoke restitutio in integrum ‘even against contracts suffering from obvious nullity’, for reasons of security.53 This practice may have been partly due to the confused nature of the Roman sources, in which, as we have seen, the institutions of tutela and cura were elided and the scope of restitutio in integrum unclear. However, on a more fundamental level, it must be attributed to the wide-ranging character of restitutio in integrum which could, as we have seen in earlier chapters, be applied to almost any transaction or juristic act. It seems that this application of restitutio in integrum to the recovery of minors’ unassisted transfers had the potential to blur the boundaries between void and voidable contracts, and between vindication and restitution. Performance rendered under a void contract could conveniently be recovered in the same proceedings as an application for a declaration of nullity, the extraordinary, discretionary nature of the remedy making it unnecessary to specify the nature of the response too closely.

D  Benefit Theory As will appear from the next section, in modern South African law contracts entered into by unassisted minors are partially or unilaterally invalid. As in Roman-Dutch law, they ‘limp’, in that they can be enforced or repudiated at the minor’s instance. However, the position has not always been as straightforward. The so-called benefit theory, developed by Chief Justice De Villiers at the end of the nineteenth century, gave rise to considerable confusion during the first half of the twentieth before it was rejected by the Appellate Division in Edelstein v Edelstein NO in 1952.54 It will be emphasised here that the benefit theory – the rule that a minor is bound by an 51   Van Leeuwen, Censura Forensis 1.4.32.8. Similarly Grotius: ‘if a minor makes an overpayment he does not make the receiver owner, not having legal capacity, and, therefore, is entitled to vindicate the money or whatever was given in payment as still his own’: Inleydinge 3.30.11 (Lee’s translation). 52   De Vos has argued that since it seems to be the consumption of the money rather than the fact of an undue transfer which triggers the condictio in this case, the action in question should in fact be classified as the residual condictio sine causa specialis, rather than the condictio indebiti. See II(A) above and III(B) below. 53   See, eg, Voet, Ad Pandectas 4.1 n 13; Huber, Heedendaegse Rechtsgeleertheyt 4.40.1, 2. 54   Edelstein v Edelstein NO [1952] 3 All SA 20 (A). On the benefit theory see generally Donaldson, Minors, n 33 above, 17–27; B van Heerden et al, Boberg’s Law of Persons, 2nd edn (Cape Town, Juta, 1999) 772–80.

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unassisted contract to his benefit – was, for De Villiers CJ at least, merely the inverse of the requirement that a minor demonstrate prejudice arising from the contract in order to be able to obtain restitutio in integrum. In other words, the theory appears to have emerged from a running together of the conditions for the granting of restitutio in integrum – technically necessary only in cases where the minor had been assisted but apparently relied upon in practice also in cases involving unassisted contracts – and the substantive validity of unassisted contracts. Van der Byl & Co v Solomon,55 decided by De Villiers CJ in 1877, dealt with a contract for the sale of land entered into on behalf of a minor by his father. The minor having attained majority, the seller sued him for payment of the purchase price, the minor raising his minority as a defence. Having concluded that the contract, still wholly executory, had not been ratified by the minor upon attaining majority, De Villiers CJ went on to consider the prior question of whether the contract had required ratification at all, ie, whether it was not rather wholly valid. In this respect he remarked that ‘there is nothing to shew that the purchase of the erven was for the benefit of the minor’.56 Although he cited no authority, here he appears to have been thinking of the contemporary English rule to the effect that a contract beneficial to a minor – in particular, contracts for necessaries – might be enforced against him.57 However, on the facts of Van der Byl, ‘on the contrary, it would appear to have been to his prejudice’.58 There was, moreover, RomanDutch authority for the proposition that minors could be relieved by means of restitutio in integrum against contracts made to their prejudice either with their guardians’ assistance or by their guardians alone.59 It followed that the contract in question could not be enforced against the defendant. On the one hand, the influence of English law on De Villiers CJ’s reasoning is clear. He followed English law in treating the beneficial nature of the contract as determinative of its validity.60 However, it seems that he saw ‘benefit’ in the English sense simply as the inverse of the element of prejudice required to found   Van der Byl & Co v Solomon (1877) Buch 25.  At 27. 57   F Pollock, Principles of Contract at Law and in Equity, 1st edn (London, Stevens and Son, 1876) 33, a work frequently cited in the Cape courts during the late nineteenth and early twentieth centuries: ‘An infant’s contract is valid if it appears to the Court to be beneficial to the infant, and in particular if it is for necessaries. Explanation: “Necessaries” include all such goods, commodities and services as are reasonably necessary for the use and benefit of a person in the circumstances and condition of life of the contracting party’. Similarly, in the 8th edn (London, Stevens and Son, 1911) 57: ‘An infant’s express contract may be valid if it appears to the Court to be beneficial to the infant’. See further 69–77, especially 69–71, which deals with beneficial contracts of service. De Villiers CJ appears to have had some version of contemporary English law in mind also in Cairncross v De Vos (1876) Buch 5, 6, decided the previous year, in which he remarked obiter that ‘in ordinary cases it is incumbent upon a creditor suing for money lent to a minor to show that the amount has been expended for the benefit of the minor’. For the position in modern English law see, eg, E Peel, Treitel on the Law of Contract, 13th edn (London, Sweet & Maxwell, 2011) 566–86, especially 567 ff regarding contracts for necessaries and service contracts. 58   Van der Byl & Co v Solomon, n 55 above, 27. 59  Grotius, Inleydinge 3.48.10 (note that this appears as 3.49.10 in the Buchanan report). 60   See further Auret v Hind (1884) 4 EDC 283. According to Shippard J at 294, ‘even if the consent of the minor’s guardian could have been proved (which it could not), it would still have been necessary to show that the contract was for the benefit of the minor’. 55 56



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the Roman-Dutch remedy of restitutio in integrum. He appears to have taken a similar approach in Queen v Koning,61 decided in 1900, in which he held that a minor could validly enter into a contract for service. Beneficial contracts of service were routinely enforced against minors in nineteenth-century English law;62 according to De Villiers CJ: There is nothing to indicate that such contract of service in any way prejudiced him; on the contrary, at his age it was manifestly to his advantage that he should earn his own livelihood, and, in so doing, should acquire a knowledge of a farm labourer’s duties.63

Thus, the benefit theory appears to have arisen both as a result of a borrowing from English law, probably via the textbooks of the time, and from a fusion of the English rules on beneficial contracts with the requirements for the Roman-Dutch remedy of restitutio in integrum. A further reason for the emergence of the benefit theory in South African law appears to have been confusion between the conditions for contractual liability and for restitutio in integrum, on the one hand, and the requirements of liability in enrichment, on the other.64 As we have seen, in Roman-Dutch law at least an unassisted minor was liable to restore any benefits received from another to the extent of his surviving enrichment.65 In Nel v Divine Hall & Co,66 decided by De Villiers CJ in 1890, the defendant had entered into a contract for the purchase of clothing while still a minor without her guardian’s assistance, and having attained majority was sued by the seller for the purchase price. According to De Villiers CJ, the minor’s benefit ‘may afford a test as to the validity of his contract’.67 This view was supported by the Roman and Roman-Dutch authorities: in particular, a rescript of Antoninus Pius (C 2.37.1) suggested to De Villiers CJ that unless it could be proved that the minor had been ‘enriched’ (locupletiorem factam) by means of the contract, she would properly obtain restitutio in integrum of the contract.68 Moreover:   Queen v Koning (1900) 17 SC 541.   See in particular JAC Thomas, ‘Minors and Contract: a Comparative Study’ (1972) Acta Juridica 151, 154–55. 63   Queen v Koning, n 61 above, 542. 64   See in particular the detailed criticism of Nel v Divine Hall & Co (1890) 8 SC 16 by JC De Wet and JP Yeats, Die Suid-Afrikaanse Kontraktereg en Handelsreg (Durban, Butterworths, 1947) 44–46 and by Van den Heever JA in Edelstein v Edelstein NO, n 54 above, 26–28. The Nel decision and the benefit theory in general is defended in Donaldson, Minors, n 33 above, 17–27; PJJ Olivier, Die Suid-Afrikaanse Persone- en Familiereg, 2nd edn (AH Barnard and DSP Cronjé (eds), Durban, Butterworths, 1980) 69–75. See generally Van Heerden et al, Boberg’s Law of Persons, n 54 above, 772–80. 65   Hence according to Grotius, ‘minors and others who are not bound by contract, and infants and lunatics who are not bound by delict as such, are none the less bound to make compensation so far as they have been enriched or would be enriched if restitution were not made’: Inleydinge 3.30.3 (Lee’s translation). See also 1.8.5, 3.1.26, as well as Voet, Ad Pandectas 26.8 n 2. 66   Nel v Divine Hall & Co (1890) 8 SC 16. 67   At 18. According to De Villiers CJ, if a minor’s incapacity to contract without assistance were really absolute, then it would not be possible to enforce such a contract against her whatever the circumstances, ie, even with proof that the contract was for her benefit. However, the fact that the minor herself could enforce such a contract if she chose to ratify it upon majority suggested that she was not in fact absolutely incapable. Here he referred to Voet, Ad Pandectas 26.8 n 3 and 4. 68   De Villiers CJ referred also to Voet, Ad Pandectas 4.4 n 13 and 26.8 n 2. 61 62

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I do not understand the phrase ‘that she has been enriched’ to mean merely that she has had the best of the bargain, but that, considering the position in life and other circumstances of the case, the contract was for her benefit.69

Thus, it appears that De Villiers conflated here three things: the benefit necessary to found an enrichment action against the minor; ‘benefit’ in the English sense of a contract broadly beneficial to the minor; and finally the absence of that prejudice necessary to sustain restitutio in integrum. Neither does he appear to have distinguished clearly between unassisted contracts, generally ipso iure void, and assisted contracts, which required rescission. The benefit theory continued to be applied by South African courts during the first half of the twentieth century.70 However, the theory was criticised and contractual and enrichment liability clearly distinguished by the Transvaal Provincial Division in Tanne v Foggitt in 1938.71 Finally in 1952, the matter arose before the Appellate Division for the first time in Edelstein v Edelstein NO.72 Here the appellant sought an order declaring void an ante-nuptial contract entered into without the assistance of her guardian. In reply the respondent (the Commissioner for Inland Revenue) argued, inter alia, that since the contract had been to the appellant’s benefit it was binding on her. However, Van den Heever JA held that the old authorities put it beyond doubt that an unassisted contract was entirely without force in respect of the minor himself. The Roman and Roman-Dutch texts relied on by De Villiers CJ in the Nel case ‘afford no guidance whatsoever as to the meaning of locupletior . . . it is obvious that no latinist would have used that word to connote some vague, intangible and imponderable advantage’. Furthermore, the rule appeared unworkable in practice: ‘What standard of measurement is one to adopt in determining whether the contract was for the benefit of the minor?’.73 Thus, the benefit theory was conclusively rejected. Van den Heever JA rejected also the proposition that restitutio in integrum had any application in this case, since the remedy presupposed a binding contract.74 This – the view that a minor who, unassisted, concluded a contract, could be relieved from the consequent obligations only by restitutio in integrum – was, he said, confined to Voet, alone among the Roman-Dutch writers, and reflected not Roman-Dutch law but the earlier Roman position.75   Nel v Divine Hall & Co, n 66 above, 18.   See the cases cited by Van Heerden et al, Boberg’s Law of Persons, n 54 above, 775–77, especially nn 53 and 54. 71   Tanne v Foggitt 1938 TPD 43. 72   Edelstein v Edelstein NO [1952] 3 All SA 20 (A). 73   At 28. 74   At 25. Thus, the term ‘restitutio in integrum’ was used here in its ‘modern’ sense, to refer to the rescission of an otherwise valid obligation, as in Tjollo Ateljees (Eins) Bpk v Small 1949 (1) SA 856 (A) 871–72, another decision of Van den Heever JA. cf Chapter 1 at V and Chapter 2 at III(A). 75   At 25. The text of Voet in question (Ad Pandectas 14.5 n 4) does appear to support the proposition that restitutio in integrum is necessary to rescind even unassisted contracts. However, this is clearly inconsistent with Voet’s views as expressed elsewhere: see Ad Pandectas 4.1 n 13, 4.4 n 52, discussed at II(C) above. 69 70



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Thus it is now beyond doubt in South African law that restitutio in integrum, insofar as it refers to rescission, is necessary only in respect of assisted contracts; unassisted contacts are ‘unilaterally void’ and thus do not require it.76 However, given the extra­ordinary character of restitutio in integrum in Roman-Dutch law, already demonstrated in respect of mistake and compulsion in Chapters 2 and 4, it is unsurprising that in early South African law restitutio in integrum continued to be applied even in respect of unassisted contracts, leading to the confusion between the requirements of contractual validity, enrichment liability and restitutio in integrum which in turn gave rise to the benefit theory. Moreover, despite the clarity now achieved regarding the substantive validity of minors’ contracts, the position is different when it comes to the restitution of performance rendered under them. It appears that the use of restitutio in integrum in the context of unassisted contracts which was rejected in Edelstein v Edelstein NO persists, even in modern law, with respect to the restitution of performance under such contracts. In other words, the homogenous approach to minors’ contracts which underlies the benefit theory still persists in modern law.

III  Restitution of Minors’ Transfers in South African Law A  Restitution of Performance Rendered under Voidable Contracts Where a minor77 has concluded a contract with the consent or assistance of his guardian, or the guardian has contracted on the minor’s behalf, or the guardian has subsequently ratified the contract, in modern South African law the contract is valid.78 However, on attaining majority the minor may obtain restitutio in integrum, provided that he can demonstrate that the contract was prejudicial to him at the time it was concluded.79 If the minor is successful, he enters a claim for the cancellation of the agreement and the restoration of the pre-existing position. The courts have taken a flexible approach in achieving this equitable readjustment, 76   At 25–26. The term is Tony Honoré’s: AM Honoré, ‘Degrees of Invalidity’ (1958) 75 South African LJ 32, 37. 77   Whereas in Roman and Roman-Dutch law (certainly within the Province of Holland) the age of majority was 25 years (see, eg, D 4.4, ‘On persons under 25’; Voet, Ad Pandectas 4.4 n 1), in South Africa it was fixed by statute at 21: see s 1 of the Age of Majority Act 57 of 1972 and Donaldson, Minors, n 33 above, 2 n (c) on earlier pre- and post-Union legislation. However, in 2005 the age of majority was lowered to 18 by s 17 of the Children’s Act 38 of 2005. 78   See, eg, Van Heerden et al, Boberg’s Law of Persons, n 54 above, 781–96; DSP Cronjé and J Heaton, The South African Law of Persons, 3rd edn (Durban, LexisNexis, 2008) 94–99; CJ Davel and T Boezaart, Law of Persons, 5th edn (Cape Town, Juta, 2010) 64–66. 79   See, eg, Skead v Colonial Banking and Trust Co Ltd 1924 TPD 497; Wood v Davies (1934) CPD 250. See also eg Van Heerden et al, Boberg’s Law of Persons, n 54 above, 724–31; Cronjé and Heaton, Law of Persons, n 78 above, 104–5; Davel and Boezaart, Law of Persons, n 78 above, 67–70.

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both generally80 and in the context of minority in particular. Thus, in Wood v Davies,81 decided in the Cape Provincial Division in 1934, the plaintiff had inherited a large sum while still a minor. His father, acting in his capacity as guardian, had used a portion of the sum to buy a house from the defendant. In fact, it appeared that the minor’s guardian had not had authority to enter into a contract of this nature: first, because the purchase price exceeded the amount of money readily available to the minor at the time, the inheritance having been invested; secondly, because the contract imposed heavy obligations on the minor which extended beyond the term of his majority.82 Moreover, Sutton J held that in any case the purchase of property at an excessive price by the minor’s father as a home for the minor’s family, the minor himself being at boarding school, together with certain onerous terms in the contract of sale itself, and the fact that those obligations would continue to bind the minor after the end of his minority, constituted a contract prejudicial to the minor, and that, having attained majority, he was therefore entitled to restitutio in integrum.83 Thus, he was entitled to the cancellation of the contract and to the return of the payments towards the purchase price made on his behalf, together with interest, that amount to be set off against a sum representing ‘a fair and reasonable amount for the use and occupation of the property’, together with the interest that might have been earned if that amount had been paid in the form of monthly rental.84 Wood v Davies appears to be the only South African case in which restitutio in integrum of performance tendered under an assisted contract has been granted.85 Nevertheless, it is clearly still good law.86

B  Restitution of Performance Rendered under Void Contracts As we have seen, in the case of an unassisted contract there is technically no longer any need for the minor to seek restitutio in integrum in respect of the contract itself. Subsequent to the decision in Edelstein v Edelstein, it is well established in South African law that an unassisted contract is ipso iure void, at least insofar as   See Chapter 1 at V.   Wood v Davies (1934) CPD 250. 82   At 255–58. 83   At 258–60. 84   At 261. 85  But see also Wolff v Solomon’s Trustee (1895) 12 SC 42. This case dealt with the transfer of immoveable property, for which an order of court was required in addition to the consent/assistance of the minor’s guardian. Thus, it was held (at 48) that the minor’s claim in respect of the property was in truth a vindicatory one. 86  In The Law of South Africa, Wood v Davies stands as authority for the proposition that, ‘Restitutio in integrum is an extraordinary remedy and is only available where the contract was prejudicial to the minor when it was made . . . The purpose of restitution is to restore the status ante quo . . . Each party must return not only everything they received in terms of the contract, but also the proceeds or any advantage derived from the contract’ (citations omitted): DSP Cronjé, ‘Persons’ in The Law of South Africa, 2nd edn (Durban, LexisNexis Butterworths, 2010) vol 20(1), para 476. See also Van Heerden et al, Boberg’s Law of Persons, n 54 above, 724–26. 80 81



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the minor himself is concerned. An unassisted minor will, however, need to bring an action in order to recover any money or property he may have transferred under the void contract. What, then, is the nature of that action? Modern textbooks on the law of persons are almost unanimous in stating that where the minor seeks to recover property the appropriate action is vindicatory, whereas in the case of money the appropriate claim is the condictio, specifically a condictio indebiti.87 Among writers on the law of enrichment, De Vos, Eiselen and Pienaar and Visser all take the view that the appropriate action in respect of payments is the condictio sine causa specialis, although De Vos himself, the originator of this view, admits that it is the condictio indebiti that appears in the Roman and RomanDutch sources.88 However, closer examination of the cases in this area reveals that these views rest on rather slender authority insofar as modern law is concerned. In particular, it appears that there is no authority for either the condictio indebiti or the condictio sine causa in respect of minors’ payments in South African case law. On the one hand, Breytenbach v Frankel,89 decided by the newly-constituted Appellate Division of South Africa in 1913, suggests that minors’ transfers are wholly ineffectual and that therefore the appropriate action to recover property thus transferred is vindicatory rather than restitutionary.90 The plaintiffs were owners of a farm previously let to the defendants on a long lease. The long lease had been concluded by the father of one Jacobs, owner of an undivided share in the farm, acting on his behalf while he was still a minor, but without the approval of the Cape Supreme Court, as required at the time. On coming of age, Jacobs repudiated the contract of lease and sold his share in the farm to the plaintiff. The plaintiff now sought to eject the defendants on the basis that the lease was wholly invalid, at least insofar as the minor’s portion was concerned.91 Lord De Villiers did not finally decide the question whether the initial alienation was void or merely voidable – and thus whether it had been strictly necessary for the minor to seek restitutio in integrum on attaining majority in order to avoid the lease – but he emphasised that it had been the ‘universal practice’ in Roman-Dutch law to do so.92 However, in the course of his judgment he remarked that if the minor had not transferred his undivided share in the land to the plaintiff, he would ‘according to some of the authorities, have been entitled to bring a

87   See, eg, Van Heerden et al, Boberg’s Law of Persons, n 54 above, 800–3 (especially n 132), 821–22; Cronjé and Heaton, Law of Persons, n 78 above, 101; Davel and Boezaart, Law of Persons, n 78 above, 74. 88   De Vos, Verrykingsaanspreeklikheid, n 4 above, 31–32 (especially n 23), 95, 183; Eiselen and Pienaar, Unjustified Enrichment, n 5 above, 172–73; Visser, Unjustified Enrichment, n 2 above, 547–50. De Vos argues that in such a case the condictio indebiti cannot lie because the pupil was not capable of transferring ownership; the recipient of the coins acquired ownership through commixtio rather than through the transfer (datio) itself. See II(A) and (B) above. 89   Breytenbach v Frankel 1913 AD 390. 90   For the position in Roman-Dutch law, see II(C) above. 91   At 396: The lease was ‘so utterly void in law that, although registered as a burthen against the land it should be disregarded as a factor standing in the way of a third party, who bought the land with full knowledge of the lease’. 92   At 397–98. cf II(C) above.

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vindicatory action against the defendants’.93 Similarly, treating the long lease as equivalent to full alienation,94 Solomon J remarked that the alienation of a minor’s immovable property without the court’s consent ‘has no effect to transfer the dominium in such property’, that ownership remained with the minor, and that consequently ‘in order to recover his property it is not necessary for him to apply to the Court for a restitutio in integrum [in respect of such alienation], but he can bring a vindicatory action as the dominus of the property’.95 However, because the lease had been notarised and registered, it could not be said to be of no effect whatsoever.96 Vindication would have to take the form of an application to rectify the register in which the lease was reflected; in other words, an application for restitutio in integrum in respect of the register.97 It followed that in practice: it makes little difference whether an alienation by a guardian of the immovable property of a minor is held to be void or voidable, for, in either case, if the minor repudiates it, he must bring an action to set aside the registration.98

At the same time, this judgment suggests that the unassisted minor’s claim to recover land, and presumably also movable property, transferred under an unassisted contract in South African law is essentially a vindicatory one. On the other hand, as we have already seen, where the minor’s performance consists in a payment of money, it is inevitable that he will be obliged to fall back on a restitutionary action. This is because ownership in the money is lost as soon as it is mixed.99 In Baddeley v Clarke,100 the first reported decision I have been able to find in which a claim for the restitution of performance under an unassisted contract was considered, a minor had entered into an exceptionally onerous hirepurchase agreement in respect of a motorcycle. The minor made the initial downpayment and paid two subsequent instalments. When he failed to make the third payment on time the seller repossessed the motorcycle without restoring the payments already made, as he was entitled to do under the terms of the contract. The 93   At 399. However, the plaintiff himself was prevented from bringing such a vindicatory action by the fact that he had obtained transfer subject to the lease: ‘the plaintiff is not entitled to rely upon it in so far as it confers on him the dominium and to ignore it in so far as it makes the transfer subject to the lease’. See also the judgment of Solomon J at 402. 94  At 402. 95   At 399–400. In modern law the matter is governed by s 80 of the Administration of Estates Act 66 of 1959. See Van Heerden et al, Boberg’s Law of Persons, n 54 above, 689–94. 96  At 398–99. 97   At 401. In fact, the Registrar of Deeds should not have registered the defendants’ lease in the absence of an order of the court. This overlap between vindication and restitution is evident also in Umhlebi v Estate Umhlebi (1905) 19 EDC 237: cf Chapter 2 at III(B). In theory, a half-share in the property in question remained with Mrs Umhlebi throughout; in practice, the court’s intervention was necessary in order to reverse the registration of the property in her son’s name by a previous order of the same court. 98   At 402. As for the plaintiff ’s application, in the absence of rectification it had been impossible for the minor to transfer ownership to the plaintiff or anyone else. Thus, it followed that the plaintiff could not succeed in his attempt to eject the defendants. 99   See II(A) and (C) above. 100   Baddeley v Clarke (1923) 44 NPD 306.



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minor’s father brought an action to recover those payments, subject to a deduction representing the minor’s use of the motorcycle, ie, a reasonable hire cost. Both members of the Natal Court agreed that the contract was invalid, and that the plaintiff ought to succeed in his claim for restitution subject to the deduction for use, which Dove-Wilson summarised as ‘the extent to which the minor was benefited’.101 However, neither judge specified the nature of the minor’s cause of action. Nor did they cite any authority in support of the minor’s claim to recover his payments. However, the deduction of £7 representing the value of the minor’s use suggests an attempt to effect full restitution of the parties’ reciprocal performances – the sophisticated response characteristic of restitutio in integrum in South African law – similar to the ‘fair and reasonable amount for the use and occupation of the property’ set off against the minor’s restitutionary claim in Wood v Davies. Because the motorcycle was not held to be a necessary or even beneficial purchase – indeed, Tatham J expressed the view that ‘an ordinary push bicycle might have been as useful to enable [the minor] to get to his daily work’ – it does not appear that the minor could have been shown to have been enriched by its use. Similarly in Grand Prix Motors WP (Pty) Ltd v Swart,102 the nature of the restitutionary remedy in question remained unspecified. Here, the minor had entered into an unassisted contract for the purchase of a car. She took delivery of the car and paid a portion of the purchase price over the course of the next three months. Thereafter, she returned the car and sought to recover the amount paid. The seller lodged a counterclaim for the amount representing either damages for breach of contract, a claim resting on the assertion that the contract was valid because the minor had been tacitly emancipated, or in the alternative, the minor’s unjustified enrichment. Rejecting the seller’s claim, Grosskopf AJ held that the contract was invalid on account of the plaintiff’s minority and that on the evidence no case had been made out against the plaintiff on the basis of her enrichment.103 The plaintiff recovered her payments in full. Again, there was no discussion of the nature of the plaintiff’s claim, although the rejection of the seller’s counter-claim on the basis that no unjustified enrichment on the part of the minor had been demonstrated suggests that Grosskopf AJ had in mind independent enrichment claims. However, in Watson v Koen h/a BMO,104 decided in 1994, the Court referred to the 101   At 310. In fact, both judges appear to have applied the benefit theory. According to Tatham J at 307–8: ‘I am unable to see in the evidence anything from which I can infer that the contract was for the benefit of the boy. The purchase of the motor cycle in any case is not proved to have been for his bene­ fit, an ordinary push bicycle might have been as useful to enable him to get to his daily work. We must look at the transaction as a whole, and, looking at it in that way, both as to the use for the motorbicycle and the onerous nature of the contract, I am quite unable to take the view that the contract was for the boy’s benefit’. 102   Grand Prix Motors WP (Pty) Ltd v Swart 1976 (3) SA 221 (C). 103   At 222. 104   Watson v Koen h/a BMO 1994 (2) SA 489 (O). The case dealt with the issue of tacit emancipation. However, in the course of the judgment the court (at 493) not only referred to the plaintiff ’s action as an instance of restitutio in integrum but also upheld the rule that such a claim would fail where there had been fraud on the part of the minor. See further below.

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plaintiff’s claim in Grand Prix Motors v Swart as a claim for restitutio in integrum.105 In fact, this issue had arisen for a third time the previous year, in Louw v MJ & H Trust (Pty) Ltd.106 Here, as in the previous cases discussed, the plaintiff sought to recover money paid towards the purchase of a vehicle under an unassisted contract concluded with the defendant while the plaintiff was still a minor. In response, the defendant sought to enforce the contract and claim damages for breach, relying on a series of decisions in which it had been established that where an unassisted minor had induced another party to contract with him by fraudulently misrepresenting himself to be a major or holding out that he had been emancipated, he would be held to the contract, regardless of his minority: Auret v Hind,107 Cohen v Sytner,108 Vogel & Co v Greentley,109 Pleat v Van Staden110 and Fouche v Battenhausen & Co.111 Eloff J concluded that these decisions were wrong to the extent that they upheld this rule. A passage from Voet’s commentary apparently supporting the rule was ‘of doubtful validity’.112 Moreover, there were ‘cogent reasons’ for rejecting the rule: ‘if one were to consider his contract to be valid if induced by fraud one places it in the power of the minor to bind himself effectively by his contract’.113 As for the other Roman-Dutch and early South African authorities cited, these were authority rather for the proposition that a fraudulent minor was precluded from claiming restitutio in integrum in respect of his performance under the contract:114 ‘The fact that a fraudulent minor is pre105   For criticism of this decision see Van Heerden et al, Boberg’s Law of Persons, n 54 above, 802 n 132. On restitutio in integrum as a technique for reversing unjust enrichment in the context of reciprocal transfers see Chapter 1 at V. 106   Louw v MJ & H Trust (Pty) Ltd 1975 (4) SA 268 (T). See generally the discussion of this decision in De Vos, Verrykingsaanspreeklikheid, n 4 above, 183; Van Heerden et al, Boberg’s Law of Persons, n 54 above, 802 n 132. 107   Auret v Hind (1884) 4 EDC 283. At 294 Shippard J accepted the argument of counsel (Solomon) that there were ‘five exceptions’ to the general rule that minors were not bound by their contracts, the fourth of which was that the minor had ‘falsely represented himself either expressly or tacitly to be of full age’. 108   Cohen v Sytner (1897) 14 SC 13. De Villiers CJ remarked during the course of argument (at 14) that ‘[w]here a minor incurs a debt by representing himself as of full age he is bound’. However, it was not necessary to decide the point. 109   Vogel & Co v Greentley (1903) 24 NLR 252. Bale CJ held at 254 that ‘there can be no doubt that under Roman-Dutch law where the minor represents himself to be of age, and by virtue of the representation enters into a contract that he is generally bound by that representation. It is right that it should be so, otherwise it would give scope for fraud of a very serious description indeed’. 110   Pleat v Van Staden 1921 OPD 91. According to Ward J at 97, ‘The authority is very meagre in our Courts, but what little there is seems to be that a minor who makes a false representation as to his age is not protected by his minority from responsibility’. McGregor J (at 101–4) gave a fuller account of the old authorities but came to the same conclusion. Thus, the minor was held liable on the contract. 111   Fouche v Battenhausen & Co (1939) CPD 228. At 233–34 Davis J considered the rule that a minor was bound by a fraudulently induced contract, but found that the contract had in fact been ratified by the minor’s father. Thus, restitutio in integrum was necessary in order to absolve the minor of his duty to perform, and in this context Davis J held that this remedy was precluded by the minor’s fraud. 112  Voet, Ad Pandectas 27.9 n 13. 113   Louw v MJ & H Trust, n 106 above, 273–74. See further Donaldson, Minors, n 33 above, 32–33. 114   In particular, Van Leeuwen, Censura Forensis 1.4.43.7; Voet, Ad Pandectas 4.4 n 43; Fouche v Battenhausen, n 111 above. According to Voet, ‘restitution on this ground of minority is denied . . .



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cluded from claiming restitutio in integrum does not mean that his contract binds him because of his fraud, and that it can be enforced against him’.115 This meant that although the plaintiff could not be held liable for damages for breach, he was also unable to succeed in his restitutionary claim.116 According to the RomanDutch authorities considered, as well as the judgment in Fouche v Battenhausen, Eloff J held, the effect of the minor’s fraud was to prevent him from obtaining any restitutionary relief.117 In denying the respondent’s counter-claim and overruling the old cases, Eloff J was obviously correct.118 The rule that a minor is bound by a fraudulently induced contract even where unassisted is supported neither by the old authorities of Roman-Dutch law nor by the English law referred to in some of the old cases, such as Auret v Hind119 and Pleat v Van Staden.120 It is now clearly established in modern South African law that the contract of an unassisted minor is inherently [w]hen he has fraudulently stated that he is a major to the person with whom he was contracting’. This rule is based on a rescript of Diocletian and Maximian preserved in Justinian, Code 2.42(43).2 and 3 pr. 115   Louw v MJ & H Trust, n 106 above, 272. 116   At 274. 117  ibid. 118   This aspect of the decision accords with the view expressed by Wessels, Law of Contract, n 31 above, vol 1, para 830 ff and Donaldson, Minors, n 33 above, 27–33, upon both of which Eloff J expressly relied, as well as that of the writers cited in Van Heerden et al, Boberg’s Law of Persons, n 54 above, 819–20 n 179. Eloff J rejected (at 273–74) the contrary view expressed in JC De Wet and JP Yeats, Die Suid-Afrikaanse Kontraktereg en Handelsreg, 3rd edn (Durban, Butterworths, 1964) 54, but this view continues to be propounded in the latest edition of this work: JC De Wet and AH Van Wyk, Die Suid-Afrikaanse Kontraktereg en Handelsreg, 5th edn (Durban, Butterworths, 1992) 63. See also the authorities cited by Van Heerden et al, Boberg’s Law of Persons, n 54 above, 818 n 177. 119   In his heads of argument, Solomon referred (at 288–89) to what appears to be the second edition of Pollock’s Principles of Contract in support of the rule that a minor is contractually bound where he has falsely represented himself to be of full age, provided that the plaintiff prove that he was deceived by the minor’s holding himself out to the public as a major. This rule was then affirmed by Shippard J at 294, although he found that no such false representation had been made. In fact, the relevant section of Pollock’s textbook claims only that, ‘[w]hen an infant has induced persons to deal with him by falsely representing himself as of full age, he incurs an obligation in equity, which however in the case of a contract is not an obligation to perform the contract, and must be carefully distinguished from it. Indeed, it is not a contractual obligation at all. It is limited to [the principle that] “An infant shall not take advantage of his own fraud”’. See F Pollock, Principles of Contract at Law and in Equity, 2nd edn (London, Stevens and Sons, 1878) 56 and generally 56–57. 120   In this case McGregor J carried out a more detailed and accurate survey of nineteenth-century English law (at 103), stating that ‘[i]n English law [the minor’s] contract is in general, exceptis excipiendis, either absolutely void, or unenforceable against him, but as Sir Frederic Pollock puts it (Contract, p. 55) “one who has represented himself of full age is . . . liable to restore any advantage he has obtained by such representations to the person from whom he has obtained it” (p 32)’. This passage is drawn from the first edition of Pollock’s work, the general statement appearing at 33 and a more detailed treatment of the question at 54–56. The English cases McGregor J cites here include (at 103) R Leslie Ltd v Sheill [1914] 3 KB 607, where Lord Sumner held (at 618) that ‘the whole current of decisions down to 1913, apart from dicta which are inconclusive, went to shew that, when an infant obtained an advantage by falsely stating himself to be of full age, equity demanded him to restore his ill-gotten gains, or to release the party deceived from obligations or acts in law induced by the fraud, but scrupulously stopped short of enforcing against him a contractual obligation, entered into while he was an infant, even by means of a fraud’. McGregor J concluded at 103–4 that he was absolved from further inquiry into English law because the Roman-Dutch authorities seemed already to cover the point. For the position in modern English law see, eg, Peel, Treitel on the Law of Contract, n 58 above, 566–86, especially 583 ff, on the effects of fraud on restitutionary clams.

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unenforceable against him, even when fraudulently induced.121 On the other hand, in denying the appellant’s restitutionary claim on the basis of his fraudulent mis­ representation, Eloff J implicitly associated himself with a particular conception of restitutio in integrum, namely, one in terms of which this extraordinary, equitable remedy is granted only to a deserving petitioner. As we have seen, in Baddeley v Clarke and Grand Prix Motors v Swart, a minor who had performed in terms of an unassisted contract was allowed an action to recover his performance. Although the nature of the action was not specified in either case, it appears that this remedy was conceived of as an instance of restitutio in integrum. However, in the Louw case Eloff J not only explicitly labelled the minor’s restitutionary claim an instance of restitutio in integrum but also took the view that this remedy would be awarded only where the equities favoured the minor. Where the minor had himself fraudulently induced the putative contract, he did not deserve the benefit of this equitable relief.122 This is a conception of the remedy which belongs in Roman-Dutch law rather than in the modern law of South Africa.123 Finally, it should be noted that section 89 of the National Credit Act 34 of 2005 now deems unlawful all consumer credit agreements (a category which includes hire-­ purchase agreements) entered into by unassisted minors.124 In respect of such contracts the Act has introduced a statutory restitutionary regime in terms of which the minor recovers any money paid (with interest from the date of payment), while all rights of the credit provider to recover money paid or goods delivered under the contract are cancelled or, if the court concludes that doing so in the circumstances would unjustly enrich the consumer, forfeit to the State.125 This restitutionary regime strongly resembles the common law claim to recover money or property transferred in terms of an illegal agreement (condictio ob turpem vel iniustam causam), subject to the operation of the par delictum rule.126 However, section 89(3)(a) expressly exempts from the scope of the section those cases in which the consumer (ie, minor) has fraudulently represented to the credit 121   eg Van Heerden et al, Boberg’s Law of Persons, n 54 above, 817–19; Davel and Boezaart, Law of Persons, n 78 above, 82. 122   For further criticism of this aspect of the decision see Van Heerden et al, Boberg’s Law of Persons, n 54 above, 821–22 and Davel and Boezaart, Law of Persons, n 78 above, 82–83. Here again, Van Heerden et al take the view that the minor’s claim is a condictio, and that therefore ‘the only basis for rejecting it would have been a finding that the contract was binding on the minor, or that the other party had a valid claim for enrichment or delictual damages against him’. 123   See further Donaldson, Minors, n 33 above, 28–29: in Roman law, ‘[t]his equitable remedy [ie, restitutio in integrum] was not granted as of right, but only when all the circumstances of the case warranted it (D 4.1.3). It was accordingly refused when the minor was not worthy’. As for Roman-Dutch law, ‘as has already been seen, it was frequently the practice for minors on being sued on contracts ipso iure void to make application for restitutio in integrum, although strictly speaking this was not necessary. Though restitution was obtained by means of a special petition, the matter was usually referred back to the ordinary courts to be determined . . . If in such a case the minor had misrepresented his age the Court would certainly refuse the extraordinary remedy’. However, in modern South African law ‘[a]n action for restitution may be brought in the same way as any other civil action’. 124   National Credit Act 34 of 2005, s 89(2)(a). 125   ibid s 89(5). But see now National Credit Regulator v Opperman and others [2012] ZACC 29, 2013 (2) SA 1 (cc). 126   See Visser, Unjustified Enrichment, n 2 above, ch 7.



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provider (ie, the major) that he had legal capacity to contract. This means that the common law is still the only regulatory regime governing fraudulently-induced contracts. In such cases, Louw v MJ & H Trust still applies in its entirety: the consumer contract is void but the minor cannot obtain restitution.

C Analysis Despite the placement of certain texts dealing with the restitution of minor’s payments in D 12.6, the Digest title concerning the condictio indebiti, and the perpetuation of this characterisation of the action in the Roman-Dutch sources, there is in fact little evidence that in modern South African law a minor’s claim to recover performance under an unassisted contract is analysed as an instance of the condictio indebiti. On the other hand, there is support in the Roman and Roman-Dutch sources and in certain early cases for the proposition that minors are incapable of transferring even movable property without assistance. This leads to the conclusion that the minor’s claim is, in essence, vindicatory, or, in the case of mixed money, an instance of the residual condictio sine causa specialis.127 But in fact the support for this view in modern South African law is scanty. What authority there is suggests that the minor’s claim is an instance of restitutio in integrum on grounds of minority. The application of this remedy to the restitution of minors’ unassisted transfers has two main implications. First, as restitutio in integrum is applied equally to the rescission of contracts which are valid but voidable at the minor’s instance and to the restitution of performance rendered under contracts which are void ab initio, it appears that the South African courts have adopted a unified approach to the restitution of minors’ transfers. In other words, not only is the restitutionary response employed in each case the same; the circumstances giving rise to a right to rescind an assisted contract (and recover performance rendered under it) are the same as those giving rise to a claim in respect of performance rendered under an unassisted (void) contract. Secondly, it follows from the South African courts’ choice of remedy in such cases that the minor’s claim in respect of performance rendered under an unassisted (void) contract is understood to arise directly from the fact of his minority, rather than from the invalidity of the contract. In other words, the explanation for restitution is to be found in the plaintiff’s minority itself: in the minor’s lack of adult judgement and experience and, at a higher level of generality, in the vitiation of his intention in making the transfer.128 The absence   De Vos, Verrykingsaanspreeklikheid, n 4 above, 31–32 (especially n 23), 95, 183.   cf the analysis of minority as an unjust factor in English law by contemporary theorists, especially P Birks, An Introduction to the Law of Restitution (Oxford, Clarendon Press, 1985) 216–18; G Virgo, The Principles of the Law of Restitution, 2nd edn (Oxford, Oxford University Press, 2006) 387– 88, 392–96; A Burrows, The Law of Restitution, 3rd edn (Oxford, Oxford University Press, 2011) 311–14. Virgo raises also the alternative possibility that minority is a species of policy-motivated unjust factor, founded on a policy of protecting incapacitated people from the consequences of their actions: Law of Restitution 387–88. Note, however, that in English law a minor may recover his performance under an invalidated transaction only in the event of a total failure of consideration: Virgo, The Principles of the Law of Restitution, n 128 above, 394–96; Burrows, The Law of Restitution, n 128 above, 312–14. 127 128

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of a relationship of indebtedness between the parties – or, to put the proposition in more abstract terms, in the absence of a legal ground for the transfer – appears to be less analytically significant. However, the law as it currently stands is vulnerable to the following criticism. In fact the transferor’s minority is not in itself sufficient to generate his restitutionary claim. It appears also to be a requirement for recovery that the balance of equities favours the minor: in particular, he must be free of the taint of fraud. Like the excusable mistake requirement in the context of mistake and the protest requirement in the context of compulsion, the rule that restitution is blocked by fraud on the part of the minor appears to be derived from a particular conception of the minor’s restitutionary claim. It seems that in Louw v MJ & H Trust, the court was drawing directly on the Roman-Dutch conception of restitutio in integrum as an extraordinary, equitable, discretionary remedy, in terms of which a plaintiff may recover only if he deserves relief. But as I have argued in the context of the excusable mistake and protest requirements, this conception of the unassisted minor’s restitutionary claim is mistaken. There is, of course, no separate equitable jurisdiction in South African law, comprising equitable forms of action, as there was in classical Roman law and indeed in Roman-Dutch law. In Tjollo Ateljees (Eins) Bpk v Small in 1949, Hoexter AJA expressly listed Wood v Davies as one of the surviving instances of restitutio in integrum as a ‘cause’ in South African law.129 This is to be contrasted with the approach taken by Van den Heever JA in the same case, for whom restitutio in integrum in modern law referred merely to the restitutionary process itself, the question of the circumstances under which a contract may be avoided having been separated from the remedy and allocated instead to the substantive law regarding duress, minority etc.130 Just as the question of the validity of minors’ contracts now falls to be decided according to the substantive doctrines of the law of contract, so the claim of a minor seeking to recover performance under a void contract must be explicable in terms of the minor’s substantive cause of action. In the absence of any contractual or delictual explanation, that cause of action must be found in the enrichment of the other party to the contract. It should not be necessary for recovery in enrichment that the plaintiff demonstrate unconscionable behaviour on the part of the recipient, nor should wrongdoing on his part necessarily preclude his claim. The rule that restitution is precluded where an unassisted minor has represented himself to be a major appears to reflect the older conception of restitutio in integrum present in Roman-Dutch law, in terms of which the issues of contractual validity, restitutionary cause of action and response are conflated in the form of an extraordinary, equitable remedy. 129   Tjollo Ateljees (Eins) Bpk v Small 1949 (1) SA 856 (A) 879: ‘The simple question, therefore, is whether according to our law an action for restitutio in integrum is a civil cause. There can be no doubt that our courts have never considered even the possibility of answering that question in the negative’. 130   At 871–72: ‘I am not at all sure that there is room for restitutio in the developed law or that the remedy is useful today . . . The notion of restitution is meaningless apart from the Roman dualistic system in which ius and aequitas could stand poles apart . . . We do not petition for restitutio in integrum to relieve us from the obligations induced by fear, force or fraud. We raise these negations of free volition as direct defences or causes of action. The duality of Roman law has ceased to exist’. cf Chapter 1 at V.



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Thus, just as the excusable mistake requirement fails to conform to any principled explanation for the cause of action to which it attaches, requiring instead to be defended purely on grounds of legal policy, so it seems that the rule in Louw v MJ & H Trust ought to be retained only if serves some useful purpose. But in fact the rule is exceptionally difficult to defend on this basis. Like the now-rejected rule that a minor remains liable on a contract which he himself has fraudulently induced, the rule that restitution of performance under an unassisted contract is precluded by fraud on the part of the minor appears to leave the minor vulnerable to his own immaturity and lack of judgement: that is, to precisely those qualities against which the law regulating minors’ contracts seeks to protect him.

IV  Restitution of Ultra Vires Transfers A Introduction Thus far, the exclusive focus of this chapter has been transfers by minors. But South African law recognises also an additional class of similar cases, namely, those in which a transfer has been made ultra vires by either a natural or a juristic person. Cases of this kind were not of course considered in the Roman or RomanDutch sources, either as an instance of the condictio or under the rubric of restitutio in integrum. However, in modern law the claim has been specifically identified as a condictio indebiti, although as in the case of minors’ transfers the condictio sine causa has also been proposed. In this section I consider two different factual configurations represented in twentieth-century South African case law, before examining the impact of the definitive decision of the Appellate Division in Bowman, De Wet and Du Plessis NNO v Fidelity Bank Ltd.131

B  Twentieth Century (i)  Obligation Invalid Because Ultra Vires, Transfer Effective The first instance in which the analogy between minority and other species of incapacity appears to have been expressly drawn is in Amalgamated Society of Woodworkers of SA v Die 1963 Ambagsaalvereniging, a decision of the Transvaal Provincial Division in 1967.132 The key facts were, first, that the second plaintiff, a common law universitas consisting of a number of trade unions, including the first plaintiff, had made a payment of R16,218 to the defendant, a body set up specifically to receive a portion of the proceeds of the sale of certain immovable property belonging to the second plaintiff;133 and secondly, that this payment, as   Bowman, De Wet and Du Plessis NNO v Fidelity Bank Ltd [1996] ZASCA 141, 1997 (2) SA 35 (A).   Amalgamated Society of Woodworkers of SA v Die 1963 Ambagsaalvereniging 1967 (1) SA 586 (T). 133  At 590–94. 131 132

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a donation, was ultra vires the powers of the second plaintiff and therefore void ab initio.134 The second plaintiff now sought to recover that amount from the defendant. First, De Vos J dismissed the possibility that the claim was a vindicatory one. The second plaintiff was held to have transferred ownership in the money to the defendant on delivery, and thus the ultra vires nature of the purported donation had no effect on the validity of the transfer.135 This stands in contrast to the position of the unassisted minor, whose incapacity theoretically extends to the transfer of ownership.136 In any event, once the money was paid over it became unidentifiable and ownership, if any, lost through mixing.137 In considering whether a claim in enrichment lay to recover the money paid, De Vos J discussed Lodge v Modern Motors Ltd,138 a decision of the High Court of Southern Rhodesia (as Zimbabwe was then called) which concerned a hire-­ purchase contract in terms of which Modern Motors had made a vehicle available and Lodge had paid a deposit and several instalments which he now sought to reclaim, relying on the defendant’s enrichment. Modern Motors pleaded in reply that Lodge had been enriched at Modern Motors’ expense by virtue of his use of the car, to which Lodge in turn excepted. Young J held that the parties’ contract was invalid (although not, it was found, illegal)139 in terms of the applicable legislation:140 he referred to it as ‘ultra vires’, relying on Sinclair v Brougham.141 Thus, Young J drew a rather imprecise analogy between the claim by Modern Motors in respect of Lodge’s enrichment and the claim against an unassisted minor to recover surviving enrichment recognised by the South African common law, as discussed in Edelstein v Edelstein NO: ‘I can see no reason why, in an ultra vires transaction under s 6 of the Hire Purchase Act 1945, the rule evolved in relation to other ultra vires transactions e.g. by minors, should not apply’.142 Referring to these aspects of the Lodge decision, De Vos J observed that: This present case is perhaps even a closer analogy to the case of a minor purporting to act in a transaction which in reality falls beyond his capacity. The position of a minor acting without the assistance or consent of his guardian is analogous to the case of a corporate body acting beyond its powers. The capacities of both are limited, in the one case by reasons of age, in the other by the terms of its constitution or memorandum.143

Concerning the restitution of performance tendered by such a person of limited capacity, he went on to hold that:   At 594–95.   At 596. 136   See II(C), III(B) above. 137  At 596. 138   Lodge v Modern Motors Ltd 1957 (4) SA 103 (SR). See also the reference to Crispette and Candy Co, Ltd v Michaelis, NQ and Michaelis, NO 1948 (1) SA 404 (W). 139   Lodge v Modern Motors, n 138 above, 114. 140   Hire Purchase Act 1945 of Southern Rhodesia. 141   Sinclair v Brougham [1914] AC 398. See Lodge v Modern Motors, n 138 above, 114–18. 142   Lodge v Modern Motors, n 138 above, 119. 143   Amalgamated Society of Woodworkers, n 132 above, 596–97. 134 135



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The minor, having paid in terms of a contract entered into without the consent of his guardian, would clearly be able to recover from the payee what he had paid [here De Vos J cited, inter alia, Grotius, Inleydinge 3.30.11, which refers to the condictio indebiti].144 It seems to me, therefore, that, by an application of the principles governing a claim of a minor to recover what had been paid in terms of an ultra vires transaction, the second plaintiff, having acted as a body corporate outside the powers laid down by its constitution, can claim repayment of the money it paid defendant in terms of the purported donation.145

Finally, De Vos J noted the point raised by counsel for the defendant, namely, that the second plaintiff’s payment had not been made while labouring under a mistaken view of the facts. Instead, all the parties were labouring under the same mistake as to the second plaintiff’s capacity, which was of course a mistake of law.146 However, De Vos J responded that this objection was irrelevant: the only relevant consideration was that the second plaintiff had acted ultra vires in making the payment.147 Thus, the second plaintiff’s claim, a condictio indebiti, succeeded.148 Mistake was expressly excluded as the basis of this claim. Rather, the action was founded upon the plaintiff’s lack of capacity, on analogy with a minor’s claim to recover performance rendered under an unassisted contract. The second plaintiff’s incapacity owing to the operation of the ultra vires doctrine served both as the factor invalidating the purported donation and as the reason for the restitution of the plaintiff’s transfer.

(ii)  Obligation Valid, Transfer Ineffective Because Ultra Vires Amalgamated Society of Woodworkers concerned a contract of donation which was void because ultra vires: the payment which the second defendant sought to recover had been made in execution of that contract. A variant situation is that in which a transfer has been made in discharge of a valid obligation, and the transferor now seeks to attack the validity of the transfer itself, on the basis that it was made ultra vires the powers of the transferor. This is a situation clearly rather remote from the core application of the condictio indebiti, which lies to recover transfers made in discharge of a non-existent liability. An early case dealing with such a claim is Van Wijk’s Trustee v African Banking Corp,149 in which the trustee of a deceased’s estate which had been declared 144   De Vos J cited also Wessels, Law of Contract, n 31 above, vol 2, para 3673, in terms of which ‘A minor, prodigal or lunatic is not considered in law to have the capacity of making a voluntary payment and therefore they can recover back money paid on account of a natural obligation’. 145   Amalgamated Society of Woodworkers, n 132 above, 597. 146  At 595. 147   At 597: ‘In any event the ratio behind the requirement that there should be a mistake of fact when claiming in terms of the condictio indebiti seemed to have been that if payment were made with full knowledge of all the relevant facts, an intention to donate would be presumed . . . This would, however, hardly assist here, for that is precisely the point: that neither a minor nor, in the instant case, the second plaintiff, has the legal capacity to make a donation’. 148   At 597. 149   Van Wijk’s Trustee v African Banking Corp 1912 TPD 44, 57 (judgment of Curlewis J).

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insolvent sought to recover the balance of the amount paid out in respect of a merely concurrent claim treated as preferent by the executrix, certain preferent claims also having been treated as concurrent. After a detailed discussion of the Roman and Roman-Dutch law concerning claims against overpaid creditors, both by heirs, executors and trustees and by other creditors, De Villiers JP concluded: If in violation of his duty an heir or executor pays a creditor whose claim should have been postponed, it does not appear to me to be contrary to any principle of our law if under such circumstances the estate, through the executor or the trustee, is given the right to recover back what has been improperly paid by way of a condictio quasi indebiti.150

Curlewis J provided a slightly fuller explanation for the claim: The improperly paid creditor cannot repel [the executor] by the plea that the condictio indebiti does not lie, because though such creditor had a just and lawful claim against the estate, he could not enforce it and claim payment . . . the executor is not obliged, and indeed is not permitted, to pay him until the preferent creditor has been satisfied to the extent of his preference.151

A similar case arose in CCA Little & Sons v Liquidator R Cumming (Pvt) Ltd (In Liquidation),152 another decision of what was then the High Court of Southern Rhodesia. Here, a company had made certain payments to the plaintiff with whom it had entered into a contract for the provision of building services; during the term of the contract the company was placed under judicial management, the judicial manager electing to continue the contract. Subsequently, the plaintiff sued the defendant liquidator for a certain amount agreed to be outstanding on the contract; however the defendant attempted to set off against that sum an almost equivalent amount paid to the plaintiff in respect of services performed before the date of the provisional order of judicial management, alleging that this amount had been wrongly paid in that it had had the effect of preferring the plaintiff above other creditors. The plaintiff excepted to the defendant’s plea, hence these proceedings. Having considered the relevant legislation, Hathorn J concluded that the only payments that could validly be made by or on behalf of the judicial manager after the date of the order were those properly made in terms of the law relating to insolvency.153 The payments to the plaintiff were thus prohibited by law and therefore null and void.154 The question then arose whether the defendant’s remedy in respect of the payments was the condictio indebiti or the condictio sine causa.155 Assuming that the obligation to the plaintiff was a valid one 150   At 52–53. In support of this proposition De Villiers JP cited Watson’s Executor v Watson’s Heirs (1891) 8 SC 283, in which an executor who had paid out the inheritance to the heirs in ignorance of certain claims against the estate was permitted to recover. 151   At 57. 152   Little & Sons v Liquidator R Cumming (Pvt) Ltd (In Liquidation) 1964 (2) SA 684 (SR). 153   At 690–91. 154   At 691. 155  ibid.



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but the payment to discharge it was not, it seemed that the claim could not be characterised as an instance of the condictio indebiti.156 Rather, because the payment was made at a time when it was prohibited by law, the defendant’s remedy was the condictio sine causa (stricto sensu).157 Finally, in Rulten NO v Herald Industries (Pty) Ltd,158 a decision of the Durban and Coast Local Division in 1982, the debt in satisfaction of which the contested payment was made was once again valid. The plaintiff, trustee in an insolvent estate, sued to recover an amount representing the difference between the sum which the defendant would have received as a concurrent creditor and the full extent of the defendant’s claim, the latter amount having been paid out to him by the plaintiff trustee in the mistaken belief that his claim was a preferent one. At the beginning of argument the parties were agreed that the claim was appropriately characterised as a condictio indebiti, and that it required proof of mistake. However, as in the Amalgamated Society of Woodworkers case, the objection was raised that the trustee’s mistake had been one of law. Moreover, even if this hurdle could be cleared, there remained the fact that the amount paid had indeed been owing; the debt was merely unenforceable to the extent that it exceeded the amount of the dividends subsequently declared. Regarding the first difficulty, Booysen J remarked that while mistake of law generally acted as a bar to the condictio indebiti, this was not invariably the case. Further: It is, I consider, also clear that it is not applicable in the case of certain persons of limited legal capacity such as minors acting without the assistance of their guardians and a company whose officers have on its behalf acted beyond its powers as laid down in its memorandum or articles [in support of this proposition he cited the Amalgamated Society of Woodworkers case].159

Moreover, there were sound reasons to include trustees in the position of the plaintiff within the class of those exempt from the operation of the mistake of law rule.160 The recognition of a preference which did not exist would be beyond the powers of a trustee in an insolvent estate, just as the payment in the Amalgamated Society of Woodworkers case had been beyond the powers of the plaintiff, a corpor­ ate entity.161 As for the second issue, the fact that the ultra vires payment had technically been owing, again Booysen J relied on an analogy with the position of an unassisted minor. He characterised the claim against the insolvent estate as a natural  ibid.  ibid. 158   Rulten NO v Herald Industries (Pty) Ltd 1982 (3) SA 600 (D). 159   At 607. 160   At 608. Unlike the executor in a deceased estate who according to the common law was subject to the mistake of law rule in the same way as any other person (see, eg, Estate Delponte v Barnes 1910 CPD 118), a trustee’s legal capacity was limited. Booysen J contrasted the common law position with the claim provided under s 50 of the Administration of Estates Act 66 of 1965. 161   At 609. Booysen J cited Ward v Barrett NO 1963 (2) SA 546 (A) in support of this proposition. 156 157

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obligation, like the natural obligation generated by the unassisted contract of a minor.162 If indeed a minor could recover a payment made in performance of that natural obligation, he went on, it followed that the trustee in this case could likewise recover the payment which he had made.163 However, even if the extended condictio indebiti was not available in this case – if the analogy with minors’ payments did not hold – the plaintiff’s claim might alternatively be classified as an instance of the condictio sine causa specialis, inter alia, ‘because it is the appropriate condictio in cases of payments made ultra vires’ (here he cited the Little case).164 As in the Van Wijk and Little cases, the conclusion reached in the Rulten case – that the restitutionary claim was available regardless of the existence of a valid obligation – is rather sparsely substantiated. Nor is terminology used consistently, the claim in question being referred to variously as a condictio quasi indebiti, a condictio sine causa specialis and a condictio indebiti. However, terminology aside, it appears that the best explanation for the outcomes in these three decisions is that the purported transfer in each case having been wholly ineffectual, ownership in the money did not in fact pass to the recipients on delivery, an analysis which echoes that applied to minors’ claims by certain Roman and Roman-Dutch authorities.165 Thus, the claim of the plaintiff in this position appears to arise from the mixing of the plaintiff’s money in the hands of the defendant, rather than from the transfer itself. The claim to recover this money should therefore properly be characterised as a condictio sine causa specialis, according to the analysis proposed by Professor De Vos.166

C  Bowman, De Wet and Du Plessis NNO v Fidelity Bank Ltd It appears that twentieth-century South African law evolved two distinct ways of conceptualising the claim for the recovery of ultra vires transfers: first, as a standard condictio indebiti in respect of a valid transfer; secondly, as a condictio sine causa specialis arising from the mixing of the plaintiff’s money in the hands of the defendant subsequent to an ultra vires and therefore ineffective transfer. Whereas the former claim depends on a finding that the obligation underlying the transfer is ultra vires and therefore void, the second lies even where the obligation underlying the transfer is valid. Both echo a particular strand in the law regarding the restitution of transfers by unassisted minors.167 However, the decision in Bowman, De Wet and Du Plessis NNO v Fidelity Bank Ltd168 in 1996 has definitively charac  At 610. cf II(C) above.   At 610: ‘I consider that, where payment is made in discharge of a naturalis obligatio by a person with limited legal capacity beyond his powers or by a person who is by law given certain limited powers to act for the benefit of others acting beyond his powers, ie ultra vires, then such payment is recoverable to the extent of the payee’s consequent enrichment’. 164   At 610. Booysen J cited Little & Sons, n 152 above, 691. 165   See II(A) and (C) above. 166   De Vos, Verrykingsaanspreeklikheid, n 4 above, 31–32 (especially n 23), 95, 183. cf II(A) above. 167   See II(A) and (C) above, as well as III(B). 168   Bowman, De Wet and Du Plessis NNO v Fidelity Bank Ltd [1996] ZASCA 141, 1997 (2) SA 35 (A). 162 163



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terised the claim to recover payments ultra vires as an instance of the condictio indebiti, while at the same time clearly distinguishing it from the minor’s claim. The facts of Bowman differed significantly from those of the cases discussed above. As we have seen, the Amalgamated Society of Woodworkers case concerned a valid transfer in terms of a contract which was itself ultra vires the plaintiff’s powers, while the Van Wijk, Little and Rulten cases were all understood to involve an ultra vires transfer by a trustee purporting to discharge a valid obligation. The Bowman case, on the other hand, concerned the ultra vires payment by liquidators of a sum not owed. Mabula Lodge was a game farm, hotel and shareblock concern which experienced financial difficulties leading to the liquidation of Mabula Investments (Pty) Ltd and the sequestration of the estates of two individuals, Joubert Jnr and Snr, the driving force behind the Mabula Lodge enterprise. The first plaintiffs, joint liquidators of the company, together with the second and third plaintiffs (trustees of the Jouberts’ estates) had negotiated an agreement with the defendant, a secured creditor of all three, in terms of which the defendant would receive a net sum of R640,000 in respect of its secured claims from the proceeds of the sale of Mabula Lodge, the assets of which belonged to all three parties. This agreement enabled the trustees and liquidators to determine the minimum price for which they could sell Mabula Lodge. However, in response to a letter from the defendant’s attorneys, the first plaintiffs paid R960,000, a sum substantially in excess of the amount agreed and indeed in excess of the full amount of the defendant’s secured claims. When the plaintiffs, who were subsequently appointed receivers of the company, realised their mistake, they instituted action in the form of a condictio indebiti for the recovery of the balance of the overpayment, some R220,000, R100,000 having been previously refunded without explanation. The court a quo held that an ultra vires payment could not be reclaimed by means of the condictio indebiti, and granted absolution from the instance. Harms JA, giving the unanimous judgment of the Appellate Division, upheld the plaintiffs’ appeal. He held, first, that he would assume ‘for the sake of convenience’ that not only the overpayment but also the payment itself and indeed the agreement had been ultra vires:169 That leaves for consideration the question of whether a payment so made can be reclaimed with the condictio indebiti . . . I would have thought that an ultra vires payment represents a prime example for a payment indebite. Such payments are, by their very nature, payments of something not owing (‘onverskuldig’) by the payee . . . The point is in any event not a novel one and has been the subject of a number of judgments.170

Having reviewed the Van Wijk, Little, Amalgamated Society of Woodworkers and Rulten cases,171 Harms JA concluded that: 169   At 40. Harms JA did not explore the full implications of this assumption, because the plaintiffs sought to reclaim only their overpayment in terms of the agreement. 170  ibid. 171   Harms JA cited also Volkskas Beleggingskorporasie Bpk v Oranje Benefit Society 1978 (1) SA 45 (A) 59 and WP Koöperatief Bpk v Louw 1995 (4) SA 978 (C) 978.

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there is thus sufficient authority to the effect that an ultra vires payment can be reclaimed with the condictio indebiti or, at the very least, the condictio sine causa. There is nothing to the contrary and there is no reason to overrule the quoted cases. They make in this regard good sense.172

Next, he considered the question whether the plaintiffs had in fact shown that the amount paid had been an indebitum. ‘There can be hardly any doubt that the agreement between the parties provided for payment of R640 000 in respect of the defendant’s secured claims, and nothing more or less’.173 Yet it was argued by the defendant that since the amount payable in respect of the defendant’s unsecured claims had not been established, it had not been shown prima facie that the amount claimed was an indebitum: the amount overpaid might eventually be the same or less than the dividend. However, according to Harms JA: Dividends, if any, in an insolvent estate are . . . only due upon the confirmation of the accounts. Confirmation is thus in the nature of a suspensive condition . . . In terms of the scheme of arrangement, similar provisions applied. A debt subject to a suspensive condition is, also for purposes of the condictio indebiti, regarded as an indebitum and may be recovered thereby.174

Thus, he concluded that there had been sufficient evidence before the trial court to have justified a finding that the R220,000 claimed was an amount not owing to Fidelity.175 Finally, Harms JA posed the question whether the general rule relating to excusability of the error applied to claims such as the present one.176 In this respect Harms J relied on an analogy with the condictio indebiti accorded the executor of a deceased estate, both at common law and by statute,177 in respect of payments made or property delivered to heirs or creditors of the estate other than in accordance with the relevant provisions of the Administration of Estates Act.178 On the one hand, it seemed ‘eminently sensible’ to accept that where a person acting for the benefit of others had made an overpayment under a bona fide mistake as to his rights, he should not suffer for his mistake.179 On the other, the excusability of  At 42.   At 43. 174  At 43–44. 175  At 44. 176  ibid. 177   Administration of Estates Act 66 of 1965, s 50(b). See generally De Vos, Verrykingsaanspreeklikheid, n 4 above, 172 ff; Eiselen and Pienaar, Unjustified Enrichment, n 5 above, 130 ff Du Plessis, The South African Law of Unjustified Enrichment, n 3 above, 117–18. The executor’s claim appears to have been recognised for the first time in South African law in three decisions of the same year, Liquidators of Union Bank v Kiver, Widow and Executrix of Hofmeyr (1891) 9 SC 146, Liquidators of the Paarl Bank v Roux (1891) 8 SC 205 and Watson’s Executors v Watson’s Heirs (1891) 8 SC 283, all decisions of De Villiers CJ. 178   It was confirmed in Els NO v Jacob 1989 (4) SA 622 (SWA) that the statutory claim amounts merely to a codification of the common law action. See, eg, De Vos, Verrykingsaanspreeklikheid, n 4 above, 172 ff; Eiselen and Pienaar, Unjustified Enrichment, n 5 above, 130 ff. 179   Bowman, n 168 above, 44. Here Harms JA quoted Wessels, Law of Contract, n 31 above, vol 1, para 999. 172 173



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the error had not been a requirement of this extended form of the condictio indebiti in the ius commune: here, Harms JA referred to Daniël Visser’s account of a decision reported by the Roman-Dutch jurist Pauw.180 Finally, the decision of De Villiers CJ in Watson’s Executor v Watson’s Heir181 showed that the excusable mistake requirement did not apply to claims of this kind in South African law:182 De Villiers CJ found that, in an action by executors qua executors against heirs for recovery of their inheritance, the only question was whether the amount claimed was then due. Error in payment of the inheritance was not required for a successful claim and the absence of any reference to excusability had to follow as a matter of course. It is therefore understandable why this action has been referred to as a condictio quasi indebiti in Van Wijk. Once that is understood, it is unnecessary to introduce the complication of the condictio sine causa as was done in, for instance, Little and Rulten.183

Thus, it appears that Harms JA did not in fact limit himself to recognising the action of the executor or trustee as a species of exception to the excusability requirement.184 Rather, where a person acting for the benefit of others has made a payment which is ultra vires, proof of mistake itself is not required, and the issue of excusable mistake simply does not arise. Thus, the cause of action in cases of this kind is a distinct one, which arises not only from the absence of a relationship of indebtedness between the parties but also from the special fact that the transferor is someone acting for the benefit of others, within a narrowly-defined legal framework. Indeed, Harms JA made this clear when he started his account of the law by saying that ‘[t]he rules of the condictio are also not identical for all situations and there is scope for deviation, for instance where deceased or insolvent estates and the like are concerned’. Moreover, Harms JA was clear that the appropriate action here was the condictio indebiti. The alternative, the condictio sine causa specialis, had been introduced in the Little and Rulten cases merely in order to evade the mistake of law and excusable mistake requirements, a device unnecessary because no proof of mistake was required. In fact, it is unclear whether Harms JA’s understanding of the stimulus for the introduction of the condictio sine causa in these cases is correct. What led to its introduction was not the mistake of law rule or excusability requirement but rather the fact that the payments in question were understood to have been owed to the recipients – hence the need to explain restitution on the basis that the money paid had remained the property of the transferor, ownership being lost only on mixing. However, the decision in the Bowman case does indeed 180  Pauw, Observationes Tumultuariae Novae n 613: see DP Visser, ‘Error of Law and Mistaken Payments: a Milestone’ (1992) 109 South African LJ 177, 183. 181   Watson’s Executor v Watson’s Heirs (1891) 8 SC 283. 182   At 45. Moreover, Harms JA remarked that the statement in Estate Delponte v Barnes 1910 CPD 118, that in questions relating to the condictio indebiti an executor should stand in exactly the same position as any other person, was, as a general proposition, unsound. This was directly contrary to the view taken by Booysen J in Rulten, n 158 above, 608. 183   At 45. 184   This is Visser’s interpretation of the decision: DP Visser, ‘Unjustified Enrichment’ [1996] Annual Survey of South African Law 290–91; Unjustified Enrichment, n 2 above, 312–13.

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do away with the need for such circuitous reasoning, although for different reasons. According to the judgment of Harms JA, the only payments actually owed by an executor, trustee or liquidator are those made in accordance with the legal regime regulating the distribution of assets. Ultra vires payments are, by their very nature, payments not owed by the transferor. Thus, the payment in full of a concurrent claim as if it were a secured one, as in the Van Wijk and Rulten cases, is correctly understood as a payment indebitum. It follows that the condictio indebiti is indeed the appropriate action.

D Analysis The classification of the claim of a natural or juristic person in respect of a transfer made ultra vires as an instance of the condictio indebiti suggests an absence of legal ground analysis. However, in fact the limited capacity of such a person appears to provide an independent ground of recovery, analogous to minority. Whereas the limited capacity of minors both reflects and is intended to protect the minor against his own vulnerability and lack of judgement, the justification for the special treatment of ultra vires transfers by natural or juristic persons is the need to protect the interests of those for whose benefit the transferor acts: namely, creditors (in cases involving insolvency), shareholders and investors (in the case of a company), and beneficiaries under a will (in the case of a testamentary executor).185 Thus, whereas minority arguably belongs to the wider class of unjust factors flowing from vitiated intent, incapacity in the sense of the effects of the ultra vires doctrine is founded directly on this protective policy.186 The plaintiff’s juristic incapacity does not constitute a sufficient reason for restitution, but it is necessary, together with the absence of a relationship of indebtedness between the parties, to constitute the transferor’s claim in enrichment. It follows that juristic incapacity plays a similar role to mistake, compulsion and minority in the context of the condictio indebiti.

V Conclusion The conclusions reached in this chapter can be summarised as follows. There is authority in the Roman and Roman-Dutch sources for the view that the condictio 185   cf the English law regarding ultra vires payments by corporate bodies and public authorities: Birks, Introduction to the Law of Restitution, n 128 above, 308–9; Virgo, The Principles of the Law of Restitution, n 128 above, 387–88, 397–99; Burrows, The Law of Restitution, n 128 above, 517 and generally 517–20. 186   cf Chapter 1 at IV. Alternatively, Virgo raises the possibility that the restitution of ultra vires payments by a company be explained by reference to the total absence of intent, since the company is incapable of forming the necessary intent as a matter of law: The Principles of the Law of Restitution, n 128 above, 387.

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indebiti lies to recover money or goods transferred by a minor without the assist­ ance of his guardian. In such a case, the transferor’s minority replaces mistake as an essential element of liability, alongside the absence of a relationship of indebtedness. Alternatively, it has been argued that this claim ought to be analysed as an instance of the condictio sine causa specialis, arising from the mixing of the plaintiff’s money in the hands of the defendant subsequent to an ineffective transfer. Both views are widely accepted among South African legal theorists. Yet it seems that there is in fact no South African case in which either condictio has been applied to minors’ transfers. Rather, the remedy used is restitutio in integrum, both in cases where the contract is prima facie valid but voidable at the minor’s instance, and in cases in which the contract is void ab initio due to the absence of any assistance by the minor’s guardian. This reflects the con­ tinuation into South African law of a practice which had evolved in RomanDutch law, in terms of which restitutio in integrum, an extraordinary remedy granted on the basis of equitable considerations and at the court’s discretion, was applied in both situations in order to effect the restitution of any performance rendered. As in the case of both mistake and compulsion, the application of this remedy in South African law appears to have influenced profoundly the substantive elements of the minor’s claim. Whereas the condictio indebiti implies an analysis of the plaintiff’s claim in terms of which it is generated by the absence of a relationship of indebtedness between the parties, restitutio in integrum suggests one in terms of which the reason for restitution is the claimant’s minority: in particular, the vulnerability or disadvantage to which he is subject as a minor. Thus, as in the case of mistake and compulsion, the fact that restitutio in integrum has been applied to the restitution of minors’ transfers has tended to move South African law away from an absence of basis analysis towards one centred on unjust factors. Minority is certainly a necessary condition for restitution, and may even be a sufficient one. At the very least, it must be recognised that the restitution of minors’ payments in South African law is explicable only by an analysis which takes account of unjust factors. Indeed, restitutio in integrum appears partly to have retained its original Roman-Dutch character, in the sense that even in modern South African law it is sometimes implicitly regarded as an extraordinary remedy granted on the basis of equitable considerations. Thus, even in cases where the contract is void ab initio because unassisted, the minor cannot recover if he has somehow forfeited the court’s protection, for example, where he has fraudulently misrepresented himself to be a major. As in the case of mistake and compulsion, it is difficult to reconcile this conception of the minor’s claim with the view that restitution follows as of right, on the basis of the recipient’s unjust enrichment. If the rule that fraudulent misrepresentation precludes recovery is to be retained, it must be justified in terms of policy. It is difficult to imagine a convincing justification for a rule which fails to protect the minor against precisely the lack of judgement which underpins the restitutionary claim itself.

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Finally, the condictio indebiti has also been applied in entirely new circumstances, in the partly analogous case of transfers ultra vires. The absence of any historical precedent for the application of restitutio in integrum in such cases has presumably immunised this claim against its influence. As a result, this claim appears to be free of the equitable embellishments which characterise those enrichment claims historically associated with this remedy. Restitution is triggered solely by the ultra vires transfer of goods or money not owed. The reason for restitution in such cases is not, of course, precisely the same as that underlying the restitution of minors’ transfers, namely, minors’ lack of judgement and, more broadly, the impairment of their intention. Rather, according to the prevailing taxonomy in English law, it belongs to the third family of unjust factors, the category of reasons for restitution grounded in specific policies. Nevertheless, the analysis of enrichment by transfer upon which this claim rests is essentially similar to that which prevails in respect of mistake, compulsion and minority. It implies an analysis founded at least in part on specific unjust factors, rather than on a generalised absence of legal ground approach.

6 Theory: Unjust Factors or Absence of Legal Ground? I Introduction As we saw in Chapter 1, it is generally assumed that the South African law of enrichment by transfer presupposes an absence of legal ground analysis. In the case of mistaken transfers, for example, it is assumed that it is the absence of a valid legal obligation or other objectively-determined relationship of indebtedness supporting the transfer that renders it prima facie recoverable, rather than the plaintiff’s mistake. To the extent that South African law is inconsistent with this analysis, it has been subject to criticism; several attempts have been made to rationalise it; alternatively, discordant elements have simply been ignored. The way forward for South African law has almost universally been supposed to lie in the further development of an absence of legal ground analysis, and in particular, in the nearer approximation of the South African law of enrichment to the position which prevails in German law. However, as we saw in Chapters 2 to 5, this analysis of the modern South African law of enrichment is inadequate. It is admittedly the case that the absence of legal ground analysis is inherent in the action most often used to effect the restitution of transfers in South African law, namely, the condictio indebiti, the claim to recover what is not owed. But as a matter of fact the mechanism used to effect the restitution of transfers in South African law has frequently been the remedy of restitutio in integrum, not the condictio indebiti. Restitutio in integrum is granted on the basis of specific unjust factors such as mistake, compulsion and minority. It turns out that even in those cases where the condictio indebiti is nominally applied, restitutio in integrum has exerted a profound influence over the elements of this action. At least in part due to the influence of this remedy, South African law has evolved a mixed approach to enrichment by transfer in terms of which the courts consider both the presence of a specific reason for restitution or unjust factor and the absence of a legal ground underlying the transfer. It follows that an analysis which does not take account of unjust factors cannot adequately reflect the existing law, in that it cannot distinguish between different positive reasons for restitution. Nor does a pure absence of legal ground analysis permit the critical evaluation of some of the more puzzling features of the modern condictio indebiti,

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such as the excusable mistake requirement applied in the context of mistake. Only the frank embrace of unjust factors allows this. Yet it remains a distinct question whether the unjust factors approach is defensible in theoretical terms – whether it is internally coherent; whether it accurately reflects the real reasons for restitution in key cases – and whether it can be harmoniously combined with the absence of legal ground approach already inherent in South African law to produce a workable regime. This question is particularly pressing in light of recent developments in England: persuasive arguments in favour of a change of direction in English law – in favour of abandoning the unjust factors analysis for an absence of legal ground approach – have been raised by Professor Birks himself. If these arguments prove to be compelling in the South African context also, then it would surely be wise for the South African courts to abandon the line which they have been pursuing for more than a century – a mixed approach to unjust enrichment by transfer in terms of which unjust factors play a central role – and to pursue instead a pure absence of legal ground approach. On the other hand, if unjust factors do seem crucial to achieving a satisfactory analysis of enrichment by transfer, then there would seem to be a good reason to retain the current mixed analysis: to attempt to refine and develop the South African unjust factors, rather than treating them as imposters. Accordingly, this chapter assesses certain important arguments recently advanced against the unjust factors approach to enrichment by transfer, insofar as they are relevant to South African law. It focuses on the particular factual and legal complexes dealt with in Chapters 2, 3, 4 and 5 above: namely, the restitution on grounds of mistake, compulsion and minority and other species of juristic incapacity of performance rendered under void contracts and of extra-contractual transfers. I begin this chapter with an outline of the unjust factors analysis of enrichment by transfer as it is applied in modern English law. Next I give a brief account of the absence of legal ground approach: I discuss both the German law of unjustified enrichment and the version of the absence of legal ground approach recently proposed for English law by Birks. I then go on to consider the question which is at the heart of this chapter, namely, whether the unjust factors approach provides a satisfactory explanation for claims to recover enrichment by transfer, considering also the associated question of the reasons for the rise of unjust factors in South African law. Finally, I present my conclusions in this respect, and consider the validity of a mixed approach to unjust/ified enrichment.

II  Unjust Factors Analysis in English Law The genesis of unjust enrichment as a cause of action in English law can be traced back to the decision of Lord Mansfield in Moses v Macferlan.1 Here, it was held   Moses v Macferlan (1760) 2 Burr 1005.

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that the action for money had and received was an equitable action, founded in ‘natural justice’, to recover money which ‘ex aequo et bono’ the defendant ought to refund. All existing instances of liability2 could be subsumed under this general principle as cases where it would be unjust for the defendant to retain the benefit which he had received at the claimant’s expense. However, it was only with the publication in 1966 of the first edition of Goff and Jones’ The Law of Restitution3 that the theorisation of unjust enrichment really began. Here, the authors not only affirmed the subject’s independence from contract, but followed the American Restatement of the Law of Restitution4 in attempting to draw together ‘quasi-contractual’ claims and ‘other claims of different origin which are also founded on that principle’: that is, claims in equity as well as common law claims falling outside the scope of the quasi-contractual actions. In Lipkin Gorman v Karpnale Ltd 5 in 1991, the principle against unjust enrichment was at last formally recognised by the House of Lords, a step which ushered in a new phase in the development of this area of the law, as the recent marked increase in judicial activism since then shows.6 According to the prevailing consensus among modern writers, the principle against unjust enrichment finds expression at a lower level of generality in four ‘questions’: Has the defendant been enriched? Was the enrichment at the claimant’s expense? Was the enrichment unjust? Are there any defences upon which the defendant can rely?7 The question then arises as to the content of these various elements, particularly the notion of ‘unjust’. Even if one removes restitution for wrongs from the law of unjust enrichment, leaving only ‘autonomous’ unjust enrichment,8 the principle against unjust enrichment is still one that operates at an exceedingly high level of generality. Indeed, it is scarcely distinguishable from 2  These are listed as ‘mistake’, ‘a consideration which happens to fail’, ‘imposition’ (express or implied), ‘extortion’, ‘oppression’, or ‘an undue advantage taken of the plaintiff ’s situation, contrary to laws made for the protection of persons under those circumstances’. 3   Robert Goff and Gareth Jones, The Law of Restitution, 1st edn (London, Sweet & Maxwell, 1966). 4   Restatement of the Law of Restitution (American Law Institute, 1937). See W Seavey and A Scott, ‘Restitution’ (1938) 54 LQR 29. 5   Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548 (HL). 6   See, eg, Woolwich Equitable Building Society v IRC [1993] AC 70 (HL); Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669 (HL); Kleinwort Benson Ltd v Lincoln CC [1999] 2 AC 349 (HL); Deutsche Morgan Grenfell Group plc v IRC [2006] UKHL 49, [2007] 1 All ER 449 (HL); Test Claimants in the Franked Investment Income Litigation v Revenue and Customs Commissioners [2012] UKSC 19, [2012] 2 AC 337. 7   See, eg, G Virgo, The Principles of the Law of Restitution, 2nd edn (Oxford, Oxford University Press, 2006) 9; Lord Goff of Chieveley and G Jones, The Law of Restitution, 7th edn (London, Sweet & Maxwell, 2007) 16–17; A Burrows, E McKendrick and J Edelman, Cases and Materials on the Law of Restitution (Oxford, Oxford University Press, 2007) 71; A Burrows, The Law of Restitution, 3rd edn (Oxford, Oxford University Press, 2011) 27. See also the judicial recognition of these ‘questions’ in Banque Financière de la Cite v Parc (Battersea) Ltd [1999] 1 AC 221 (HL) 227 (Lord Steyn) and in subsequent cases. But cf the revised structure adopted in C Mitchell et al (eds), Goff and Jones: The Law of Unjust Enrichment, 8th edn (London, Sweet & Maxwell, 2011) para 1–09 and the justifying grounds listed in chs 2 and 3. 8   As argued by Peter Birks, ‘Misnomer’ in W Cornish et al (eds), Restitution: Past, Present and Future (Oxford, Hart Publishing, 1998) 1 and later in Unjust Enrichment, 2nd edn (Oxford, Clarendon Press, 2005).

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the purely moral principle that ‘no-one become richer by the loss and injury of another’.9 How, then, was the law to be systematised? In 1985 Peter Birks proposed a taxonomy in terms of which each individual ground of restitution or unjust factor is assigned to one of a number of categories, according to the nature of the reason for restitution upon which it relies.10 The secondary principles inherent in these categories mediate the very broad idea of unjust enrichment, in that they restate that idea at a lower level of generality. According to Birks’ original (1985) thesis, there were three categories of unjust factors.11 Of these categories, two survived in the mature theory: factors negativing voluntariness and policy-motivated factors.12 The first category reflects the idea that the impoverished party did not mean to transfer the benefit in question: that it was in some sense involuntary. Mistake, the subject matter of Chapters 2 and 3, occupies a central position within this family of unjust factors. It is axiomatic to the unjust factors approach that his mistake is itself the claimant’s cause of action. The impairment of his voluntariness in making the transfer is the reason why it must be returned. Admittedly, the defence of good consideration in particular plays an important role in safeguarding the integrity of valid contracts.13 But at least according to the classical account of the unjust factors approach, the existence of a contract, statutory obligation, judgment debt or other relationship of indebtedness underlying the transfer is in principle irrelevant to the existence of a cause of action in unjust enrichment.14 9   D 12.6.14 (Pomponius, On Sabinus, Book 21) and D 50.17.206 (Pomponius, Various Readings, Book 9) (Watson’s translation). 10   P Birks, An Introduction to the Law of Restitution (Oxford, Clarendon Press, 1985). 11   ibid ch 4. 12   The second category looked to the ‘unconscientious receipt’ of the benefit by the defendant, and it follows that the first two categories were, respectively, claimant- and defendant-sided. However, the defendant-sided unity later collapsed, following the demise of Birks’s theory of free acceptance. See in particular the criticisms advanced by Andrew Burrows, ‘Free Acceptance and the Law of Restitution’ (1988) 104 LQR 576 and The Law of Restitution 334–37. Also Virgo, The Principles of the Law of Restitution, n 7 above, 121–24. 13   According to Goff J in Barclays Bank Ltd v WJ Simms Son & Cooke (Southern) Ltd [1980] 1 QB 677, 695, ‘A payment is made for good consideration, in particular if money is paid to discharge, and does discharge, a debt owed to the payee (or a principal on whose behalf he is authorised to receive the payment) by the payer or a third party by whom he is authorised to discharge the debt’. See also (most recently) Test Claimants in the Franked Investment Income Litigation v Revenue and Customs Commissioners [2010] EWCA Civ 103, paras [175]–[184] and generally Virgo, The Principles of the Law of Restitution, n 7 above, 172–76, 667–72; Goff and Jones, Law of Restitution, n 7 above, ch 41. But cf Deutsche Morgan Grenfell plc v IRC [2006] UKHL 49, [2007] 1 AC 558. 14  But cf Burrows, The Law of Restitution, n 7 above, 88–91, especially 88–90: ‘Where the defendant is legally entitled to the enrichment – in the sense that that enrichment is owed to it by the claimant, under a valid legal obligation – there can normally be no liability to make restitution despite their being an unjust factor. The reason for this is that the prima facie injustice established by the unjust factor is normally outweighed by the fact that the defendant is legally entitled to the enrichment’. See also R Stevens, ‘Is there a Law of Unjust Enrichment?’ in S Degeling and J Edelman (eds), Unjust Enrichment in Commercial Law (Sydney, Thomson Reuters, 2008); G Virgo, ‘Demolishing the Pyramid: the Presence of Basis and Risk-Taking in the Law of Unjust Enrichment’ in A Robertson and Tang Hang Wu (eds), The Goals of Private Law (Oxford/Portland, OR, Hart Publishing, 2009); C Mitchell et al, Goff and Jones: The Law of Unjust Enrichment, n 7 above, para 1–09 and the discussion of justification grounds in chs 2 and 3.



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Other unjust factors falling within the sub-category of ‘impaired’ intent are compulsion (Chapter 4) and, for most theorists, personal disadvantage/human incapacity, which includes minority (Chapter 5).15 Here too, it is the compulsion or disadvantage itself which furnishes the reason for the restitution of the benefit. There are also cases of ‘no intent’ within the first category of unjust factors: for example, the unjust factor of ignorance belongs here,16 as arguably does juristic incapacity.17 And finally, there is ‘qualified’ intent: this sub-category contains the important unjust factor of failure of consideration, defined primarily as the failure of a promised counter-performance in return for the rendering of a benefit to the recipient, but comprising also the failure of a non-promissory condition as to the future.18 By contrast, the third category – policy-motivated unjust factors – contains cases where restitution is independent of any involuntariness on the part of the claimant. This category comprises illegality as well as the exaction of money ultra vires, recognised as a new unjust factor in Woolwich Equitable Building Society v Inland Revenue Commissioners:19 the principle of legality itself required that money exacted ultra vires be restored.20 Andrew Burrows assigns also ultra vires payments by a public authority (a species of juristic incapacity) to this category.21 More recently, however, Birks has recanted his first taxonomy and proposed instead a new one, much closer to the absence of legal ground approach characteristic of German law.22 This change of direction was prompted in part by the swaps cases of the 1990s, in particular the decision of the House of Lords in Kleinwort Benson Ltd v Lincoln CC.23 Birks was also strongly influenced by the work of the German theorist Sonja Meier.24 Birks concluded that the unjust factors approach had poor explanatory power in certain important cases of enrichment by transfer, and that it had effectively been abandoned by the English courts. His revised taxonomy of English law is described in the next section. 15   Regarding compulsion, see Birks, An Introduction to the Law of Restitution, n 10 above, 173–203; Virgo, The Principles of the Law of Restitution, n 7 above, ch 9. Regarding minority, see Birks, An Introduction to the Law of Restitution, n 10 above, 216–18 (part of the wider category of personal disadvantage, which in turn forms part of inequality); Burrows, The Law of Restitution, n 7 above, 311–14 (part of the wider category of human incapacity). cf Virgo, The Principles of the Law of Restitution, 387. 16  Virgo, The Principles of the Law of Restitution, n 7 above, ch 7; Burrows, The Law of Restitution, n 7 above, ch 10. 17  Virgo, The Principles of the Law of Restitution, n 7 above, 387, 397–99. 18  Birks, An Introduction to the Law of Restitution, n 10 above, ch 7; Virgo, Principles of the Law of Restitution, n 7 above, ch 12; Burrows, The Law of Restitution, n 7 above, ch 14. 19   Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70 (HL). 20  Burrows, Law of Restitution, n 7 above, ch 20. 21  ibid 517–20. See Chapter 5 at IV(D). 22   P Birks, Unjust Enrichment, n 8 above. 23   Kleinwort Benson Ltd v Lincoln CC [1999] 2 AC 349 (HL). 24   See (in English) S Meier and R Zimmermann, ‘Judicial Development of the Law, Error Iuris and the Law of Unjustified Enrichment: a View from Germany’ (1999) 115 LQR 556; S Meier, ‘Restitution After Executed Void Contracts’ in P Birks and F Rose (eds), Lessons of the Swaps Litigation (London, Mansfield Press, 2000) 168; ‘Unjust Factors and Legal Grounds’ in D Johnston and R Zimmermann (eds), Unjustified Enrichment: Key Issues in Comparative Perspective (Cambridge, Cambridge University Press, 2002) 37.

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III  Absence of Legal Ground Analysis A  German Law Like South African law, the German law of enrichment developed from the European common law, the ius commune. It inherited from Roman law a range of casuistically-determined enrichment actions, the most prominent of which were the condictiones. But unlike the uncodified condictiones of the ius commune, the first sentence of § 812(1) of the German Civil Code operates at a high level of generality and abstraction. According to this general clause, ‘A person who obtains something by performance [Leistung] by another person or in another way at the expense of this person without legal ground is bound to give it up to him’.25 Thus, the first sentence of § 812(1) appears to constitute a single cause of action: a general enrichment action founded directly and exclusively on the absence of a legal ground, where ‘legal ground’ is understood primarily to denote a relationship of indebtedness between the parties or entitlement to the benefit on the part of the recipient.26 Rather than requiring positive reasons for restitution, on its face the general clause requires the return of every enrichment which cannot be justified. There is a fundamental presumption in favour of the return of enrichment. In fact, this account of the general provision in § 812 is rather over-­simplified. According to the so-called Wilburg/Von Caemmerer taxonomy, it is necessary to distinguish between enrichment by transfer and enrichment ‘in another way’.27 No general test can be formulated which captures the meaning of ‘legal ground’ outside the scope of enrichment by transfer.28 Instead, insofar as the general clause provides for the recovery of such enrichment, it must be understood to comprise multiple causes of action: the Eingriffskondiktion, for gains to the defendant arising from interference with or encroachment upon the rights of the plaintiff; the Verwendungskondiktion, for expenditure on another’s property not amounting to a Leistung; and the Rückgriffskondiktion, which lies where the plaintiff has discharged a debt owed by the defendant to a third party.29 25   The translation is G Dannemann’s: The German Law of Unjustified Enrichment and Restitution: a Comparative Introduction (Oxford, Oxford University Press, 2009) 308. 26  ibid 35–36. 27  See generally (in English) R Zimmermann and J Du Plessis, ‘Basic Features of the German Law of Unjustified Enrichment’ (1994) Restitution Law Review 14, 24–30; BS Markesinis, W Lorenz and G Dannemann, The German Law of Obligations, vol 1, The Law of Contract and Restitution (Oxford, Clarendon Press, 1997) 717–20; Thomas Krebs, Restitution at the Crossroads: a Comparative Study (London, Cavendish, 2001) 207–17; Dannemann, German Law of Unjustified Enrichment and Restitution, n 25 above, 21–25. 28   J Du Plessis, ‘Towards a Rational Structure of Liability for Unjustified Enrichment: Thoughts from Two Mixed Jurisdictions’ (2005) 122 South African Law Journal 142, 174. 29   See generally Zimmermann and Du Plessis, ‘Basic Features of the German Law of Unjustified Enrichment’, n 27 above; Markesinis et al, German Law of Obligations, n 27 above, 740–55; Dannemann, German Law of Unjustified Enrichment and Restitution, n 25 above, ch 5.



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On the other hand, in the case of enrichment by Leistung – performance – a degree of automatic restitution does seem to be achievable.30 The lesser enrichment condictiones of the ius commune – the condictio causa data causa non secuta or ob rem, condictio ob causam finitam and condictio ob turpem vel iniustam causam – are explicitly or implicitly embodied in §§ 812–822 BGB.31 However, it is the condictio indebiti, the claim for what is not owed, which lies behind the general provision in § 812(1). In this context the term ‘legal ground’ extends beyond enforceable claims to include also gifts and other transfers made gratuitously (donandi causa); transfers made ob rem, ie, against an agreed non-contractual reciprocation or other future event; contracts unenforceable for lack of form; gambling debts; prescribed debts.32 Yet it typically refers to a valid relationship of indebtedness33 between the transferor and the recipient. Restitution therefore frequently arises directly from the absence of such a relationship of indebtedness. It follows that the Leistungskondiktion operates particularly smoothly in the context of invalid contracts. Indeed, a key feature of the German law of unjustified enrichment is that it runs in tandem with the law of contract.34 In German law, contractual performance is analysed as a transfer in discharge of liability. Thus, restitution follows directly from contractual invalidity; there is no need to inquire into the reasons for such invalidity. Whether the contract is invalid because of some deficiency in one or both parties’ intent (for example, in cases of mistake) or whether it is invalid for reasons independent of intent (for example, where the contract is void because it is illegal), in either event the parties’ performance is recoverable because it lacks a legal ground to support it.35 The Leistungskondiktion also offers a ready explanation for the restitution of other transfers made in discharge of liability, such as transfers made in discharge of a liability imposed by statute. If there turns out to have been no relationship of 30   Zimmermann and Du Plessis, ‘Basic Features of the German Law of Unjustified Enrichment’, n 29 above, 24–28; Markesinis et al, German Law of Obligations 717–740; Dannemann, The German Law of Unjustified Enrichment and Restitution, n 25 above, ch 2, especially 37. 31   For example, the second sentence of s 812(1) contains separate formulations of both the condictio ob causam finitam and condictio causa data causa non secuta (also known as the condictio ob rem), while the condictio ob turpem vel iniustam causam is specifically dealt with in s 817. See Zimmermann and Du Plessis, ‘Basic Features of the German Law of Unjustified Enrichment’, n 27 above, 18–20; Dannemann, German Law of Unjustified Enrichment and Restitution, n 25 above, ch 3. 32  Markesinis et al, German Law of Obligations, n 27 above, 726–27; Dannemann, German Law of Unjustified Enrichment and Restitution, n 25 above, 37–44, 45–49. 33   The term ‘relationship of indebtedness’ is Jacques Du Plessis’s: see Du Plessis, ‘Towards a Rational Structure of Liability for Unjustified Enrichment’, n 28 above, 173–74. 34   See, eg, R Zimmermann, ‘Unjustified Enrichment: the Modern Civilian Approach’ (1995) 15 OJLS 403, 405–7; Markesinis et al, German Law of Obligations, n 27 above, 725–26. 35   Invalid contracts must, however, be distinguished from contracts which are subsequently termin­ ated, eg, for breach. The restitution of performance tendered under terminated contracts is generally regarded as a matter for the law of contract rather than the law of unjust enrichment, and is regulated not by s 812 BGB but by s 346. Two accounts in English are given by R Zimmermann, ‘Restitutio in Integrum: the Unwinding of Failed Contracts under the Principles of European Contract Law, the UNIDROIT Principles and the Avant-projet d’un Code Européen des Contrats’ (2005) 4 Uniform Law Review 719, 727–29; Dannemann, German Law of Unjustified Enrichment and Restitution, n 25 above, 60–74.

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indebtedness underlying the transfer after all, for example, because the statute was misconstrued, the transfer is prima facie recoverable. There are, however, certain defences to the Leistungskondiktion.36 Most importantly, according to § 814 BGB, ‘what has been performed for the purpose of fulfilling an obligation cannot be claimed back if the person who performed knew that he was not obliged to perform’.37 The burden of proving such knowledge rests on the defendant.38

B  Professor Birks’ analysis As we have already seen, in 2003 Birks recanted his first taxonomy of the English law of restitution, one based on unjust factors, and proposed instead a new taxonomy, much closer to the German position described above. This change of direction appears to have been prompted by a series of decisions handed down by the English superior courts in the mid- to late 1990s, the so-called ‘swaps’ litigation. Birks’ view was that these cases in themselves compelled the re-analysis of the restitution of unjust enrichment in English law in terms of an absence of legal ground analysis. In an interest swap, one party promises to pay the other a fixed rate of interest on a certain, notional sum of money at specified intervals for a fixed period, say 5 per cent of £5 million every quarter for five years. The other party promises to pay according to a floating interest rate determined by a formula. During the 1980s, swaps contracts became very popular with local authorities in the United Kingdom as a way of improving their short-term liquidity. In order to achieve this particular purpose, the swaps were set up in such a way that the other party, typically a merchant bank, paid a large sum of money up front, calculated according to the fixed rate. If the local authority ‘won’ on the swap – if the floating rate fell – it would end up paying back less than it had initially received. If the bank won – and they must have expected that they usually would – then the local authority would end up paying more. In fact, in many cases the swap contract operated in favour of the local authority: the merchant banks lost on the deal, in that they ended up making a net payment to the authorities. However, in Hazell v Hammersmith and Fulham LBC 39 it was held that these swap agreements were void, being beyond the authorities’ statutory powers as defined in the Local Government Act 1972. When it came to light that the agreements had been invalid all along – that their obligations to make 36   On defences to the Leistungskondiktion see Markesinis et al, German Law of Obligations, n 27 above, 735–40; Dannemann, German Law of Unjustified Enrichment and Restitution, n 25 above, ch 4. 37   Translation by Dannemann, German Law of Unjustified Enrichment and Restitution, n 25 above, 309. 38   This defence does not, however, exclude restitution where the payment has been compelled, or where the plaintiff has paid under express reservation: see, eg, Markesinis et al, German Law of Obligations, n 27 above, 736; J Du Plessis ‘Fraud, Duress and Unjustified Enrichment’ in D Johnston and R Zimmermann (eds), Unjustified Enrichment: Key Issues in Comparative Perspective (Cambridge, Cambridge University Press, 2002) 194, 204; Dannemann, German Law of Unjustified Enrichment and Restitution, n 25 above, 77–78, 204. cf Chapter 4 at V(C). 39   Hazell v Hammersmith and Fulham LBC [1992] 2 AC 1 (HL).



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the payments in question had been illusory – the banks sought to recover those payments. Apart from the novel ground of ‘absence of consideration’ recognised by the Court of Appeal in Guinness Mahon & Co Ltd v Council of Royal Borough of Kensington and Chelsea,40 they relied on a number of conventional unjust factors in doing so. In particular, in Kleinwort Benson Ltd v Lincoln City Council,41 among the last of the swaps cases, Kleinwort Benson sought to rely on their mistake as to the validity of the swap agreement at the time the payments were made. Here, difficulties arose. First, reliance on mistake required the abrogation of the rule against recovery for mistakes of law. In fact, setting aside the matter of specific defences, the five members of the House of Lords were unanimous on this point. Moreover, there was considerable disagreement as to whether Kleinwort Benson could be said to have been mistaken at all, given that the decision in the Hazell case had been handed down only after their swap contract had run its course.42 But even if it were conceded that there was a genuine mistake in Kleinwort Benson v Lincoln, for Birks the reliance of the House of Lords on the unjust factor of mistake in Kleinwort Benson v Lincoln nevertheless amounted to a covert civilian reception.43 The ultra vires doctrine which invalidated the contract had seemed to leave intact the distribution of risks according to which Kleinwort had hoped to emerge the overall winner: the parties’ bargain appeared to have survived the invalidity.44 Moreover, in this case the swap contract had run its course: each party appeared to have received full performance. Given that, it is difficult to see how Kleinwort Benson’s mistake as to their liability to perform could have provided a reason for restitution.45 Thus, the House of Lords’ reliance on the unjust factor of mistake to justify restitution appears to have made paper-thin the 40   Guinness Mahon & Co Ltd v Council of Royal Borough of Kensington and Chelsea [1998] EWCA Civ 294, [1999] QB 215. 41   Kleinwort Benson Ltd v Lincoln City Council [1998] UKHL 38, [1999] 2 AC 349. 42   Admittedly, the House of Lords’ reliance on a mistake analysis in this case was indisputable: were it not for the claimants’ mistake, the claim would already have become time-barred. According to s 32(1)(c) of the Limitation Act 1980, time runs against a mistaken payer only from the moment at which the mistake is discovered, or could with reasonable diligence have been discovered. See A Burrows et al, ‘The New Birksian Approach to Unjust Enrichment’ (2004) 12 Restitution Law Review 260, 270–71 (Robert Stevens). In fact, Birks later acknowledged this point: Unjust Enrichment, n 8 above, 239–40. On the question whether Kleinwort Benson could be said to have been mistaken, see generally Meier and Zimmermann, ‘A View from Germany’, n 24 above; JM Finnis, ‘The Fairy Tale’s Moral’ (1999) 114 LQR 170; D Sheehan, ‘What is a Mistake?’ (2000) 20 Legal Studies 538; A Nair, ‘ “Mistakes of Law” and Legal Reasoning: Interpreting Kleinwort Benson v Lincoln City Council’ in R Chambers, C Mitchell and J Penner (eds), Philosophical Foundations of the Law of Unjustified Enrichment (Oxford, Oxford University Press, 2009). 43  Birks, Unjust Enrichment, n 8 above, 112–13. See also P Birks, ‘Mistakes of Law’ (2000) 53 Current Legal Problems 205; ‘Private Law’ in P Birks and F Rose (eds), Lessons of the Swaps Litigation (London, Mansfield Press, 2000). 44   P Birks, Unjust Enrichment, 1st edn (Oxford, Clarendon Press, 2003) 96. The relevant passage appears to have been deleted in the second edition: Unjust Enrichment, n 8 above, 110. 45   This appears to be what Birks meant by a ‘spent mistake’: P Birks, ‘No Consideration: Restitution After Void Contracts’ (1993) 23 University of Western Australia Law Review 195. Certainly, the same policies of certainty and finality militating against restitution after full performance in the case of formless contracts or contracts invalid for minor illegality appeared to require that there be no restitution here either.

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line between an analysis based on specific reasons for restitution and one based on the absence of any legal ground. It seemed that the nullity of the contract had itself been treated as sufficient to give rise to restitution.46 Accordingly, like the general clause found in § 812(1) of the BGB, Birks’ new approach treats all enrichment which lacks a legal ground or basis as prima facie recoverable. Fundamental to his new theory is the classification of all enrichment as either participatory or non-participatory. Whereas non-participatory enrichment appears to have something in common with the ‘enrichment in another way’ of the Wilburg/Von Caemmerer taxonomy, participatory enrichment corresponds broadly to the German Leistungskondiktion. Moving down one level, for Birks participatory enrichment is either obligatory or voluntary. On the one hand, obligatory enrichments comprise benefits conferred in discharge of liabil­ity.47 If a benefit is conferred in discharge of liability and it turns out that there was no liability, then the absence of liability means that the basis of the enrichment has failed. Chief among such obligatory enrichments are contractual performances: for Birks, this is the archetypical instance of a benefit conferred in discharge of liability, just as contractual performance is in German law. This means that contractual invalidity translates directly into the restitution of contractual performance. Where the claimant has performed in terms of a contract which is invalid from the start, due either to deficient intent or to some invalidity independent of intent, the basis of his performance fails initially or immediately.48 For example, in the case of a contract tainted by misrepresentation or illegitimate pressure, the voidability of such a contract shows that the basis of any performance rendered under that contract has failed from the start.49 On the other hand, it can happen that the contractual basis is good at the moment of receipt but fails subsequently; for example, when the contract in question later becomes terminable for breach – Birks terms this subsequent failure of basis.50 Although in practice restitution will often follow only in cases where the claimant did not intend the enrichment to accrue to the recipient, the reason for the invalidity is in principle irrelevant to Birks’ account. That said, the old list of intent-based unjust factors may still be invoked in cases in which one such factor is the reason why the supposed obligation is invalid51 – here, Birks employs the metaphor of a pyramid ‘in which, at the base, the particular unjust factors such as mistake, pressure, and undue influence become reasons why, higher up, there is no basis for the defendant’s acquisition’.52 Moreover, a policy underlying invalidity may sometimes give rise to a defence in cases where that policy would be 46   See generally Meier, ‘Restitution After Executed Void Contracts’, n 24 above, 212–13; ‘Unjust Factors and Legal Grounds’, n 24 above, 72–75; Birks, Unjust Enrichment, n 8 above, 112–13. 47  Birks, Unjust Enrichment, n 8 above, 130–42. 48   ibid 131–40. 49   On degrees of invalidity in Birks’ scheme see Unjust Enrichment, n 8 above, 125–27. Note that Birks treats voidability or terminability as sufficient in themselves to show the absence of basis. 50  Birks, Unjust Enrichment, n 8 above, 140–42. 51   ibid 116, 131. 52   ibid 116.



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stultified by automatic restitution. In fact, in Birks’ scheme, defences play an important role in limiting the restitution available in principle in every instance of invalidity.53 Thus, he classifies valid judgments,54 contracts for finality,55 informal contracts56 and natural obligations57 as species of defences, whereas German lawyers would generally regard these as legal grounds.58 As for voluntary enrichments, nearly all of these fall within one of three categories, namely, contract, trust or gift.59 The first and second categories include many of the cases formerly treated as instances of extra-contractual failure of consideration; for example, where a payment is made in order to bring about a contract which does not eventuate,60 or in order to create a trust which subsequently fails for some reason.61 This category corresponds broadly to the condictio causa data causa non secuta and condictio ob causam finitam of the uncodified civil law. As we have seen, transfers made on a particular future basis are recoverable in German law if that basis does not eventuate or fails successfully to sustain itself.62 The third category, gift, comprises transfers made donandi causa (for a gratuitous purpose), which are likewise included within the legal ground concept in German law. According to Birks, in deciding what the purpose of a particular voluntary enrichment was, care must be taken to see whether the claimant knowingly took the risk that his primary purpose might not be achieved, for if he did that, his purpose will not truly have failed.63 Generally speaking, he will not have taken the risk of failure where his intention is impaired by mistake, etc; where he explicitly communicated his purpose to the recipient; or where the purpose was manifest from the circumstances.64

53   ibid 116: ‘Selectivity under the third question, based on policies which favour restitution, will be replaced by selectivity under the fifth question, based on policies which would be damaged by the automatic restitution now in principle available in all cases of invalidity’. cf the approach proposed by Duncan Sheehan in ‘Natural Obligations in English Law’ [2004] Lloyds Maritime & Commercial Law Quarterly 172. 54   ibid 233. 55   ibid 234–35. 56   ibid 255–57. 57   ibid 257–58. One prominent category of natural obligation listed by Birks, following the original list proposed by Lord Mansfield in Moses v Macferlan (1760) 2 Burr 1005, has now been superseded by s 335 of the Gambling Act 2005 which renders gambling contracts enforceable. 58   See generally S Meier, ‘No Basis: a Comparative View’ in A Burrows and Lord Roger of Earlsferry (eds), Mapping the Law: Essays in Memory of Peter Birks (Oxford, Oxford University Press, 2006) 350; Tariq A Baloch, Unjust Enrichment and Contract (Oxford, Hart, 2009) 75. 59  Birks, Unjust Enrichment, n 8 above, 142–54. 60   See, eg, Chillingworth v Esche [1924] 1 Ch 97, which involved a claim for the recovery of a precontractual deposit paid ‘subject to contract’. 61   See, eg, Re Gillingham Bus Disaster Fund [1959] 1 Ch 62 (CA), where a gift of money for ‘worthy causes’ was held immediately void as being a non-charitable purpose trust. 62   See III(A) above. 63  Birks, Unjust Enrichment, n 8 above, 142. 64  ibid.

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IV  Civilian Critique of the Unjust Factors Analysis Whether in its German or Birksian incarnations, it appears from the brief summaries of the analyses given in the previous two sections that the absence of legal ground analysis differs in certain key respects from one founded on unjust factors. The unjust factors approach looks to reasons to return enrichments, whereas the absence of legal ground approach looks for reasons to retain them. The unjust factors approach looks to primary facts, like mistake, which lie inside the law of enrichment, whereas the absence of legal ground approach looks to legal institutions, like contract, which lie outside it. The absence of legal ground approach is general and abstract, whereas the unjust factors approach is specific and concrete. The absence of legal ground approach is objective, whereas the unjust factors approach is (often) subjective. Of course, it is true that the outcomes reached by the unjust factors and absence of legal ground analyses in particular cases are very often the same: ‘The game we are playing is seeking to account for as much of the law as is possible, not the imposition from above of a dogmatic restriction’.65 Nevertheless, it has been widely argued over the course of the last decade that the unjust factors approach is unable to provide a satisfactory explanation for the restitution of enrichment. This argument takes a number of forms. In this section, I will discuss each of the main strands in turn, focusing on enrichment by transfer: first, with respect to performance rendered under invalid contracts, secondly, with respect to wholly extra-­contractual transfers.66 In the next section, I will seek to show that in each case the argument in question can be rebutted, or at least that the absence of legal ground approach is itself vulnerable to a similar criticism. I will advance also certain positive arguments in favour of the unjust factors approach to enrichment by transfer. If each approach has arguments to commend it, the question arises whether a mixed approach such as South Africa’s might after all offer the best of both worlds, or whether such mixing is simply incoherent and thus theoretically indefensible. I will address this further question in the final section of this chapter.

A  Contractual Performance As we have seen, in German law it is the restitution of contractual performance which best embodies the generality and abstraction associated with the absence of the legal ground analysis. The restitutionary response arises directly from the invalidity of the contract, and therefore it can be regarded as the paradigm case of so-called ‘automatic restitution’. Similarly for Birks, contractual performance is   Stevens, ‘Is there a Law of Unjust Enrichment?’, n 14 above, 33.   Daniel Visser divides his treatment of enrichment by transfer in South African law in a similar way: see DP Visser, Unjustified Enrichment (Cape Town, Juta, 2008) 268–70. 65 66



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characterised as an obligatory enrichment, a transfer in discharge of liability. It follows that the absence of any basis to support such performance can be directly inferred from the invalidity of the contract in terms of which it is made. According to the orthodox unjust factors approach, on the other hand, the restitution of contractual performance by one party to an invalid contract depends on the existence of a particular unjust factor. Usually, the reason for contractual invalidity itself provides an unjust factor. Outside such cases, if the contract has not yet run its course, it is open to the claimant to recover any performance he may already have made on grounds of failure of consideration, where ‘consideration’ is understood to mean bargained-for counter-performance67 – it is a further question whether both total and partial failures are admitted here. If, on the other hand, the contract has been fully performed, then restitution is precluded in the absence of another unjust factor such as mistake, compulsion, etc, because the plaintiff has received everything he bargained for. It follows that contractual invalidity is not of itself a sufficient ground for the recovery of contractual performance according to the unjust factors analysis. However, it has been argued, most notably by Sonja Meier, that the traditional unjust factors account of the restitution of contractual performance is in truth superfluous. Rather, such performances should be analysed as transfers in discharge of liability, as in German law, moreor-less automatically recoverable where that liability is absent.68 There are admittedly a number of cases in English law in which the restitution of contractual performance is denied despite the fact that the contract in question is invalid. In particular, in cases where the parties’ bargain survives the invalidity69 and full performance has been rendered,70 restitution is typically denied. Thus, where the contract is invalid due to lack of form, English law seems to be prepared to leave the parties as they are rather than initiate mutual restitution.71 Similarly, in cases of what Meier calls ‘minor illegality’ – instances where policy requires the invalidation of the contract but not the restitution of performance – there is a tendency to deny recovery where full performance has been rendered.72 Finally, with respect to minors’ contracts, English courts have tended to insist on failure of consideration as a condition of restitution,73 even where counter-restitution by 67   Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32 (HL) 48 (Viscount Simon LC). 68   See Meier, ‘Restitution after Executed Void Contracts’, n 24 above; ‘Unjust Factors and Legal Grounds’, n 24 above, 69–72; ‘No Basis’, n 58 above, 347–49. 69   cf eg cases of misrepresentation or compulsion, where their bargain is destroyed. 70   cf eg cases of impossibility, where full performance is necessarily excluded. 71   Meier, ‘Restitution After Executed Void Contracts’, n 24 above, 178–83; ‘Unjust Factors and Legal Grounds’, n 24 above, 71– 72; ‘No Basis’, n 58 above, 348–49. Meier gives as examples Home & Colonial Insurance v London Guarantee [1928] 32 Lloyds Rep 267 (KB) and Tootal Clothing Ltd v Guinea Properties Ltd (1992) 64 P&CR 452 (CA). For a different interpretation of the Tootal case, see Dannemann, German Law of Unjustified Enrichment and Restitution, n 25 above, 185–87. 72   Meier, ‘Restitution After Executed Void Contracts’, n 24 above, 201–2; ‘No Basis’, n 58 above, 348– 49. Meier gives the example of Aratra Potato Co Ltd v Taylor Joynson Garrett [1995] 4 All ER 695 (QB). 73   Meier, ‘Restitution After Executed Void Contracts’, n 24 above, 187–93. See also Dannemann, German Law of Unjustified Enrichment and Restitution, n 25 above, 188–89.

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the minor has been possible.74 In these three categories of cases at least, restitution undoubtedly depends on failure of consideration. In other words, invalidity is not in itself a sufficient condition for restitution. On the other hand, as Meier has shown, even in English law performance rendered under invalid contracts is almost always recoverable, regardless of whether there has been a failure of consideration.75 Take, for example, those cases in which a contract has been rescinded because of some interference in the formation of the intention to contract, for example, misrepresentation, duress, undue influence, etc.76 In all these cases, either there is necessarily a failure of consideration – as where the other party to the contract has elected to withhold or recover performance – or performance is recoverable regardless of whether there has been a failure of consideration or not – as where the claimant is himself the victim of misrepresentation, etc.77 Admittedly, recovery can be explained by the distinct unjust factors of mistake, compulsion, undue influence, etc. However, in the words of Dr Meier, ‘it is remarkable that these unjust factors do nothing else than to mirror the reasons why the contract is invalid’.78 Thus, Meier argues that there is little value in distinguishing between the reason for contractual invalidity and the reason for the restitution of performance.79 It seems both more economical and more accurate to accept that where restitution is permitted, this is because the contract is invalid, rather than because of failure of consideration, or because of the induced mistake, compulsion, etc of the transferor. On the other hand, in cases where the reason for contractual invalidity does not in itself provide a reason for restitution, as in Kleinwort Benson v Lincoln, allowing restitution to turn on whether or not the transferor was mistaken in some respect is equally unsatisfactory.80 In Kleinwort Benson v Lincoln itself, the bank’s mistake pertained to its liability to make the payments in question. But it could equally have relied on a mistake as to the advantages of the transaction, provided that it could demonstrate that this mistake had caused the payments. As we have already seen, for Meier and Birks the use of mistake in this way strongly

  As in Pearce v Brain [1929] 2 KB 310.   Note that Meier’s focus here is void contracts (including contracts subject to rescission), not contracts which are originally valid. The coincidence between failure of consideration and restitution of performance rendered in cases of breach or frustration is, of course, complete, at least where the failure is total. 76   See Meier, ‘Restitution After Executed Void Contracts’, n 24 above, 176–78, 206–7. 77   Of course, in these cases it cannot be argued that the claimant has received all he bargained for, because the effect of the induced mistake, compulsion, etc is precisely to destroy the parties’ bargain. In Dr Meier’s words, ‘failure of consideration is not required because the defect leading to the invalidity prevents a free bargaining process’: ‘Restitution After Executed Void Contracts’, n 24 above, 207. 78  Meier, ‘Restitution After Executed Void Contracts’, n 24 above, 211. 79   ibid 169–73, 206–12; ‘Unjust Factors and Legal Grounds’, n 24 above, 72; ‘No Basis’, n 58 above, 347–48. 80   cf Birks’ criticisms of the decision of the House of Lords in Kleinwort Benson Ltd v Lincoln City Council [1998] UKHL 38, [1999] 2 AC 349, described at III(B) above. See further eg Meier, ‘Restitution After Executed Void Contracts’, n 24 above, 212–13; ‘Unjust Factors and Legal Grounds’, n 24 above, 49–53; ‘No Basis’, n 58 above, 348. 74 75



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militates against an unjust factors analysis of the restitution of performance under void contracts, because it means diverting attention away from the central issue, namely, the invalidity of the contract.81 ‘Legal certainly would be better served if, instead of focusing on some diffuse elements of the transferor’s state of mind, we were to look at the underlying defective contract and to decide, on a case by case basis, which kind of defects lead to restitution and which do not.’82 Thus, in his new account Birks puts contractual performance at the centre of the category of obligatory enrichments, that is, enrichments recoverable without more in the absence of a relationship of indebtedness. The intent-based unjust factors continue to play a limited role, in that their purpose within the pyramid of which absence of basis forms the apex is to invalidate the contract which would otherwise provide the explanatory basis of the recipient’s enrichment,83 but the third, policy-motivated family of unjust factors no longer has any role to play, because a policy which does not invalidate the basis of an enrichment has no relevance at all, and a policy which does destroy that basis is irrelevant, since the invalidity is sufficient in itself, without regard to the reason for it.84 These arguments appear equally applicable to South African law. As in English law, in South Africa contractual invalidity does appear to function as a sufficient ground for the recovery of contractual performance. We have seen abundant evid­ence of this in Chapters 2, 3, 4 and 5: where a contract fails owing to mistake, duress, minority or incapacity, performance rendered under that contract is generally restored. The degree to which the explanation for restitution relies on a particular unjust factor depends on the remedy: where it is restitutio in integrum, it is likely that a pure unjust factors analysis will be applied; where it is the condictio indebiti, the approach is likely to be a mixed one. But once again, at an analytical level the unjust factors of mistake, compulsion, minority and incapacity simply mirror the reasons why the contract is invalid. Furthermore, whereas in English law a promise is generally binding without more only if given for some consideration, the prevailing conception of contract being that of a deal or bargain, South Africa of course lacks such a doctrine of consideration.85 Even wholly gratuitous or unilateral promises can constitute valid contracts. Thus, it would appear entirely natural to analyse the restitution of contractual perform­ance in South African law in terms of the invalidity of the contract, as German law does.86 We would in principle expect contractual invalidity to translate directly into the restitution of contractual performance, and the failure of counter-­performance to be irrelevant to the restitution of performance rendered under an invalid contract.

  See III(B) above.   Meier, ‘No Basis’, n 58 above, 348.  Birks, Unjust Enrichment, n 8 above, 116. 84   ibid 115. 85   As definitively established in Conradie v Rossouw 1919 AD 279. 86   cf eg Visser, Unjustified Enrichment, n 66 above, ch 9. 81 82 83

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B  Extra-contractual Transfers Once again, it is contractual performance which civilians regard as the paradigm case of so-called ‘automatic restitution’. According to both versions of the absence of legal ground approach set out above, contractual performance is analysed as a transfer in discharge of liability, and the absence of a legal ground for the transfer can therefore be directly inferred from the invalidity of the contract. This means that the case for the absence of legal ground approach is strongest with respect to the restitution of performance rendered under a contract which is invalid. However, proponents of the absence of legal ground approach argue that it is preferable to the unjust factors approach also in respect of extra-contractual transfers, by which I mean transfers made other than in discharge of contractual obligations. As in the case of the restitution of contractual performance, the main thrust of this argument is that unjust factors have little explanatory power in this context, in that they fail to reflect the true reasons for restitution (or the absence of restitution). It is argued, further, that the duplication of grounds of contractual invalidity by unjust factors is inelegant and uneconomical. These arguments will be illustrated with reference to the core case of a mistaken transfer.

(i)  Unjust Factors Analysis Does Not Reflect the True Reasons for Restitution The first argument rests on the observation that as in the case of contractual performance in particular, deliberate transfers are almost always made in discharge of liability.87 Regarding the central case of mistaken transfers in particular, the argument for an absence of legal ground analysis of such transfers rests on the observation that the causative mistake on the basis of which restitution is awarded in terms of an unjust factors approach will very often be a mistake about liability. The crux of the argument is that to emphasise the ‘mistake’ aspect rather than the fact that the transfer was unsupported by any relationship of indebtedness is to reverse the natural relationship between these two ideas. This argument can be further broken down into three main claims. On the one hand, it is argued that it is generally the absence of any objective legal basis for the payment – the absence of any relationship of indebtedness between plaintiff and defendant – that furnishes the most compelling explanation for its restitution.88 Take the case where a plaintiff, A, has paid taxes to his local council, B, in compliance with a regulation which later turns out to be ultra vires. Here, it appears that the most intuitively satisfying justification for restitution is 87  It is precisely from this observation that the Leistungskondiktion proceeds: see, eg, Krebs, Restitution at the Crossroads, n 27 above, 208, 212. 88   I have made this point previously, in H Scott, ‘Restitution of Extra-contractual Transfers: Limits of the Absence of Legal Ground Analysis’ (2006) 14 Restitution Law Review 93, 97–98. Niall Whitty agrees: see NR Whitty, ‘Mapping the Law: Essays in Memory of Peter Birks edited by Andrew Burrows and Lord Rodger of Earlsferry’ (2008) 16 Restitution Law Review 241, 246–47. See also eg Zimmermann, ‘Modern Civilian Approach’, n 34 above, 415–16; Birks, Unjust Enrichment n 8 above, 131–35.



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nothing more than the invalidity of the underlying obligation. The fact that the plaintiff was mistaken as to that liability – the vitiation of his voluntariness in making the payment – is really of secondary importance: the person on the Underground, if asked why money paid in pursuance of an ultra vires scheme ought to be returned, would probably reply, ‘because the plaintiff didn’t owe it’ or ‘because the regulation wasn’t really valid’.89 Thus, the gist of the argument is that where the purpose of a transfer is clearly the discharge of the transferor’s liability, and the absence of liability appears clearly from the surrounding circumstances, the absence of legal ground analysis seems to be able to give a cleaner and more elegant explanation for restitution than an approach based on the plaintiff’s mistake can. It is more economical to regard restitution as having been triggered by the invalidity of the underlying obligation itself than by A’s mistake as to his liability to make it. Accordingly, it is argued in respect of English law that no unjust factor was necessary in Woolwich Equitable Building Society v Inland Revenue Commissioners:90 it was enough that tax paid by the plaintiff in terms of certain ultra vires regulations had not been owing.91 As for South African law, the case of Rooth v The State92 illustrates the same point. Although the plaintiffs’ claims failed because they was unable to satisfy the requirement of mistake of fact, arguably it ought to have been enough that the amounts paid had not in fact been owing, because the statutes under which they were made were in fact invalid. Furthermore, it is argued that the lack of any absence of legal ground requirement in the English analysis of mistaken transfers means that in practice much reliance is placed on defences to block the restitution of payments made in discharge of a valid obligation. Where the plaintiff, C, has mistakenly paid D, confusing him with E, to whom he intends to pay a debt, the unjust factors approach requires that he be able to recover, because of his mistake. But if it turns out that he in fact owed an identical debt to D, that prima facie claim is blocked, because the payment was made for good consideration. In this example, the plaintiff’s mistake is really irrelevant to recovery. It is the existence of his relationship of indebtedness with D that determines the outcome of the case. So, not only is the mistake analysis often a rather circuitous way of explaining the restitution of certain transfers; sometimes, the common law has to rely on a covert absence of legal ground analysis in order to reach acceptable results. It seems that the defence of good consideration itself involves a significant concession to the absence of legal ground approach, in that it appears to smuggle in that approach via the back door.93 For this reason, even defenders of the unjust factors approach in English  Dannemann, German Law of Unjustified Enrichment and Restitution, n 25 above, 158–59.   Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70 (HL). 91  Birks, Unjust Enrichment, n 8 above, 134. See also Du Plessis ‘Towards a Rational Structure of Liability for Unjustified Enrichment’, n 28 above, 169–70. 92   Rooth v The State (1888) 2 SAR 259. See Chapter 2 at II(B)(i). 93   Meier, ‘Unjust Factors and Legal Grounds’, n 24 above, 53–54; Birks, Unjust Enrichment, n 8 above, 135–40, especially 139–40. In fact, English law itself is no longer quite so vulnerable to this criticism. The decision of the House of Lords in Deutsche Morgan Grenfell Group plc v Inland Revenue Commissioners [2006] UKHL 49, [2007] 1 AC 558 (HL) suggests that the existence of a valid obligation 89 90

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law now acknowledge the ‘general rule’ that, ‘[w]here the defendant is legally entitled to the enrichment – in the sense that the enrichment is owed to it by the claimant under a valid legal obligation – there can normally be no liability to make restitution despite there being an unjust factor’.94 South African law, as a result of its mixed analysis, is able to accommodate cases such as that of A and B more easily than English law can. As we have seen, in order to found restitution of a mistaken payment by means of the condictio indebiti, it is necessary to show, first, the presence of a mistake and, secondly, the absence of any relationship of indebtedness between the parties. Thus, in cases such as this one, the absence of legal ground analysis inherent in the condictio indebiti is simply accentuated, while the unjust factors approach is suppressed. On the other hand, the liability mistake rule – which is still applied in the context of the South African condictio indebiti95 – tends to undermine the independent significance of the mistake requirement. Admittedly, in the context of South African law this rule is less problematic than it was in England prior to the abrogation of the liability mistake rule there.96 This is because South African law treats gifts as contracts: a mistake in the execution of a gift founds restitution, whereas a mistake inducing a gift will not, unless the mistake is of such a nature as to invalidate the gift contract itself.97 Nevertheless, if only mistakes about liability found restitution, this suggests that it is the absence of liability itself rather than the impairment of the plaintiff’s intention in making the transfer that is the real reason for restitution. If mistake were really the reason for restitution, then any causative mistake ought to count, as in English law. Finally, if indeed mistake is neither normatively or analytically significant in cases such as those of A and B and C and D, it seems to follow that the mistake requirement should be retained only insofar as it can be defended on pragmatic grounds. In fact, it is argued that the only legitimate function of the mistake requirement is to protect the reliance of the recipient, by which is meant the recipient’s reasonable expectation that he will be able to retain the payment.98 But it is clear that the mistake requirement is not especially well adapted to the protecto make a payment does not always bar its restitution: see, eg, R Chambers, ‘Deutsche Morgan Grenfell Group plc v IRC [2006] UKHL’ (2006) 6 Oxford University Commonwealth Law Journal 227, 232–34; Stevens, ‘Is there a Law of Unjust Enrichment?’, n 14 above, 17–19; Burrows, The Law of Restitution, n 7 above, 91. But cf now the decision of the Court of Appeal in Test Claimants in the Franked Investment Income Litigation v Revenue and Customs Commissioners [2010] EWCA Civ 103, paras [175]–[184], where it was emphasised that the defendants’ entitlement to the tax barred the claim. 94  Burrows, The Law of Restitution, n 7 above, 88–90 (footnotes omitted) See also Stevens, ‘Is there A Law of Unjust Enrichment?’, n 14 above, 17. 95  See ABSA Bank Ltd v Leech [2001] ZASCA 65, 2001 (4) SA 132 (SCA). cf English law, where this requirement has been abrogated: Barclays Bank Ltd v WJ Simms, Son & Cooke (Southern) Ltd [1980] 1 QB 677. 96   The difficulties are set out by Meier, ‘Unjust Factors and Legal Grounds’, n 24 above, 40–43. 97   See Du Plessis, ‘Towards a Rational Structure of Liability for Unjustified Enrichment’, n 28 above, 165–66. 98   ibid 168–72 and now J Du Plessis, The South African Law of Unjustified Enrichment (Cape Town, Juta, 2012) 168–74, especially 173–74; Visser, Unjustified Enrichment, n 66 above, 327.



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tion of the recipient’s reliance: it tends to lead to overkill, in that it bars claims where there has been no reliance by the recipient which deserves protection.99 Thus, if the protection of reliance is the only justification for the mistake requirement, it seems that it would be better to abandon it entirely in favour of a more nuanced defence. According to Dr Meier, even in civilian jurisdictions, ‘comparative research suggests that there has been a shift of focus away from considering the transferor’s state of mind and towards an inquiry into whether it is worth protecting the recipient’s reliance on retaining the benefit’.100

(ii)  Duplication of Grounds of Invalidity by Unjust Factors is Uneconomical and Unnecessary The argument made above leads on to a further, related criticism of the unjust factors approach. This is that it is uneconomical and unnecessary for a legal system to recognise impairments to consent such as mistake, compulsion, minority and incapacity as both grounds of invalidity and distinct unjust factors, especially if these grounds or factors are given different content in each context.101 Generally speaking, the demands of invalidating factors are greater than their unjust factor twins. For example, in English law mistake has different content depending on whether it serves to invalidate a contract or trigger restitution: contrast eg Bell v Lever Bros Ltd102 with Kelly v Solari.103 Meier describes this distinction as one between transaction mistakes – mistakes in forming the intention to enter into a transaction – and execution mistakes – mistakes in carrying out such trans­actions. Whereas the latter are unrestricted, the former can found restitution of perform­ ance only if the transaction itself can be invalidated.104 Thus, a mistake which is sufficient to trigger the restitution of an extra-contractual payment – a spontan­ eous mistake of fact, such as the mistake at issue in Kelly v Solari – will not generally be sufficient to invalidate a contract: usually only an induced mistake can do that. Meier argues that the different content given to transaction mistakes and execution mistakes in English law shows that it is not really serious about mistake as an unjust factor.105 Regarding transaction mistakes, the need to restrict restitution for mistakes inducing a valid contracts shows that it is really the validity or otherwise of the contract which determines restitution of performance rendered under it, rather than the fact that the transfer was caused by a mistake. As for execution mistakes, the unfortunate duplication described above would be elimin­ated if the (weaker) mistake requirement were abandoned in favour of an approach founded directly on the absence of a legal ground.  Visser, Unjustified Enrichment, n 66 above, 327.   Meier, ‘No Basis’, n 58 above, 351. 101   This point appears to have been made first by Zimmermann, ‘Modern Civilian Approach’, n 34 above, 416. 102   Bell v Lever Bros Ltd [1932] AC 161 (HL). 103   Kelly v Solari (1841) 9 M&W 54. 104   Meier, ‘Unjust Factors and Legal Grounds’, n 24 above, 37–54. 105   ibid, especially 53–54. See also ‘No Basis’, n 58 above, 348 and cf IV(A) above. 99

100

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V  The Case for Unjust Factors A  Contractual Performance As we saw in the discussion above, it has been argued that the unjust factors analysis of the restitution of performance rendered under failed contracts is superfluous, in that it involves an unnecessary layer of analysis. It seems more accurate to accept that where restitution is permitted, this is because the contract is invalid, rather than because of failure of consideration, or because of the induced mistake, compulsion, etc of the transferor. Among the most powerful responses to this argument is one which Professor Birks himself made: namely, that in its very abstraction the absence of a legal ground approach to the restitution of perform­ ance rendered under invalid contracts departs from the intuitive ‘reasons for restitution’ that make the unjust factors approach intelligible to the non-lawyer.106 Take first class one unjust factors such as mistake. As we have seen, in German law performance rendered under a contract vitiated by mistake (§ 119 BGB) is recoverable under the general clause in § 812 as having occurred without legal ground.107 Technically, it is the absence of any underlying obligation which itself triggers restitution. Yet intuitively it appears that the real ‘reason for restitution’ in such a case is the mistake itself. But for the mistake, there could be no restitution at all.108 Someone seeking to recover his performance under a contract of sale on the basis that the seller misled him as to the attributes of the goods would point to the induced mistake as the reason for restitution, not the invalidity of a contract which resulted from that mistake. In fact, Birks himself in his pyramid analogy appears to have recognised the important normative function of class one unjust factors, even in an approach founded on the absence of a legal ground.109 As for category three unjust factors – policy-motivated restitution – as we have seen, Birks asserts that these are entirely superfluous.110 However, even in those cases where the reason for the invalidity does also appear to require the restitution of performance, the ‘automatic restitution’ which Birks sees is only apparent. In English law the invalidity of a contract does not necessarily translate into the restitution of benefits conferred under it. Rather, this will often be a matter of statutory interpretation: was it the intention of the legislature that benefits received under the contract should be restored?111 Even if restitution in a particular case did appear to follow directly from the invalidity of a contract itself, this would mean   Most recently Birks, Unjust Enrichment, n 8 above, 115, 127–28.  See, eg, Krebs, Restitution at the Crossroads, n 27 above, ch 4, especially 55–59. For texts see Dannemann, German Law of Unjustified Enrichment and Restitution, n 25 above, 298, 308. 108  Krebs, Restitution at the Crossroads, n 27 above, 64–65. 109  Birks, Unjust Enrichment, n 8 above, 116. 110   ibid: ‘There is no room at the base of this pyramid for policies dictating restitution’. See IV(A) above. 111   L Smith, ‘Demystifying Juristic Reasons’ (2007) 45 Canadian Business Law Journal 281, 299–300. 106 107



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only that the policy which had given rise to the nullity of the contract also embodied a positive choice to allow restitution of all performances rendered under it.112 These arguments apply equally to the restitution of contractual performance in South African law. Admittedly, it is true that contractual invalidity is usually followed by the restitution of contractual performances, although as in English law, this is not invariably the case. Moreover, unlike English law, South Africa recognises a range of ‘just factors’, such as natural obligations, prescribed debts, etc,113 which would assist in keeping the automatic restitution of contractual perform­ ance within defensible bounds. Nevertheless, like English law, South Africa lacks any systematic doctrine of contractual nullity, lacking as it does a comprehensive civil code.114 Thus, in directing attention to the reason for the restitution of performance tendered under an invalid contract, even where that reason is the same as the reason for contractual invalidity, the unjust factors approach appears to do valuable work; certainly it has greater explanatory power than an analysis which founds restitution directly on the invalidity of the contract itself. Moreover, regarding cases where the reason for contractual invalidity does not itself provide an unjust factor, here South African law appears to differ from English law in an important respect: it does not seem that a mistake as to the validity of such a contract will found restitution after full performance, as it was permitted to do by the House of Lords in Kleinwort Benson v Lincoln. There is a series of cases concerning contracts void for lack of compliance with formalities in which the South African courts have denied restitution by means of the condictio indebiti on grounds of mistake; instead, they have made restitution turn on the failure of contractual reciprocation. If anything, then, South African law appears to be better described by the unjust factors analysis of the restitution of perform­ ance rendered under void contracts than English law is. Historically, restitution of performance rendered under contracts for the sale of land invalid because not in writing was determined according to the rule in Carlis v McCusker,115 a decision of the Transvaal Supreme Court which concerned an agreement invalid for lack of compliance with section 30 of Transvaal Duty Proclamation 8 of 1902. Innes CJ decided that there could be no restitution of money paid under the contract unless the seller had not only failed to perform his part of the bargain but was also unable or unwilling to render full performance.116 Furthermore, in Wilken v Kohler in 1913, Innes J (now a member of the newly112   See generally Krebs, Restitution at the Crossroads, n 27 above, ch 10. The point is briefly reiterated in Burrows et al, ‘The New Birksian Approach to Unjust Enrichment’, n 42 above, 274 (Thomas Krebs). 113   See, eg, Du Plessis, ‘Towards a Rational Structure of Liability for Unjustified Enrichment’, n 28 above, 150; Visser, Unjustified Enrichment, n 66 above, 285–89; Du Plessis, The South African Law of Unjustified Enrichment, n 98 above, 52–56. 114   See further H Scott and DP Visser, ‘The Impact of Legal Culture on the Law of Unjustified Enrichment: the Role of Reasons’ in E Bant and M Harding (eds), Exploring Private Law (Cambridge, Cambridge University Press, 2010) 159–60. 115   Carlis v McCusker 1904 TS 917. 116   Although no authority was cited in support of this proposition, it is likely that Innes CJ had in mind the position in English law regarding the recovery of performance under contracts governed by the Statute of Frauds, and in particular decisions such as Thomas v Brown (1876) 1 QBD 714.

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established Appellate Division) held obiter that there could be no restitution under such a contract once both parties had performed in full, notwithstanding the fact that the contract in terms of which they had performed was null and void.117 These principles were repeatedly affirmed by the South African courts during the course of the twentieth century, at least with respect to formalities regarding the sale of land.118 More recently, the Alienation of Land Act 68 of 1981 has adjusted the common law position with regard to contracts for the sale of land: contracts which do not comply with the prescribed formalities remain wholly invalid,119 but according to section 28(1), partial performance rendered under such a contract can now be recovered regardless of the willingness of the other party to render counter-­ performance. Thus, the Act has abrogated the rule in Carlis v McCusker. On the other hand, according to section 28(2), where the parties have performed in full, the contract becomes valid ab initio and restitution is precluded. While section 28(2) has effectively preserved the rule in Wilken v Kohler, it strongly recalls the regime applied to certain types of contracts in German law, according to which the lack of a required form, in particular the failure to record a contract in writing, is healed by full performance.120 This regime is distinctively civilian in its use of the legal ground concept to bar restitution after full performance. However, the original Wilken v Kohler rule appears to persist in the common law in respect of contracts other than those governed by the Act.121 Recently, the rule was explicitly approved and applied by the Supreme Court of Appeal in Legator McKenna Inc and another v Shea and others,122 in which the plaintiff sought to recover performance rendered under a purported sale which had failed due to lack of correlation between offer and acceptance.123 More significantly, the 117   Wilken v Kohler 1913 AD 134. The statutory provision at issue was s 49 of the Free State Ordinance 12 of 1906. The question of its effect was discussed in depth by both Innes J (at 142–43) and Solomon J (at 147–49). Both concluded that it rendered a verbal contract null and void – ‘void ab initio’ – rather than merely voidable. In Kennedy v Lanyon 1923 TPD 284, 287, Stratford J confirmed that s 30 of the Transvaal Proclamation had the same effect. 118   See, eg, Kennedy v Lanyon, n 117 above; Mattheus v Stratford 1946 TPD 498; Botha v Kelder 1948 (3) SA 248 (T); De Villiers NO v Summerson 1951 (3) SA 75 (T); Van Vuuren v Boshoff 1964 (1) SA 395 (T); Botes v Toti Development Co (Pty) Ltd 1978 (1) SA 205 (T) 212; Rand vir Rand (Edms) Bpk v Boswell 1978 (4) SA 468 (W) 473. 119   Alienation of Land Act 68 of 1981, s 2(1): ‘No alienation of land after the commencement of this section shall, subject to the provisions of section 28, be of any force or effect unless it is contained in a deed of alienation signed by the parties thereto or by their agents acting on their written authority’. 120   See, eg, s 766 BGB. See G Dannemann, ‘Unjust Enrichment as Absence of Basis: Can English Law Cope?’ in A Burrows and Lord Roger of Earlsferry (eds), Mapping the Law: Essays in Memory of Peter Birks (Oxford, Oxford University Press, 2006) 369–72; German Law of Unjustified Enrichment and Restitution, n 25 above, 38–39. 121  See Wilkens NO v Bester [1997] ZASCA 9, 1997 (3) SA 347 (SCA) 362; Afrisure CC v Watson NO [2008] ZASCA 89, 2009 (2) SA 127 (SCA). 122   Legator McKenna Inc and another v Shea and others[2008] ZASCA 144, 2010 (1) SA 35 (SCA). 123   The facts and issues were as follows. The second appellant, an attorney at the firm Legator McKenna, was appointed curator bonis to the estate of the first respondent, Shea, after she suffered serious brain injuries in an accident. In his capacity as curator, he sold the house belonging to Shea to the joint second respondents, and the house was subsequently transferred to them by registration in



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construction of the Wilken v Kohler rule adopted in that case implies a failure of consideration analysis, rather than one founded on the presence of a legal ground. Although the condictio indebiti would ordinarily lie to recover a transfer motivated by a mistaken belief in the validity of a contract, according to Brand JA the rule in Wilken v Kohler created an exception in cases involving void (not prohibited) contracts: it dictated that where both parties to such a contract had performed in full, restitution should be denied, since the purpose of the parties’ transaction had been achieved.124 Put slightly differently, a party to a void contract who had received exactly what he had bargained for should not be allowed to escape the consequences of a bad bargain by means of an enrichment action intended to be an equitable remedy.125 Specifically, he should not be permitted to rely on a mistake as to the validity of the contract in order to found the condictio indebiti. In conclusion, it appears that in South African law, a mistake as to the validity of a void contract will not found restitution after full performance, as it was permitted to do by the House of Lords in Kleinwort Benson v Lincoln. Unless contractual invalidity itself depends on deficient intention, or unless it is explicitly decided that the policy which gave rise to the nullity of the contract also embodied a positive choice to allow restitution of all performances rendered under it, the restitution of contractual performance depends on the failure of counter-­ performance; it does not invariably arise from the invalidity of the contract itself. Thus, whereas in cases of mistake, compulsion and minority restitution is technically explicable by both the absence of legal ground and unjust factors approaches, only the unjust factors approach is able to explain the outcomes in Wilken v Kohler and Legator McKenna v Shea. One of the principal bases on which Birks and Meier alleged that the English regime regarding the restitution of perform­ ance rendered under invalid contracts concealed a tacit reliance on an absence of legal ground analysis appears to be lacking in the case of South African law.

the local deeds office. On recovering from her injury, Shea sought to have the sale and transfer of the house declared invalid and the house returned to her against repayment of the purchase price. It appeared that the second appellant had made his acceptance of the second respondents’ offer to purchase subject to the condition that the sale be approved by the Master of the High Court. Since this acceptance did not correspond to the respondents’ unconditional offer, in law it amounted to no more than a counter-offer. Alternatively, even if the second respondents had impliedly accepted that counter-offer by conduct, the agreement thus produced fell foul of s 2(1) of the 1981 Act. In that case it was governed by s 28(2) and restitution of performance was precluded. 124   Legator McKenna v Shea, n 122 above, para [28]. It should be noted that where the intention of one or both parties is vitiated by mispresentation, compulsion, etc, their bargain is destroyed: see IV(A) above. 125  ibid.

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B  Extra-contractual Transfers As we saw above, the unjust factors analysis of the restitution of extra-contractual transfers is vulnerable to criticism on two main fronts. First, it is argued that it has little explanatory power, in that it fails to reflect the true reasons for restitution in key cases. Secondly, it is argued that the duplication of grounds of invalidity by unjust factors is uneconomical and unnecessary. Regarding the first argument in particular, it is possible to turn the force of this critique back on proponents of the legal ground approach. Just as there are some cases in which the unjust factors approach seems at best circuitous, equally there are certain important instances of extra-contractual restitution which the legal ground approach is able to explain only with difficulty, and often only by introducing what really amounts to a covert unjust factors approach.126 In other words, in these cases it is the unjust factors approach that seems to have superior explanatory power. In order to make this point it is necessary to return to the German Leistungskondiktion – as an exemplar of the absence of legal ground approach to enrichment by transfer – and examine its operation in more detail. In particular, it is necessary to examine two different version of the Leistungskondiktion, the objective and subjective.

(i)  Deficiencies in the Objective Analysis of the Leistungskondiktion The version of the Leistungskondiktion briefly set out above was essentially an objective one. According to this understanding of the claim, which appears to have been that of von Caemmerer himself,127 the term ‘legal ground’ is understood to denote an objectively determined relationship of indebtedness, such as a contract, and the right to recover a transfer accordingly arises directly from the absence of such a relationship of indebtedness between the parties. This understanding of the Leistungskondiktion is essentially similar to the sine causa analysis proposed for South African law by Professor JC van der Walt in the 1960s: ‘enrichment is in principle sine causa if there is no obligatory relationship [verbintenisregtelike verhouding] between the enriched and impoverished parties on the basis of which the enriched party could claim the transfer of the benefit’.128 Again, this narrow understanding of the legal ground concept produces an extremely elegant and streamlined analysis of the restitution of enrichment by transfer: the term 126   I have made this argument previously, in Scott, ‘Restitution of Extra-contractual Transfers’, n 88 above, 98–104. 127  Krebs, Restitution at the Crossroads, n 27 above, 214. 128   JC Van der Walt, ‘Die Condictio Indebiti as Verrykingsaksie’ (1966) 29 Tydskrif vir Hedendaagse Romeins-Hollandse Reg 220, 222 (my translation). A recent proponent of the objective analysis in the South African context is Jacques du Plessis: see Du Plessis, ‘Fraud, Duress and Unjustified Enrichment’, n 38 above, 206–7; ‘Towards a Rational Structure of Liability for Unjustified Enrichment’, n 28 above, 175–77; and now (more cautiously) The South African Law of Unjustified Enrichment, n 98 above, 53–54, 65–66.



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‘legal ground’ denotes a single, unified concept, and in the absence of such a legal ground any transfer can be directly recovered without more. It is obvious that a number of important qualifications have to be introduced in order to make this version of the Leistungskondiktion workable in practice. First, as we have seen, the concept of a legal ground must be understood to extend beyond the core idea of an enforceable claim to include also gifts and transfers ob rem, as well as contracts unenforceable for lack of form, prescribed debts, etc.129 This enables the Leistungskondiktion to encompass not only the condictio indebiti – the claim for what is not owed – but also the other condictiones of the ius commune which were included in the BGB, such as the condictio ob rem explicitly recognised in the second sentence of § 812(1) BGB.130 Secondly, as we have seen, § 814 BGB in particular plays a crucial role in limiting the scope of the Leistungskondiktion as objectively understood. According to this provision, ‘what has been performed for the purpose of fulfilling an obligation cannot be claimed back if the person who performed knew that he was not obliged to perform’.131 Thus, knowledge of the absence of a legal ground for the transfer bars restitution. However, as these qualifications suggest, one difficulty with the objective version of the Leistungskondiktion from an analytical perspective is that it rests on too sweeping a generalisation. As the list of possible legal grounds in the previous paragraphs shows, there is a large class of transfers which are not supported by any true relationship of indebtedness but in respect of which it would be highly undesirable to allow recovery. Take the case where F transfers his house to his wife G in order to induce her to return to him: clearly the transfer is unsupported by any relationship of indebtedness, but if G actually returns it should not be possible for F to recover the house. In order to achieve the right result in this case, F’s transfer has to be regarded as supported by a different sort of legal ground: a shared understanding as to the purpose for which it is given which is not, however, contractual.132 But while proponents of the objective analysis are able to explain the denial of restitution here by extending the concept of a legal ground beyond the core case of a relationship of indebtedness, this solution seems to involve sacrificing a degree of the elegance and simplicity which distinguished the Leistungskondiktion in the first place.133 The same point can be made with respect to gifts. Although it is one of the distinctive features of the civilian approach that it treats donations as contracts, it is only with some artificiality that a gift can be regarded as a transfer in discharge of liability, or a gift contract as a relationship of 129  Markesinis et al, German Law of Obligations, n 27 above, 726–27; Du Plessis, ‘Towards a Rational Structure of Liability for Unjustified Enrichment’, n 28 above, 173–74; Dannemann, German Law of Unjustified Enrichment and Restitution, n 25 above, 37–44, 45–49. 130   See III(A) above, as well as Krebs, Restitution at the Crossroads, n 27 above, 214–15. 131   Once again, the burden of proving such knowledge rests on the defendant. See here also the good faith provision in § 242 ‘which would exclude an enrichment claim if the transfer is made with the discernible object that the recipient should have it, regardless of whether a legal ground existed or not’: Du Plessis, ‘Towards a Rational Structure of Liability for Unjustified Enrichment’, n 28 above, 174. 132   See, eg, Dannemann, German Law of Unjustified Enrichment and Restitution, n 25 above, 44–45. 133   cf Krebs, Restitution at the Crossroads, n 27 above, 214–15.

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indebtedness.134 Thus, a gift, too, must be recognised as yet another distinct kind of legal ground in order to defeat claims which would otherwise succeed under the general action. This multiplication of legal grounds appears to be the price which the objective version of the Leistungskondiktion pays for the directness and economy achieved in routine cases, like that of A and B discussed above. In fact, the objective analysis of the Leistungskondiktion is vulnerable to an even more searching criticism, in that it does not seem to be able to offer any principled explanation at all for the knowledge defence in § 814 BGB. Take the case where H and I are in dispute over whether H owes I money under a statute, and H, who believes (correctly) that the sum is not owed ultimately pays outright in order to close the matter. According to § 814, H’s knowledge of the absence of any obligation to pay excludes restitution: this is mistake by another name. But in its very nature, the only way in which the objective version of the Leistungskondiktion can explain the refusal of restitution is by pointing to the existence of an objective legal ground to support the transfer: to ‘legal institutions or figures from outside the law of unjustified enrichment’.135 On an analytical level it simply cannot accommodate the sort of subjective considerations introduced by § 814. Admittedly, the transfer in this case might be said to be supported by a contract of compromise between the parties.136 However, ex hypothesi, I, the recipient of the payment, believes that it was indeed owing under the statute. So if only for this reason, there cannot be any compromise underlying the transfer in this case. Alternatively, H’s payment could be said to be supported by a contract of gift. This has often been advanced as the explanation for the error requirement in the context of the Roman condictio indebiti.137 But once again, this explanation seems highly artificial. On the one hand, there is really no gratuitous intention on the part of H at all. On the other, there cannot be a genuine gift contract here because once again, I, the recipient, believed the money to be owed. If all that is meant by ‘gift’ is that the transfer was made with gratuitous intent on the part of the transferor, donandi causa, then the plaintiff’s intention is in truth relevant as a primary fact.138 One is simply putting an objective gloss on a subjective phenomenon. So it seems that neither of these explanations is at all satisfactory. It is only through fiction that H’s payment can be seen as supported by a contract of compromise or gift.   ibid 214.   Smith, ‘Demystifying Juristic Reasons’, n 111 above, 291. 136   But see Dannemann, ‘Unjust Enrichment as Absence of Basis’, n 120 above, 375–76; German Law of Unjustified Enrichment and Restitution, n 25 above, 168, 308: according to § 779 BGB, a contract of compromise requires both parties to give in. For the position in English law see Burrows, The Law of Restitution, n 7 above, 603–4. 137   See, eg, R Zimmermann, The Law of Obligations: Roman Foundations of the Civilian Tradition (Cape Town, Juta, 1990) 851. 138   ‘Consent is in the role of showing that an enrichment is not unjust, nothing more or less . . . It is not in the role of part of a declaration of intention that is constitutive of a legal transaction and which, indirectly, validates an enrichment’: see L Smith, ‘Unjust Enrichment: Big or Small?’ in S Degeling and J Edelman (eds), Unjust Enrichment in Commercial Law (Sydney, Thomson Reuters, 2008) 38. 134 135



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Of course, in excluding restitution of performance in cases where the plaintiff was actually aware of the absence of any legal ground supporting the payment, § 814 gives effect to the important policies of certainty and finality. In particular, like mistake in a system founded on unjust factors, the knowledge defence protects the recipient’s reliance.139 However, the failure of the objective approach to accommodate subjective purposes means that it can offer no principled explanation for the exclusion of liability in cases where the plaintiff knew that the sum paid was not owed. In fact, it seems that the objective analysis of the Leistungskondiktion is itself vulnerable to the very criticism levelled by civilians against the unjust factors approach in English law: just as it has been argued that the defence of good con­ sideration masks an absence of legal ground approach, so it seems that the defence in § 814 BGB implies an approach founded on unjust factors, namely, the unjust factor of mistake.

(ii)  Deficiencies in the Subjective Analysis of the Leistungskondiktion It is precisely because of arguments of this kind that many contemporary German theorists embrace instead a subjective version of the Leistungskondiktion.140 According to this subjective analysis, the legal ground underlying a transfer is not an objectively determined relationship of indebtedness, like a contract or a statutory obligation, but rather the particular subjective purpose with which that transfer is made. The absence of a legal ground is determined by asking whether the purpose actually envisaged by the transferor has been achieved. This is essentially the version of the legal ground approach proposed for the South African law of enrichment by transfer by Daniel Visser.141 It is also the version of the Leistungskondiktion adopted by Birks in his account of the restitution of enrichment by transfer: as we have seen, he divided the category into ‘obligatory’142 and ‘voluntary’143 enrichments, a distinction which rests on the acknowledgement of the range of subjective purposes which motivate transfers. In fact, the subjective analysis of the Leistungskondiktion still achieves a degree of ‘automatic restitution’ in cases where the transferor’s purpose can be readily inferred from the surrounding circumstances. To return to the core case introduced above,144 where A has paid taxes to B, his local council, in compliance with a regulation which turns out to be ultra vires, it can be readily assumed that A’s subjective purpose in making the payment was the discharge of his putative

  See, eg, Zimmermann, ‘Modern Civilian Approach’, n 34 above, 407.   Zimmermann and Du Plessis, ‘Basic Features of the German Law of Unjustified Enrichment’, n 29 above, 26; Krebs, Restitution at the Crossroads, n 27 above, 223–26; Du Plessis, ‘Fraud, Duress and Unjustified Enrichment’, n 38 above, 206–7; ‘Towards a Rational Structure of Liability for Unjustified Enrichment’, n 28 above, 173–74. 141   See Chapter 1 at III. 142  Birks, Unjust Enrichment, n 8 above, 130–42. 143   ibid 142–54. 144   In IV(B)(i) above. 139 140

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liability under the regulation.145 There is no need to look any further than the invalid regulation in order to determine that A’s purpose in making the transfer has failed. In this sort of case, restitution still follows directly from the absence of a relationship of indebtedness between the parties, as it does for the objective analysis. At the same time, through its focus on the actual purpose of the transferor, the subjective analysis of the Leistungskondiktion is able to deliver the absence of legal ground approach from both the criticisms set out in the previous subsection. Regarding shared purposes other than the discharge of liability, such as that at issue in the example of F and G, these can be accommodated without artificiality. Where F transfers his house to G in order to induce her to return to him, restitution simply depends on whether or not F’s subjective purpose is fulfilled. On the other hand, in the absence of any shared purpose at all, as in the case where I thinks that a certain sum is owed to him by H and H thinks that it is not, the denial of restitution where H pays outright in order to close the matter need not be explained by reference to a contract of compromise or gift; rather, it simply follows from the fact that H’s subjective purpose has been achieved. Thus, the subjective analysis is able to offer a convincing explanation for the knowledge defence in § 814 BGB as well. However, these improvements come at a price. First, outside contexts in which the plaintiff’s purpose can be readily inferred from the circumstances, the subjective analysis makes it necessary to examine the particular mental state of the plaintiff in order to determine what their purpose was: this is the position in the case of H and I. As we have seen, this emphasis on the plaintiff’s actual purpose means that the subjective analysis is able to explain the denial of restitution in this sort of case in a way that the objective analysis cannot. But it also means that where the plaintiff’s purpose cannot be readily inferred, the absence of legal ground analysis operates no more clearly or elegantly than the unjust factors approach does. In fact, it seems that in this kind of case the emphasis which the Leistungskondiktion puts on the absence of a legal ground is misplaced: the question is not whether the plaintiff’s purpose has failed, but what that purpose was. This point is best illustrated by reference to the English case of Kelly v Solari,146 a case which Birks and Meier regard as involving a covert application of the civilian condictio indebiti.147 According to the plaintiff’s version of the facts, certain directors of a life assurance company had misconstrued the company’s obligations under a insurance contract with the defendant’s deceased husband: they had believed that the contract obliged the company to make the transfer in question; in fact, the policy had lapsed because 145   Admittedly, it remains open for the recipient of the payment to raise the possibility that the plaintiff ’s real purpose was otherwise, typically by showing that the plaintiff knew that the regulation was invalid when he made the payment. But it seems reasonable to assume in the absence of evidence to the contrary that the plaintiff ’s purpose was indeed the discharge of liability. 146   Kelly v Solari (1841) 9 M&W 54. 147  Birks, Unjust Enrichment, n 8 above, 103–4; Meier, ‘Restitution After Executed Void Contracts’, n 24 above, 172.



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the defendant’s husband had failed to pay the quarterly premium. Thus, Kelly v Solari was not an instance of the straightforward case in which someone performs under a putative contract which turns out to be void. Rather, the plaintiff had overperformed relative to a (formerly valid) contractual obligation; in that sense, the transfer was wholly extra-contractual. It follows that there was no objective contractual invalidity from which the directors’ subjective purpose in making the transfer could be smoothly inferred. In analytical terms the most direct way for the plaintiff to show that the directors’ purpose had been the performance of the contractual obligation was to point to their mistake as to the extent of that obligation. This is plain from the language of the court in that case: the question for the jury was, had the directors paid the money ‘under the influence of a mistake’, or had the money been ‘intentionally paid, without reference to the truth or falsehood of the fact, the plaintiff meaning to waive all inquiry into it, and that the person receiving shall have the money at all events, whether the fact be true or false’?148 Far from being an instance where restitution was best explained by reference to the absence of a relationship of indebtedness between the parties – which seems to be what Birks and Meier mean when they describe this as an instance of the condictio indebiti – in Kelly v Solari it was the directors’ mistake which constituted the reason for restitution. Admittedly, the subjective analysis of the Leistungskondiktion still produces the correct outcome in Kelly v Solari: according to this approach, if indeed the directors’ purpose in making the payment had been the discharge of liability, this purpose had failed, and therefore the plaintiff was entitled to recover. Nevertheless, once again, the critical question was not whether the directors’ purpose failed, but what that purpose was. In a case like Kelly v Solari, in which the failure of the transferor’s purpose cannot be directly inferred from the invalidity of a contract or some other source of obligation such as a statute, the difficulty lies precisely in determining whether the transfer has been made in discharge of a putative liability or outright, with knowledge of all the facts. Thus, it does not appear to be an answer to this criticism to say, as Tariq Baloch does, that ‘[t]he new Birksian approach appears to sidestep these difficulties by adopting a mixed approach. It is generally objective when it comes to obligatory enrichments and subjective in relation to voluntary enrichments’.149 In a case like Kelly v Solari, we simply do not know whether we are dealing with an obligatory or voluntary enrichment unless we examine the intention of the transferor. Thus, Kelly and Solari shows that, outside cases involving invalid contracts, the unjust factors approach has better explanatory value than the absence of legal ground analysis. In cases of this kind the subjective analysis of the Leistungskondiktion necessarily collapses back into the unjust factors approach. It involves an additional layer of analysis which is ultimately superfluous. As we have already noted more than once, Birks admitted that the intent-based unjust factors have a continuing role to play in his new analysis: ‘the particular   Kelly v Solari, n 146 above, 58–59 (Parke B).  Baloch, Unjust Enrichment and Contract, n 58 above, 74.

148 149

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unjust factors . . . become reasons why, higher up, there is no basis for the defend­ ant’s acquisition’.150 But it does not seem that this explanation is sufficient to account for cases like Kelly v Solari. Here, the directors’ mistake, if any, was not a ground of invalidity. Rather, as we have seen, the analytical significance of that mistake lay solely and precisely in its role as an unjust factor. It was significant as a ‘primary fact’, unmediated through an absence of legal ground analysis.151 It follows that the pyramid cannot help to meet this particular criticism of Birks’ new theory, and of the absence of legal ground approach in general. It does not give sufficient weight to impairments to intent which are not also reasons for invalidity. In fact, Birks himself seems to have recognised this. In his account of voluntary (ie, non-obligatory) enrichments, he remarks that: in deciding what that [ie, the claimant’s] purpose was, great care has to be taken to see whether the claimant knowingly took the risk that his primary purpose might not be achieved, for if he did his purposes, taking those desired with those intended but not desired, will not have failed. In the absence of mistake or some other impairment of intent, risk-taking is commonly negatived by revealing the purpose of the transfer and thus creating an opportunity for the other side to reject, but there is no need to communicate the purpose to a recipient to whom it is or appears to be manifest.152

Like the subjective version of the Leistungskondiktion, this approach yields the correct result in cases like those of F and G and H and I discussed above.153 But it follows directly from Birks’ proposition that where the plaintiff has not revealed the purpose of his transfer, and where that purpose is not manifest from the surrounding circumstances, the only way to exclude the possibility that the plaintiff was a risk-taker is to point to a mistake or other impairment of intent on his part. Like the subjective version of the Leistungskondiktion, Birks’ analysis necessarily collapses back into an unjust factors approach. One can take this criticism of the absence of legal ground approach even further. There are certain instances of restitution for which even the subjective version of the Leistungskondiktion can offer no principled explanation at all: in other words, where an approach founded on the failure of the purpose of the transfer yields what appears to be the wrong result. Imagine that K, a local authority, threatens to cut off the electricity supplied to J if J fails to pay the amount which K contends is owed; J, who believes (correctly) that the sum claimed by K is not owed, nevertheless makes the payment under compulsion to keep the electricity on.154 As in the case of H and I discussed above, here there is no agreement between the parties as to the purpose of the transfer. Being blind to subjective  Birks, Unjust Enrichment, n 8 above, 116.   Smith, ‘Unjust Enrichment: Big or Small?’, n 138 above, 38. 152  Birks, Unjust Enrichment, n 8 above, 142. 153   See, eg, Meier, ‘No Basis’, n 58 above, 353. 154  This example is used by Daniel Visser in Die Rol van Dwaling by die Condictio Indebiti: ‘n Regshistoriese Ondersoek met ‘n Regsvergelykende Ekskursus (Dr iur thesis, University of Leiden, 1985) 226–28. 150 151



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considerations, the objective analysis of the Leistungskondiktion can offer no convincing explanation for why the knowledge defence set out in § 814 should not operate here, whereas it did in the case of H and I. The real difference between the cases is that in the latter, J’s voluntariness in making the payment is impaired, but such an inquiry into the parties’ subjective intention is off limits to the objective analysis. But it appears that the subjective analysis likewise breaks down in cases of this kind. In the case of J and K, J’s subjective purpose has in fact been achieved: she has prevented her electricity from being cut off. Thus, according to the logic of the subjective analysis restitution ought to be precluded.155 But this is the wrong result. Visser has tried to explain restitution in this case by arguing that although J’s actual purpose is to prevent her electricity from being cut off, nevertheless that is not the ‘objective’ or ‘formal’ purpose of her transfer.156 The parties tacitly agree that the purpose of the transfer should remain the discharge of liability, despite J’s subjective belief that she was not liable to make the transfer, and therefore if that putative liability turns out to have been non-existent restitution follows in the normal way. But the difficulties inherent in this explanation are clear. First, it seems inconsistent with the approach adopted in the case of H and I: why should J’s subjective purpose have no effect on the objective purpose of her transfer, whereas H’s subjective purpose did affect that objective purpose? Secondly, it is difficult to see how the discharge of liability could remain the goal of the transfer, through the tacit agreement of the parties, in the face of J’s knowledge that the transfer was not in fact owed. In fact, the only convincing explanation for this outcome in analytical terms is to point to the compulsion to which J was subject. The real difference between the cases of H and I and J and K is that in the latter case, J’s voluntariness in making the payment was impaired: hence the exception to the knowledge defence in § 814 BGB recognised in precisely this sort of case.157 Whether it is formulated objectively, in terms of the absence of a legal ground, or subjectively, in terms of the failure of the purpose of the transfer, in this case the Leistungskondiktion relies on the specific unjust factor of compulsion in order to achieve an acceptable result. In other words, it relies on a concealed unjust factors analysis.

(iii)  Substantiation of the Leistungskondiktion Necessarily Relies on Unjust Factors The discussion above was concerned with the analytical shortcomings of the Leistungskondiktion. Outside cases in which the plaintiff’s purpose can be readily inferred from the surrounding circumstances, it appears that the unjust factors 155   This criticism is conceded by Du Plessis, ‘Fraud, Duress and Unjustified Enrichment’, n 38 above, 207–8; ‘Towards a Rational Structure of Liability for Unjustified Enrichment’, n 28 above, 173. 156  Visser, Die Rol van Dwaling, n 154 above, 226–28. 157  Markesinis et al, German Law of Obligations, n 27 above, 736–37; Dannemann, German Law of Unjustified Enrichment and Restitution, n 25 above, 76–78.

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approach has better explanatory value than the Leistungskondiktion. However, quite apart from the analytical shortcomings of the Leistungskondiktion, distinct difficulties arise from its operation in practice. Given the fact that the Leistungskondiktion concerns purposeful transfers, in alleging a version of the events which does not disclose the existence of a legal ground the plaintiff must necessarily adduce a positive reason why he sought to discharge a liability which did not in fact exist.158 In other words, he must adduce some factor which had the effect of impairing his voluntariness in making the transfer. This is so despite the fact that § 814 BGB treats knowledge on the part of the plaintiff as a defence to be raised by the recipient. In practice, in giving his version of events, the plaintiff must be able to point to mistake, compulsion, etc. Once again, this is a distinct point from the analytical one made in the previous section. It is also a distinct point from the argument, sometimes advanced by critics of the absence of legal ground approach, that this approach requires the plaintiff to prove a negative, namely, the absence of any legal ground underlying the transfer, or, alternatively, that it requires the defendant to prove a legal ground in order to retain any benefit received. In fact, German law has sophisticated rules for managing the parties’ pleadings under the general clause in § 812.159 The plaintiff must point to a particular basis on which he made the transfer, one which did not in fact exist. If the existence of that basis is a matter for dispute between the parties, the burden of proving its non-existence falls on the plaintiff. On the other hand, if the basis named by the plaintiff is shown not to have existed, the defendant may argue that there is instead another basis supporting the transfer. It is for the defendant to point to this particular basis, but if that too is disputed, the burden of proof falls once again on the plaintiff. Thus, it is not true that section 812 requires the plaintiff to prove a negative, or that it places the burden of proof on the defendant. Nevertheless, the problem identified above persists. In practice, it will generally be impossible for the plaintiff to substantiate the assertion that his purposeful transfer lacked an underlying legal ground without referring to the impairment of his intention in making it.

(iv)  Grounds of Invalidity and Unjust Factors Can Co-exist Finally, regarding the argument that it is uneconomical and unnecessary for a legal system to recognise (at least) two sets of rules regarding impairments to consent such as mistake, one for grounds of invalidity, the other for unjust factors, in fact ‘[i]t is not at all clear that the “law of consent” should have the same content in the different places where it arises’.160 In a legal system such as German law with 158   cf Stevens, ‘Is there a Law of Unjust Enrichment?’, n 14 above, 32: ‘The mistake forms a necessary part of the story’. 159   See the lucid explanation provided by Sonja Meier in ‘No Basis’, n 58 above, 350–51. Daniel Visser explains how these rules might operate in South African law: Unjustified Enrichment, n 66 above, 329–30. 160   Smith, ‘Unjustified Enrichment: Big or Small?’, n 138 above, 37.



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a single unified law of consent, there is a tendency to assume that this content should be uniform. But in fact ‘the common law, in which the “law of consent” has never been unified, reveals various situations in which the principles seem to differ as between unilateral enrichments and bilateral bargains’.161 As we have seen, the question to whom the law assigns a particular benefit is usually answered by reference to whether the plaintiff fully intended to benefit the recipient, although other considerations may be relevant.162 However: when we consider the plaintiff’s intention . . . we must always remember that we have institutions, like the law of contract, that exist to allow people to commit themselves in advance to the intentional conferral of benefits, in such a way that they cannot freely change their minds.163

In other words, although the plaintiff’s intention is key in determining whether or not to grant restitution, the test or standard applied may vary depending on whether the transfer in question constituted a performance under a contract to which the plaintiff has already committed himself. Again, this point appears to apply equally to South African law. Indeed, as I have tried to show in Chapters 2, 3, 4 and 5, South African law’s error consists precisely in its tendency to apply the same stringent tests to mistake, compulsion and minority as grounds of invalidity and unjust factors. There is evidence of the same phenomenon in English law.164 I have criticised this position as doctrinally unacceptable, in that it leads to indefensible restrictions on the restitution of extra-contractual transfers. For example, in the case of the South African law of mistake, whatever protection the reliance of the recipient of a mistaken transfer deserves, it is certainly less deserving of protection than the reliance of a contracting party on the appearance of consensus created by a contractual document or other objective agreement.165 Although such overlap in the content of grounds of invalidity and unjust factors is to some extent attributable to the particular historical context of the South African law of enrichment, and in particular the influence of the remedy of restitutio in integrum, it cannot be denied that it is at least enabled by the duplication between invalidating grounds and unjust factors which characterises the unjust factors approach. But rather than greater uniformity, what is needed is a more nuanced or textured approach to the law of consent.166

  ibid 38.   Smith, ‘Demystifying Juristic Reasons’, n 111 above, 302. 163  ibid. 164   See, eg, Baloch, Unjust Enrichment and Contract, n 58 above, 79–81 and Dannemann, German Law of Unjustified Enrichment and Restitution, n 25 above, 201–2, discussing CTN Cash and Carry Ltd v Gallaher Ltd [1994] 4 All ER 714. 165   cf Chapter 3 at V(B). 166   Smith, ‘Unjustified Enrichment: Big or Small?’, n 138 above, 38. 161 162

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VI  Unjust Factors and the Common Law Method It was a central argument of Chapters 2, 3, 4 and 5 that the prominence of the unjust factors of mistake, compulsion and minority in South African law is due to the influence of restitutio in integrum in the nineteenth and early twentieth centuries. South African courts used this powerful equitable remedy alongside or indeed in preference to the traditional condictio indebiti. Since restitutio in integrum relied on specific reasons for equitable intervention, it tended to promote the use of unjust factors by judges in order to justify restitution. However, this historical explanation for the mixed analysis cannot be a complete one. Nor can the historical explanation account for South Africa’s continuing preference for unjust factors. As set out in Chapter 1, it is clear that at least part of the explanation is to be found in the uncodified European common law itself. Certain unjust factors, in particular mistake, have always been present in the civilian tradition. On the other hand, it is possible that the emergence of unjust factors in South African law is due to the influence of English law; for example, as explained in Chapter 4, the English doctrine of duress of goods was imported directly into South African law. However, this influence is not systematic; in fact relatively few South African cases make explicit reference to English law. Indeed, for much of the period under consideration here there was simply no self-contained English law of unjust enrichment capable of exerting systematic influence on South African law. A third possible explanation for the emergence of unjust factors in South Africa is the absence of codification: whereas German law is codified, neither English nor South African law is. As we have seen, according to the absence of legal ground approach to enrichment by transfer, restitution of performance under void transactions is more-or-less automatic. In order for that approach to function properly, it is necessary to decide in advance which flawed transactions should attract restitution and which should not: if the word ‘void’ implies automatic restitutionary consequences, it must be deployed very carefully indeed. Although South African law has inherited from the civilian ius commune much of the infrastructure necessary to operate a pure absence of legal ground approach, such as the concept of a natural obligation,167 nevertheless it lacks a systematic doctrine of nullity. Given that, it is unsurprising that South African judges have been reluctant to embrace the absence of legal ground approach in its pure form. However, a fourth explanation is available. There appears to be a strong association between specific, positive reasons for restitution such as mistake, compulsion, etc and the common law method itself.168 Modern common law judges are, of 167  See, eg, D Sheehan, ‘Natural Obligations in English Law’ [2004] LMCLQ 172; M McInnes, ‘Natural Obligations and Unjust Enrichment’ in E Bant and M Harding (eds), Exploring Private Law (Cambridge, Cambridge University Press, 2010). 168   For a fuller version of this argument see H Scott and DP Visser, ‘The Impact of Legal Culture on the Law of Unjustified Enrichment: the Role of Reasons’, n 114 above, 153.



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course, not simply appliers or interpreters of law, but law-makers too. The operation of the doctrine of precedent – the way in which past judicial decisions constrain decisions in future cases – is of course a matter of great controversy,169 but it is axiomatic to the doctrine that judges’ decisions are in some sense authoritative. It is in the granting of relief that this authority is most clearly exercised. This does not mean that common law judges make law only when they intervene: in the context of an interpretive law-making tradition, the refusal to grant relief may be equally significant. Nevertheless, it is primarily by intervening that common law judges move the law forward, either by creating an entirely new legal rule or, more commonly, by extending the boundaries of an existing one. It is their ability to do this which distinguishes common law judges from their civilian counterparts.170 Furthermore, it appears that reasons play a key role in this judicial law-making function. In fact, the practice of giving reasons is historically linked to the emergence of the doctrine of precedent itself: since the middle of the nineteenth century common law judges have been in the habit of formulating their reasons in written judgments, despite the fact that initially at least they were not obliged to do so.171 However, judicial reasons are not always clearly and succinctly formulated. Moreover, even when a judge does formulate such a rule in order to justify her decision in a particular case, it is not like a rule in a statute. Rather, it has to be read in its context: in formulating the ratio decidendi of her decision, a judge formulates a rule which justifies that particular decision.172 Thus, the concept of the ratio decidendi seems itself to embody a species of formal limitation on the power vested in judges: only a rule acted upon by the court can rank as binding, and a judicially-formulated rule does not bind except insofar as it justifies the outcome in the particular case in which it appears.173 It follows from this that even where a common law judge does explicitly state the rule upon which she has acted, she will not generally state it more broadly than is necessary to justify her decision. This brief account of judicial reasoning itself offers a further possible explanation for the apparent preference of common law judges for the unjust factors analysis of 169   The sources here are too many to be listed individually. Recent accounts include L Alexander and E Sherwin, Demystifying Legal Reasoning (Cambridge, Cambridge University Press, 2008) and N Duxbury, The Nature and Authority of Precedent (Cambridge, Cambridge University Press, 2008). 170   It is easy for a common lawyer to overstate this point, particularly with respect to German law. Judgments applying laws of general application such as § 812 BGB may well have a significant impact: they may shape future understanding of the meaning of that provision, or even establish new lowerlevel rules to guide the application of that provision. In practice, a judgment of the Bundesgerichtshof in Germany is very likely to be followed by lower courts: see (in English), eg K Zweigert and H Kötz, An Introduction to Comparative Law, 3rd edn (Oxford, Oxford University Press, 1998) 262 ff, and more generally JP Dawson, The Oracles of the Law (Westport, Greenwood Press, 1968) ch 6. Nevertheless, the fact remains that such judgments are not ‘law’ in the technical sense that a judgment which is clearly wrong is still required to be followed. Judgments of German courts might be highly persuasive, but they are not authoritative in and of themselves. 171   See generally D Dyzenhaus and M Taggart, ‘Reasoned Decisions and Legal Theory’ in D Edlin (ed), Common Law Theory (Cambridge, Cambridge University Press, 2007) 134–37. 172   See AWB Simpson, ‘The Ratio Decidendi of a Case and the Doctrine of Binding Precedent’ in AG Guest (ed), Oxford Essays in Jurisprudence (Oxford, Oxford University Press, 1961) 166. 173   ibid 161.

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enrichment by transfer. The rule used by a judge to justify her decision according to either version of the absence of legal ground analysis necessarily incorporates a negative proposition. If there is no legal ground in play – a relationship of indebtedness, etc – the claimant’s transfer is prima facie recoverable. Thus, the substantive reasons for restitution are negative ones. For example, where L pays a debt twice to M, forgetting he had paid it the first time, either (it is said) L ought to be able to recover because he paid the money for a particular purpose, ie, the discharge of an obligation, and that purpose failed because no such relationship existed (the subjective analysis of the Leistungskondiktion); or he ought to recover because his payment is unsupported by a legal ground (the objective version).174 But this negative reason for restitution necessarily justifies a wide range of decisions beyond the case immediately before the court. Where L is permitted to recover his second payment to M on the ground that it lacked a relationship of indebtedness to support it, the rule which justifies this decision is necessarily wildly over-inclusive. It provides a justification also for almost every other judicial decision to order the restitution of enrichment by transfer. Furthermore, it is axiomatic to the absence of legal ground approach, at least in the context of enrichment by transfer, that a judge needs a reason not to intervene, ie, not to order restitution. In justifying intervention in terms of the absence of a legal ground, this approach makes restitution the default option. Positive reasons – the existence of a legal ground in the form of a contract, gift, etc – are reserved for cases where the judge refuses to intervene. Yet it is when they grant relief that judges’ decisions most urgently require reasoned justification. After all, it is primarily in granting relief that judges exercise their public power. Thus, it appears that the justification for intervention offered by the absence of legal ground approach is not only too broad but also too weak to be palatable to a common law judge. It is analytically strong precisely where such strength is relatively unimportant to a common law judge, ie, in providing a reasoned justification for her refusal to intervene. It follows from these points that the absence of legal ground approach is necessarily at war with the judicial conservatism inherent in the common law method. Conversely, common law judges naturally prefer an analysis which turns on unjust factors such as mistake. On the one hand, positive reasons for restitution necessarily justify a smaller range of cases than negative ones do, thus satisfying the judicial preference for specificity in the formulation of rationes decidendi. More than that, unjust factors offer a positive justification for judicial intervention, ie, for the exercise of judicial law-making power, allaying judicial anxiety about reasoned intervention in the context of a legal system which treats judicial decisions as authoritative. Unlike the absence of legal ground approach, the unjust factors analysis reflects and respects the conservatism innate in the common law method. If this argument is correct, it seems that the introduction of a system of judge-made law into South Africa after colonisation by the British in the nine  See V(B)(i) and (ii).

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teenth century may offer at least a partial explanation for the drift towards unjust factors discernible in the South African law of enrichment. Whereas South Africa’s substantive civilian heritage seems to pull it towards German law, the procedural context in which those substantive rules operate appears to be an important factor militating against the absence of legal ground approach.

VII  A Mixed Approach In his final treatment of the subject, Birks claimed that a limited reconciliation between the absence of legal ground and unjust factor approaches was possible.175 For Birks, such a reconciliation lay in: making the intent-based unjust factors subservient to absence of basis, which itself then becomes an intermediate generalization between the unjust factors and unjust. A pyramid can be constructed in which, at the base, the particular unjust factors such as mistake, pressure, and undue influence become reasons why, higher up, there is no basis for the defendant’s acquisition, which is then the master reason why, higher up still, the enrichment is unjust and must be surrendered.176

However, as Birks explicitly acknowledges in this passage, such reconciliation is possible only if the relationship between the two analyses is understood as a hierarchical one.177 In terms of Birks’ revised scheme, factors such as mistake, compulsion, etc are significant only insofar as they cause the invalidity which in turn accounts for the absence of such a basis or ground.178 In other words, unjust factors figure in the pyramid only to the extent that they duplicate grounds of invalidity. Thus, it does not appear that Birks accords these unjust factors any analytical significance in their own right. It is the absence of an explanatory basis for the enrichment which alone triggers recovery. As already explained in Chapter 1, an alternative attempt at reconciliation has recently been advanced by Daniel Visser, specifically in the context of South African law. Visser adopts a broad view of the ‘unjustified’ concept: the absence of a legal title in the narrow sense is not in itself a sufficient condition for restitution; rather, the elements of the particular enrichment action applicable in a given situation together determine whether that enrichment is unjustified. Each new instance of liability requires a fresh judgement of value or policy in order to decide whether it should be treated as unjustified.179 In the context of enrichment by 175   See also Robert Stevens: ‘no legal system can be constructed solely around this concept [ie, the absence of a legal ground], and it is also necessary, in all legal systems, to examine the positive reason why the conferral of an enrichment is unjustified’: Stevens, ‘Is there a Law of Unjust Enrichment?’, n 14 above, 12–13. 176  Birks, Unjust Enrichment, n 8 above, 116. 177   ibid 114–16. 178   ibid 113–17. 179  Visser, Unjustified Enrichment, n 66 above, especially 171–93.

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transfer in particular, Visser proposes ‘failure of the purpose of the transfer’ as a species of algorithm or thinking-tool: the failure of the purpose of the transfer renders it prima facie unjustified in this broader sense.180 Primary facts such as mistake might still form part of the wider explanation as to why the enrichment should or should not be restored, but such facts are not to be treated as requirements for liability, elements of a successful action to be proved by the plaintiff in every case; it remains open to the plaintiff to adduce alternative reasons why the enrichment is unjustified in the particular context.181 Thus, Visser espouses a ‘third way’ between the unjust factors approach and the absence of legal ground analysis, one which is capable of avoiding the weaknesses of each. Yet, as in the case of the Birksian pyramid, it is unclear whether this third way really succeeds in harmonising the two approaches. Admittedly, according to Visser’s approach, the absence of a legal ground is not decisive: unjust factors act as a check upon the failure of purpose analysis. But neither can an unjust factor such as mistake be said to be analytically significant in itself. As in the case of Birks’ pyramid, it seems that it is the absence of legal ground analysis which largely determines liability. Thus, it appears that the hybrid analyses proposed by Birks and Visser accord only a very modest role to unjust factors. But as will be clear from the previous section, it is my view that these limited reconciliations do not go far enough. In particular, they give insufficient prominence to those cases in which unjust factors are significant not merely as grounds of invalidity or facts otherwise giving rise to the failure of a legal ground but in themselves, unmediated through any absence of legal ground analysis. There is a widespread view among theorists that a truly mixed approach to enrichment by transfer is untenable. Birks argued with respect to Kelly v Solari that, ‘it would be absurd to suggest . . . that by demonstrating two approaches applicable to that case that we have revealed the presence of two different causes of action’.182 Similarly, for Andrew Burrows, Birks was ‘absolutely correct that mixing the two is a recipe for confusion and inconsistency’.183 But as I attempted to show in the discussion above, in fact a ‘pure’ approach to enrichment by transfer is an impossibility. The unjust factors approach relies on defences such as good consideration in order to achieve correct outcomes in mistake cases. In other words, it relies on a concealed legal ground analysis in order to function. On the other hand, it seems that the absence of legal ground analysis applied in German law is similarly incapable of operating without covert reliance on unjust factors, such as the mistake requirement inherent in § 814. Thus, in the words of Lionel Smith, ‘every legal system can and does mix the two approaches’.184 If that is so, then it appears that the mixed approach is not after all the analytical monstrosity that Birks believed. Rather, the mixed approach to unjust/ified   ibid 229–53, especially 251–53.  ibid 187. 182  Birks, Unjust Enrichment, n 8 above, 114. 183  A Burrows, ‘Absence of Basis: the New Birksian Scheme’ in A Burrows and Lord Roger of Earlsferry (eds), Mapping the Law: Essays in Memory of Peter Birks (Oxford, Oxford University Press, 2006) 48. 184   Smith, ‘Demystifying Juristic Reasons’, n 111 above, 304. 180 181



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enrichment by transfer simply makes it explicit that each analysis necessarily incorporates elements of the other. Indeed, the mixed approach has the great advantage of flexibility. As we have seen, in the case of each analysis there are a number of central instances which it is able to explain only rather awkwardly. For example, where A has paid taxes to his local council, B, in compliance with a regulation which later turns out to be ultra vires, the absence of legal ground analysis appears to provide the most intuitively satisfying justification for restitution; the fact that the plaintiff was mistaken as to his liability – the vitiation of his voluntariness in making the payment – is really of secondary importance. On the other hand, on facts such as those at issue in Kelly v Solari, where the plaintiff’s purpose in making the transfer cannot be readily inferred from the surrounding circumstances, the unjust factors approach appears to have superior explanatory power. Far from being an instance where restitution was best explained by reference to the absence of a relationship of indebtedness between the parties, here it was the directors’ mistake which constituted the true reason for restitution. In a legal system which embraces a mixed approach to the restitution of enrichment by transfer it is possible to switch between the two analyses as necessary; to emphasise elements of the unjust factor and absence of legal ground approaches where appropriate while de-emphasising others. Thus, it appears after all unnecessary for South African law to face a stark choice between these two analyses. Some degree of mixing is not only inevitable but even desirable. Both an appropriate unjust factor and the absence of any legal ground can coherently be treated as necessary conditions for the restitution of enrichment by transfer in South African law. But neither is sufficient in itself.185

185   cf Robert Stevens’ account of the English law of unjust enrichment in these terms: Stevens, ‘Is there a Law of Unjust Enrichment?’, n 14 above.

7 Conclusion I  Unjust Enrichment in South African Law It has been generally assumed that the appropriate action to reverse enrichment by transfer in South African law is the condictio indebiti – the condictio for what is not owed. Accordingly, it has been widely assumed that an enrichment claim arises in principle from the absence of a valid contract or other legal ground underlying that transfer. To the extent that the law is inconsistent with this analysis, attempts have been made to rationalise it. Thus, for example, it has been argued that mistake is significant only insofar as it shows that the transfer was not a gift – that there was no legal ground for the transfer in the form of a donation – and that compulsion matters only insofar as it in turn displaces the inference of donation which arises where the plaintiff knew that he was not obliged to make the transfer. However, the central argument of Chapters 2 to 5 was that the condictio indebiti is not the only mechanism available in South African law to effect the restitution of mistaken or compelled transfers, or transfers made by minors and other persons of limited capacity. In fact, the extraordinary remedy of restitutio in integrum has played a significant role in the development of South Africa’s law of enrichment. Historically, this remedy has been available to effect the restitution of transfers, alongside a wide range of other responses, restitutionary and otherwise, on grounds of reasonable mistake (iustus error), compulsion (metus), fraud (dolus), minority, etc. Thus, when instances of restitutio in integrum are considered alongside instances of the condictio indebiti – when one analyses the modern law in terms of generic causes of action in enrichment, rather than focusing on specific forms of action as academics have tended to do – a new analysis of enrichment by transfer begins to emerge. The apparently chaotic application of the condictio indebiti in modern South African law becomes intelligible. The law in fact reflects a series of specific unjust factors.

A Mistake In chapters 2 and 3 I dealt in detail with the restitution of mistaken transfers. It appears that while it is generally the condictio indebiti that is applied to such trans-



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fers, this has by no means invariably been the case in South African law. In particular, in cases where the plaintiff seeks to recover performance rendered under a contract invalidated by a unilateral mistake, historically it is restitutio in integrum that has been considered the appropriate restitutionary remedy. South African law requires a particular species of error in order to found the restitution of mistaken transfers, whether by means of the condictio indebiti or by restitutio in integrum: that mistake must be an excusable mistake or iustus error (reasonable mistake), a quality demonstrated by a range of factors, in particular the fact that the mistake was induced by the recipient of the transfer. The historical origins of this substantive iustus error requirement lie in restitutio in integrum, which served in turn as a conduit for the application of the English doctrine of Equitable mistake in contract. Not only is the iustus error requirement alien to the condictio indebiti in a purely historical sense; in its present form it is irreconcilable with the principles underlying that action, in that it appears to rest on a conception of the condictio indebiti as a corrective to the general legal order: a mechanism which is technically extraordinary. Yet, to regard the restitution of mistaken transfers as a species of extraordinary equitable relief means denying the existence of an autonomous law of enrichment altogether. Having made out a mistake, the plaintiff succeeds by right. Nor is it possible to justify retaining the excusable mistake requirement in some more moderate form. That requirement does not appear to be capable of performing any useful work not already done by the defence of loss of enrichment.

B Compulsion In Chapter 4 I analysed what has sometimes been regarded as an exception to the mistake requirement in the context of the condictio indebiti, namely, the restitution of transfers on grounds of compulsion. I showed that it was restitutio in integrum rather than the condictio indebiti that was used to effect the restitution of compelled transfers in early South African law. It seems that the application of the condictio indebiti to recover compelled transfers as well as mistaken ones arose directly out of restitutio in integrum, and occurred only in the first decades of the twentieth century. It follows from the research presented in this chapter that compulsion constitutes a specific unjust factor in the modern South African law of enrichment, in the same series as mistake. In cases of duress of goods, an additional requirement for restitution has arisen, namely, that the plaintiff must have protested when he made the transfer. Like the requirement of excusable mistake, the protest requirement appears to derive from a particular conception of the restitutionary claim, originating in restitutio in integrum, according to which the applicant for relief succeeds only if he can demonstrate that he deserves the special assistance of the court. As in the case of excusable mistake, it is difficult to defend this protest requirement: as long as there is a reason for restitution in the fact that the transfer was made under compulsion and was not owed, it should be

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unnecessary to find any additional justification for relief. Nor does there appear to be any adequate policy-based justification for the retention by the recipient of a compelled transfer of enrichment which survives in his hands

C Incapacity Finally, in Chapter 5 I argued that minority functions as an unjust factor in modern South African law in the same way as mistake and compulsion. Historically – in Roman and Roman-Dutch law – there is evidence that the condictio indebiti was applied to the restitution of performance by minors under unassisted and therefore void contracts, whereas restitutio in integrum was used to effect the restitution of performance by minors under contracts which were assisted but which were prejudicial to the minor. However, modern South African law appears to have adopted a unified approach: restitutio in integrum on grounds of minority is used to effect the restitution of perform­ance in the former case also. Thus, it appears that restitution in these cases cannot be explained by an absence of legal ground approach, one which emphasises only the invalidity of the contract. Restitution is barred if the minor has represented himself to be a major. This rule appears to flow from a conception of the restitutionary remedy as a species of extraordinary relief granted on the basis of equitable considerations. As in the case of mistake and compulsion, it is difficult to reconcile this conception of the minor’s claim with the view that restitution follows as of right, on the basis of the recipient’s enrichment. More recently, the incapacity of natural and juristic persons (for example, a trustee or corporation acting ultra vires) has been treated as analogous to that of a minor, so as to permit the trustee or corporation to recover transfers made. Restitution in these cases has been effected exclusively by means of the condictio indebiti. Although no additional qualifications appear to operate here, proof of incapacity allows the plaintiff to evade the onerous excusability requirement which otherwise operates in cases of mistake. It follows that here, too, it is necessary to recognise the positive role played by the unjust factor of incapacity in founding restitution.

D  The Importance of Unjust Factors Taking these points together, it seems impossible to make sense of the South African law relating to the restitution of mistaken transfers, compelled transfers and transfers made by minors and those suffering from juristic incapacity without giving due weight to the role played by specific unjust factors; in particular, those unjust factors which Professor Birks originally grouped together under the heading of vitiated or impaired intent. An analysis founded on the absence of legal ground simply cannot reflect the subtleties of the modern law, in that it cannot distinguish between different reasons for restitution. Such distinction is vital in



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light of the additional requirements for restitution which apply in each case, such as the excusability requirement in cases of mistake. In fact, the most immediate advantage of such a revised taxonomy is that it allows qualifications such as the excusable mistake requirement to be rationally evaluated. Previous commentators have tended to regard both the mistake requirement and the excusability requirement as equally illegitimate: thus, they have argued for the abolition of both on grounds of principle. However, if it is accepted that the South African law of enrichment by transfer in fact requires analysis in terms of unjust factors, then it is possible to begin to re-evaluate qualifications to liability – the excusability requirement in cases of mistake, the protest requirement in cases of compulsion and the refusal of a minor’s claim in cases of fraudulent misrepresentation – without having to reject the underlying structure of the law as it currently stands.

II  In Defence of the Unjust Factors Analysis It remains a distinct question whether the unjust factors approach which appears to prevail in South African law is satisfactory – whether it is internally coherent; whether it accurately reflects the real reasons for restitution in key cases – or whether it would be preferable to develop instead the civilian elements still inherent in the modern South African law. This question seems particularly pressing in light of recent developments in England and elsewhere in the common law world. In addition, the question arises whether unjust factors can be harmoniously combined with the absence of legal ground approach to produce a workable regime. Regarding performance rendered under invalid contracts, it has been argued that the traditional unjust factors account of the restitution of contractual perform­ance is in truth superfluous; that the unjust factors of mistake, compulsion, minority and incapacity simply mirror the reasons why the contract is invalid; and that such performances should thus be analysed as transfers in discharge of liability, as in German law, more-or-less automatically recoverable where that liability is absent. Moreover, proponents of the absence of legal ground approach argue that the absence of legal ground approach is preferable to the unjust factors approach also in respect of wholly extra-contractual transfers. The main thrust of this argument is that unjust factor – specifically, the unjust factor analysis of mistaken transfers – have little explanatory power in that they fail to reflect the true reasons for restitution (or the absence of restitution). It is argued, further, that it is uneconomical and unnecessary for a legal system to recognise impairments to consent such as mistake, compulsion, minority and incapacity as both grounds of invalidity and distinct unjust factors, especially if these grounds or factors are given different content in each context. However, in each case it appears that the argument against unjust factors can be rebutted, or at least that the absence of legal ground approach is itself vulnerable

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to a similar criticism. In directing attention to the reason for the restitution of perform­ance rendered under an invalid contract, even where that reason is the same as the reason for contractual invalidity, the unjust factors approach appears to do valuable work. Moreover, regarding cases where the reason for contractual invalidity does not itself provide an unjust factor, here South African law appears to differ from English law in an important respect: it does not seem that a mistake as to the validity of such a contract will found restitution after full performance, that is, in the absence of a failure of counter-performance. Thus, South African law appears to be better described by the unjust factors analysis of the restitution of performance rendered under invalid contracts than even English law is. As for the unjust factors analysis of the restitution of wholly extra-contractual transfers, here it appears that just as there are some cases in which the unjust factors approach seems at best circuitous, equally there are certain important instances of extra-contractual restitution which the legal ground approach is able to explain only with difficulty, and often only by introducing what really amounts to a covert unjust factors approach. Moreover, in practice, it will generally be impossible for the plaintiff to substantiate the assertion that his purposeful transfer lacked an underlying legal ground without referring to the impairment of his intention in making it. Regarding the charge that it is uneconomical for a legal system to recognise two sets of rules regarding impairments to consent, one for grounds of invalidity, the other for unjust factors, in fact it appears that both English and South African law require a more nuanced approach to the law of consent; less uniformity rather than more. Furthermore, there appears to be a strong association between specific, positive reasons for restitution such as mistake, compulsion, etc and the common law method itself. This explains South African law’s apparent preference for unjust factors despite its civilian heritage. Finally, whereas it has been assumed that a mixed approach to enrichment by transfer is untenable, in fact it seems that every legal system can and does mix the two approaches; indeed, the mixed approach has the great advantage of flexibility. Thus, it appears after all unnecessary for South African law to face a stark choice between these two analyses.

III  Unjust Enrichment: the Future This book has left an important question almost wholly unanswered: that is the implications of the South African Constitution for the law of enrichment. There are certain specific instances of enrichment falling within its scope to which the Constitution has obvious application; I have considered these where appropriate. For example, in Chapter 4 I discussed the incompatibility of the restitutionary regime concerning tax and other payments exacted by the State with certain provisions contained in the Bill of Rights and elsewhere.1 Moreover, to the extent that   See Chapter 4 at V(C).

1



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the South African courts are enjoined by section 39(2) of the Constitution to develop the common law in order to promote the spirit, purport and objects of the Bill of Rights, any application of the rules of enrichment by transfer in which fundamental rights are implicated can conceivably require the development of those rules. In Chapter 3 I discussed a recent application of section 39(2) in the Cape High Court: Gamble J considered the right to family and parental care in section 28 in determining that the onus in respect of loss of enrichment should fall on the plaintiff rather than the defendant.2 Yet the potential for broader, more systematic constitutional impact in this area remains unexplored, both here and in other works on the subject.3 Unlike other areas of South African private law such as property and delict, there is no primary right enshrined in the Bill of Rights to which the law of enrichment by transfer obviously gives expression and against which its constitutionality could be tested.4 One possible candidate for this role has been the right to property contained in section 25(1): ‘no one may be deprived of property except in terms of law of general application, and no law may permit arbitrary deprivation of property.’ 5 Yet it seemed unclear whether the deliberate conferral of goods or money could ever amount to a ‘deprivation of property’ within the meaning of this provision.6 More generally, the right to property recognised in section 25(1) appeared too broad to assist in the determination of individual rules governing the restitution of enrichment by transfer. However, in December 2012 in National Credit Regulator v Opperman and others7 the Constitutional Court addressed for the first time the implications of section 25(1) and of the Bill of Rights generally for the South African law of enrichment. The case concerned the condictio ob turpem vel iniustam causam, the claim to recover a transfer made for an immoral or illegal purpose. According to section 89(5) of the National Credit Act,8 where a credit 2   See Chapter 3 at V(C). cf J Du Plessis, The South African Law of Unjustified Enrichment (Cape Town, Juta, 2012) 174–75. 3   But see DP Visser, Unjustified Enrichment (Cape Town, Juta, 2008) 24–26; Du Plessis, The South African Law of Unjustified Enrichment, n 2 above, 17–22. 4   According to s 8(3) of the South African Constitution, 1996, ‘When applying a provision of the Bill of Rights to a natural or juristic person . . . a court i­n order to give effect to a right in the Bill, must apply, or if necessary develop, the common law to the extent that legislation does not give effect to that right; and may develop rules of the common law to limit the right, provided that the limitation is in accordance with section 36(1)’. According to s 39(2), ‘When interpreting any legislation, and when developing the common law or customary law, every court, tribunal or forum must promote the spirit, purport and objects of the Bill of Rights’. On the application of s 39(2) see Carmichele v Minister of Safety and Security 2001 (4) SA 938 (CC); S v Thebus 2003 (6) SA 505 (CC), paras [23]–[32]. But see A Fagan, ‘The Secondary Role of the Spirit, Purport and Objects of the Bill of Rights in the Common Law’s Development’ (2010) 127 South African Law Journal 611. 5  cf David Hoffman, ‘Restitution’ in The Impact of the UK Human Rights Act on Private Law (Cambridge, Cambridge University Press, 2011) 321–22 6  cf Eskom v Thabo Mofutsanyana Distriksraad OPD 18 March 2004 (case no 4184/2001), in which this argument was rejected. See further Visser in Unjustified Enrichment 24–26. On the concept of property in South African Constitutional law see AJ Van der Walt, Constitutional Property Law, 3rd edn (Cape Town, Juta, 2011) ch 3. 7   National Credit Regulator v Opperman and others [2012] ZACC 29, 2013 (2) SA 1 (CC). 8   National Credit Act 34 of 2005.

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agreement is unlawful in terms of that section the agreement is void and ‘all the purported rights of the credit provider under that . . . agreement9 to recover any money paid or goods delivered to . . . the consumer’ are either extinguished or alternatively forfeit to the State10 ‘if the court concludes that cancelling those rights in the circumstances would unjustly enrich the consumer’.11 The Court (per Van der Westhuizen J) held that the plaintiff’s common-law enrichment claim amounted to ‘property’ within the meaning of section 25(1);12 that the outright denial of this right by statute amounted to an arbitrary deprivation for the purposes of section 25(1)13; that it did not amount to a permissible limitation of the section 25(1) right for the purposes of section 36(1);14 and therefore that section 89(5) of the NCA was inconsistent with section 25(1) and invalid. Although the particular issues addressed in that case fall outside the scope of this work, nevertheless its wider implications for the law of enrichment by transfer are profound. For example, the denial of the condictio indebiti through the operation of the common-law requirement of excusable mistake might conceivably be construed as a deprivation within the meaning of section 25(1) and scrutinised against the arbitrariness standard recognised there. In fact, to the extent that the law of enrichment by transfer gives expression to any underlying norm, that appears to be the value of personal autonomy implied by the right to human dignity in section 10 and the right to freedom and security of person in section 12.15 Under South African law, property passes by virtue of the transferor’s intention to confer ownership on the recipient of the transfer and the recipient’s corresponding intention to become owner;16 transfer is thus itself an exercise of the parties’ autonomy in one sense. But where the intention of the plaintiff in conferring the benefit is impaired, for example, because he is mistaken about his liability, that autonomy is only imperfectly expressed; the plaintiff’s plans for the distribution of his property have misfired. It is this – the impairment of the plaintiff’s autonomy in deciding to make the transfer – that provides the ethical justification for restitution in such cases. This appears to constitute a powerful argument in favour of the unjust factors approach: all those unjust factors belonging to the major category identified by 9   The formulation ‘under that agreement’ is puzzling. In a dissenting judgment Cameron J (and with him Froneman J and Jafta J) held that section 89(5) does not in fact encompass rights arising in enrichment and is therefore compatible with section 25(1) although inoperative: National Credit Regulator v Opperman and others, n 7 above, [92] – [106]. 10   On the interpretation of section 89(5)(c) see National Credit Regulator v Opperman and others, n 7 above, [55]. 11   The credit provider is obliged by section 89(5)(b) to refund to the consumer any money paid with interest. 12   National Credit Regulator v Opperman and others, n 7 above, [57]–[64]. 13   National Credit Regulator v Opperman and others, n 7 above, [65]–[72]. 14   National Credit Regulator v Opperman and others, n 7 above, [73]–[80]. 15   cf Du Plessis, The South African Law of Unjustified Enrichment, n 2 above, 18-19. 16   See, eg, PJ Badenhorst, JM Pienaar and H Mostert, Silberberg and Schoeman’s The Law of Property, 5th edn (Durban, LexisNexis Butterworths, 2006) 74–76; H Mostert and A Pope (eds), The Principles of the Law of Property in South Africa (Cape Town, Oxford University Press, 2010) 192–94.



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Peter Birks, vitiated voluntariness, rest directly on the plaintiff’s autonomy.17 That said, the outcomes generated by an absence of legal ground approach are almost always equally compatible with that value. Indeed, the absence of legal ground analysis itself incorporates features – subjective considerations such as mistake and compulsion – which can be referred directly to the plaintiff’s auto­nomy. But while a legal system which relies on the absence of legal ground approach almost always gives equal expression to the plaintiff’s autonomy in practice, and gives at least some analytical weight to subjective considerations which can be traced directly to the plaintiff’s autonomy, according to that approach it remains the absence of an objectively constituted legal ground which generates the plaintiff’s claim in the first instance. The unjust factors approach, on the other hand, presents mistake, compulsion, etc – factors impairing autonomy – as necessary elements of the plaintiff’s restitutionary claim. In this way it foregrounds the constitutionally-derived value upon which such claims are founded. Thus, it seems that the unjust factors analysis complies more fully with the section 39(2) injunction to courts to ‘promote the spirit, purport and objects of the Bill of Rights’ in developing the common law. This point is related to a wider argument in favour of that analysis, briefly rehearsed in the previous chapter, that unjust factors express clearly and intelligibly the ethical bases of restitutionary claims, whereas the absence of legal ground approach seals away those reasons behind the legal ground concept. That claim to legitimacy is still stronger when the reasons for restitution on which the unjust factors approach depends can be explicitly grounded in constitutional values.

17   Nor is it difficult to see the unjust factor of minority as an expression of s 28(2), according to which ‘[a] child’s best interests are of paramount importance in every matter concerning the child’.

PRINCIPAL PRE-NINETEENTH CENTURY SOURCES Donellus, Hugo, Commentarii de Iure Civili Gaius, Institutes Glück, Christian Friedrich, Ausfürliche Erläuterung der Pandecten Groenewegen van der Made, Simon, De Legibus Abrogatis Grotius, Hugo, Inleydinge tot de Hollandsche Rechtsgeleertheid Huber, Ulrik, Heedendaegse Rechtsgeleertheyt —— Praelectiones Justinian, Code —— Digest —— Institutes Leyser, Augustin, Meditationes ad Pandectas Pauw, Willem, Observationes Tumultuariae Novae Pothier, Robert-Joseph, Pandectae Iustinianae —— Traité des Obligations Van Bijnkershoek, Cornelius, Observationes Tumultuariae Van der Keessel, Dionysius Godefridus, Theses Selectae Van der Linden, Johannes, Koopmans Handboek Van Leeuwen, Simon, Roomsch Hollandsch Recht —— Censura Forensis Vinnius, Arnold, Selectae Quaestiones Voet, Johannes, Commentarius Ad Pandectas

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INDEX absence of consideration (unjust factor), 15 absence of legal ground analysis:    absence of legal ground a necessary condition for restitution, 14, 121, 123, 125, 149–50, 160–61, 203    absence of legal ground a sufficient condition for restitution, 14–15, 165, 173–74, 201, 203    abstraction, 170, 176, 184    negative formulation, 170, 195–96, 199–200    ‘pure’ absence of legal ground analysis, 19, 123, 125, 165–66, 198, 202   see also automatic restitution; German Civil Code; legal ground; Leistungskondiktion; unjustified; Wilburg/Von Caemmerer taxonomy; and under Birks; contract action for money had and received, 43, 47, 103, 167 Affirmative Portfolios CC v Transnet t/a Metrorail, 67, 72, 74–75 Algorithm see under Visser, Daniel Alienation of Land Act 68 of 1981, 186 automatic restitution, 171, 174–77, 180, 184–85, 191, 198, 207 autonomy, 210–11 Baloch, Tariq, 193 benefit theory, 137–41, 145    English law, influence of, 138–40   restitutio in integrum, influence of, 138–41 Birks, Peter:    absence of legal ground analysis, 169, 172–75, 184–85, 191, 193–94     defences, 174–75    criticism of unjust factors analysis, 166, 169, 173–74, 178–79, 184–85, 187, 192–93      mixed approach untenable, 202    personal disadvantage, classification of unjust factor, 13    risk-taking, 175, 194    taxonomy of unjust factors, 12–14, 168–69, 184, 210–11     see also obligatory enrichment; participatory enrichment; pyramid; voluntary enrichment Bowman, De Wet and Du Plessis NNO v Fidelity Bank Ltd, 156–60

Burrows, Andrew:    human incapacity, classification of unjust factor, 13      ignorance, classification of unjust factor, 13      mixed approach untenable, 202    ultra vires payments by a public authority lassification of unjust factor, 14, 169 careless mistake:    Aristotelian analysis, 74   defence, 72–76    German Historical School/Pandectists, 28, 60, 73   Kelly v Solari, 57–59    loss of enrichment defence, relationship to, 74–76    negative formulation, 28, 30, 60    Roman law, 25–26    Roman-Dutch law, 26–27   Rooth v The State, 30    rule of evidence, 57–59, 62    Scots law, 72–74   Third Restatement of Restitution and Unjust Enrichment, 72   see also error nec supina nec affectata change of position defence see loss of enrichment Commissioner for Inland Revenue v First National Industrial Bank Ltd, 115–19, 127 common-law method, 198–201 compromise  see under legal ground compulsion:   condictio indebiti, element of: Roman law, 87–89   condictio indebiti, element of: Roman-Dutch law, 91–92   condictio indebiti, element of: South African law ( = duress of goods, metus), 11, 14, 84, 92, 94–95, 102–04, 108–14, 116–18, 121–25    contract, effect on validity, 119–21    tax, application to, 126–28    unjust factor, 13, 169, 194–95      South African law, 11–12, 80–81, 95, 98–99, 101–02, 121, 125–26, 205–06     English law, 125, 179    unlawfulness requirement, 113, 116, 120, 121–22   see also duress of goods; metus, protest

224

Index

condictio:   causes of action, identification with,15    Roman law, 1, 87    unilateral transfers, specific to, 18 condicito ob turpem vel iniustam causam, 14   National Credit Act, 148, 209–10    Roman law, 2, 88    Roman-Dutch law, 91–92    survival in South African law, 5–6 condictio causa data causa non secuta/ob rem, 14–15, 175, 189    Roman law, 2, 88    Roman-Dutch law, 91    survival in South African law, 5–6 condictio indebiti:    absence of a relationship of indebtedness, arising from, 6–7, 15, 104–08, 111, 123, 160–61, 165, 189, 192–93    donation presumed from conscious payment of an amount not owed, 37, 107, 190    equitable action, 29, 31, 55, 64–66, 70, 187    full performance, defence, 186–87    Roman law, 2, 87–88    survival in South African law, 5–6   see also under compulsion; iustus error; juristic incapacity; minority; mistake; mistake of law; restitutio in integrum condictio ob causam finitam, 15, 175     survival in South African law, 5–6 condictio sine causa specialis:   Roman law, 2    survival in South African law, 5–6     see also under juristic incapacity, minority consideration, doctrine of, 179 Constitution of the Republic of South Africa 1996, 71–72, 127–28, 208–11    enrichment claim as property for the purposes of section 25(1), 210    unjust factors as an expression of personal autonomy, 210–11 contract:    characterisation of claim to recover performance under voidable contracts as contractual, 6, 15–8    characterisation of claim to recover performance under voidable contracts as an enrichment claim, 6, 18    claim in respect of work done or services rendered in terms of a contract subsequently cancelled, 6      claim to recover performance under voidable contracts, 6, 14, 16    invalid due to lack of compliance with formalities, 177, 185–87    invalid due to minor illegality, 177    invalid due to misrepresentation, duress or undue influence (English law), 174, 178, 184

   invalidity a reason for restitution, 14–15, 171, 173–74, 176–80, 184–87    minors’ contracts (English law), 177–78    nullity, systematic doctrine of, 185, 198    supervening impossibility, failure due to, 15   see also under compulsion; duress of goods; fraudulent misrepresentation; grounds of invalidity; iustus error; metus; mistake in contract; minority; protest cura see guardianship De Villiers, Etienne (De Villiers AJA), 105–08, 110, 116–17, 119 De Villiers, Henry (De Villiers CJ), 31–33, 37, 39, 46–51, 53–55, 59–60, 66, 94–98, 102–03, 115, 124, 137–41, 143–44 De Vos, Wouter:    analytical significance of unjust factors, 11, 84, 129–30   condictio sine causa specialis applicable to the restitution of payments by minors: 132, 143, 156    general principles of enrichment liability, 4     restitutio in integrum not an enrichment action, 17–18    unjustified, meaning in South African law, 7–8 Divisional Council of Aliwal North v De Wet, 30–33, 57–60, 66 dolus:   actio de dolo, 34   delict, 18   exceptio doli, 34   restitutio in integrum in Roman law, ground of, 34   restitutio in integrum in Roman-Dutch law, ground of 36, 68   restitutio in integrum in early South African law, ground of, 17, 37 Donellus, Hugo 106–07 Du Plessis, Jacques,    structure of the law of enrichment, 5    unjustified, meaning in South African law, 8–9    analytical significance of unjust factors, 8–9, 11, 84, 92,129 duress of goods:   condictio indebiti, element of: see under compulsion    contract, insufficient to invalidate, 94, 100–01, 103, 120–21, 123    English law, influence of, 94–95, 198   restitutio in integrum, ground of, 94–95, 97–101, 113–14   White Brothers v Treasurer General, 37, 94–95    withholding of a right, 88, 103–04, 108, 111–12, 116, 121   see also protest

Index Eingriffskondiktion, 170 Eiselen, Sieg and Pienaar, Gerrit, 11, 143 entschuldbar, Irrtum, 28, 30 error excusabilis, 24, 28, 68 error nec supina nec affectata, 26–27, 31–32, 57–61, 73   as a rule of evidence, 57–59 error probabilis, 40 excusable mistake, 24, 166, 205–07     Divisional Council of Aliwal North v De Wet, 31–33    French Humanists, 26    German Historical School/Pandectists, 27–28, 60   iustus error, influence of, 30–33, 39, 54–55, 57, 59–60, 68–71, 79    knowledge or inducement of mistake by other party, relevance, 30–33, 57, 59–62, 65–67, 69–70    Pandectist analysis, influence on South African law, 30, 33, 60, 68, 79    positive formulation, 30, 31–32, 60–62, 66    reliance, technique for protecting recipient’s, 71–72, 75    Roman law, 25–26    Roman-Dutch law, 26–27   Rooth v The State, 30    tax, application to, 71–72, 127–28    unconscionable retention of benefit by other party, giving rise to, 54–55, 66, 70–71     Willis Faber Enthoven v Receiver of Revenue, 64–67, 68–70   see also careless mistake; iustus error failure of consideration, 175, 177–78, 184–87    as an unjust factor, 13–14, 169 fraudulent misrepresentation by minor: contract induced by, 146–48    National Credit Act, 148–49   restitutio in integrum, influence of, 148, 150      restitution of benefits rendered by minor under induced contract, 146–51, 161, 206–07    unconscionable conduct by minor a bar to restitution, 148, 150, 161 general enrichment action: South African law, 3–5, 7    German law, 170 German Civil Code:   condictiones embodied in §812–822, 171, 189    contract vitiated by mistake, 119§, 184    general clause in §812, 170–71, 174, 184, 196    influence on De Vos, 4    knowledge defence in §814, 125–27, 172, 189–92, 195–96 gift/donation see under condictio indebiti; legal ground

225

Glück, Christian Friedrich von, 29–30, 60, 107, 119 good consideration, defence of, 168, 181, 191, 202 Grotius, Hugo:      effect of mistake on contract, 40    general doctrine of enrichment, 2      minority, effect on validity of contract, 135–36   restitutio in integrum an exclusively contractual remedy, 35, 90, 92 grounds of invalidity, 16, 171, 174, 183, 188, 194, 196–7, 201–02, 207–08 guardianship:    Roman law, 133–35    Roman-Dutch law, 135–37 Huber, Ulrik, 27, 35–36 ignorance (unjust factor), 13, 169 illegality (unjust factor), 14, 169 Innes, James Rose (Innes CJ), 47, 49, 51, 59, 102–05, 107–09, 185–86 interest, 18, 115–19 invalidity thesis, 14-15 ius honorarium (Praetorian law), 1, 16, 34–35, 38, 84–87, 89, 133–34 iustus error:   condictio indebiti, application to, 30–33, 39, 54–55, 57, 59–60, 68–71, 79, 94–5   contractual doctrine, 51–54, 68, 71   Divisional Council of Aliwal North v De Wet, 30–33, 57    English Equity, influence of, 48–50, 52, 55, 68    knowledge or inducement of mistake by other party, relevance of, 30–33, 48–49, 52–55, 57, 65–67, 69–70   restitutio in integrum, ground of: Roman law, 33   restitutio in integrum, ground of: RomanDutch law, 17, 36, 68   restitutio in integrum, ground of: nineteenthcentury law, 17, 37–39, 66, 68   restitutio in integrum of contractual performance, ground of, 33, 46–52, 55, 71    unconscionable retention of benefit by other party, giving rise to, 48–49, 54–55, 66, 70–71 juristic incapacity:    analogy with minority, 152–53, 155–56   condictio indebiti, element of, 11, 14, 151, 153–60, 162   condictio sine causa specialis, 151, 154–56, 158–59    excusable mistake requirement, exception to, 158–59

226

Index

juristic incapacity (cont):    juristic person acting ultra vires, 151–55    mistake of law rule, exception to, 155, 159    natural person acting ultra vires, 153–60    ownership, ultra vires transfer ineffective (vindicatio), 152, 156, 159–60    unjust factor, 13–14, 160, 162, 169      South African law, 11–12, 80, 130, 153, 157, 159–60, 162, 179, 206 just factor see legal ground justus error see iustus error Kelly v Solari, 57–59,183, 192–94, 202–03 Kleinwort Benson Ltd v Lincoln CC, 169, 173–75, 178, 185, 187 Kotzé, John (Kotzé CJ), 28–30, 37–38, 60, 63–64, 68–69, 73, 131 Kupisch, Berthold, 86–87 ‘law of consent’, 196–97 legal ground:    Birks’ absence of legal ground analysis, meaning in, 175    compromise, 175, 190-91    gambling debt, 171    German law, meaning in, 170–71, 175, 189    gift, 171, 175, 189–91    informal contract, 171, 175, 189   judgment, 175    natural obligation, 175, 185, 198    prescribed debt, 171, 185, 189   settlement, 175    South African law, meaning in, 7–9, 185   transfer ob rem, 171, 175, 189 Legator McKenna Inc v Shea and others, 186–87 Leistungskondiktion, 5, 7, 125–26, 171–72, 188, 195–96    contractual performance, application to, 171–72, 174, 177, 179, 184, 198    objective analysis, 188–91, 200    subjective analysis, 191–95, 200 limping contract see under minority Logan v Beit, 46–48, 53, 55, 66 loss of enrichment, defence of, 18, 74–76, 124–25 McCarthy Retail Ltd v Shortdistance Carriers CC, 4–5 Meier, Sonja,    influence on Birks, 169    criticism of unjust factors analysis, 177–79, 183, 187, 192–93 metus:   actio quod metus causa, 34, 85–92, 113–14, 120, 123   condictio indebiti, element of: see under compulsion

  contra bonos mores requirement, 89–91, 100–01, 113, 120   delict, 18   exceptio metus, 34, 85, 87    loss/prejudice requirement (restitutio in integrum), 87, 90–91, 99–100, 113   metus iustus, 85, 87, 89–90, 109–10   metus reverentialis, 89, 102   restitutio in integrum, ground of: Roman law, 34, 84–87   restitutio in integrum, ground of: RomanDutch law, 35–36, 68, 89–91, 122–23   restitutio in integrum, ground of: nineteenthcentury, 17, 37, 94–95, 99   restitutio in integrum, ground of: twentiethcentury, 102–03, 107, 109, 111, 113–14, 123   restitutio in integrum of contractual performance, ground of, 92, 99–101, 119–20, 123 minority:   condictio indebiti, element of: Roman law, 11, 14, 131–33, 160–61   condictio indebiti, element of: Roman-Dutch law, 136–37, 160–61   condictio indebiti, element of: South African law, 143, 145, 149   condictio sine causa specialis, 132, 149, 161    contract, validity in Roman law, 133–35    contract, validity in Roman-Dutch law, 135–37    contract, validity in South African law: assisted minor, 141–42    contract, validity in South African law: unassisted minor, 137–41, 142–49    limping contract, 136–37    loss/prejudice requirement (restitutio in integrum), 135, 138–42    mistake of law rule, exception to, 25,130–31    natural obligation, generated by unassisted minor’s contract, 132, 136    ownership, transfer by unassisted minor ineffective (vindicatio), 131–33, 136–37,143–44, 149, 161   restitutio in integrum, ground of: Roman law, 132–34   restitutio in integrum, ground of: RomanDutch law, 36, 68, 135, 137   restitutio in integrum, ground of: South African law, 37, 137–50, 161   restitutio in integrum of performance under void (unassisted) contract, ground of, 135–37, 140–41, 143–50, 161    surviving enrichment, unassisted minor liable for, 134, 136, 152    unjust factor, 13, 160, 162, 169      South African law, 11–12, 80, 130, 149–50, 161, 179, 206

Index   see also benefit theory, fraudulent misrepresentation by minor; guardianship mistake:   condictio indebiti, element of, 9–11, 14, 23–24, 71, 88–89, 91, 102, 179, 187, 198    liability mistake rule, 10, 24, 182    reliance, technique for protecting recipient’s, 182–83, 191, 197    unjust factor, 13, 168, 182–83, 203      English law, 178–79, 181–84, 192–94      South African law, 11–12, 71, 79–80, 179, 181–82, 185–87, 197–98, 204–05   see also careless mistake; excusable mistake; iustus error; mistake inducing contract; mistake of law mistake inducing contract:    English Equity, influence of, 48–50, 52, 55, 68    English law (nineteenth-century), 41–45     common law, 42–43     Equity, 43–45      rectification, grounds for 44, 50      specific performance, refusal of, 44–45, 47     rescission, grounds for, 44–45      Leake’s taxonomy of mistake, 42      theory of objective agreement, 41–42, 54   iustus error doctrine, 51–54, 68, 71   Leake’s The Elements of the Law of Contracts, 41–42, 44, 45, 47   Pollock’s Principles of Contract, 41, 43, 47    Pothier’s taxonomy of contractual mistake, 40–41, 46    quasi-mutual assent, 53–54, 71     restitutio in integrum of contractual performance on grounds of iustus error, 39, 46–55    Roman law, 39–40    Roman-Dutch law, 40    Will Theory, 40–41 mistake of law:    German Historical School, 27–28   Glossators, 26   Humanists, 26    Roman law, 25–26    Roman-Dutch law, 26–27    South African law, 24, 28–30, 63–64, 69 mixed approach, 19, 80, 123, 125, 165–66, 176, 179, 182, 198, 201–03   see also under Birks, Peter; Burrows, Andrew Morgan Guaranty Trust Co of New York v Lothian Regional Council, 73–74 National Credit Act 34 of 2005, 148–49, 209–10 National Credit Regulator v Opperman and others, 209–10 natural obligation, 26, 63, 75 n 111   see also under legal ground; minority

227

Nel v Jonker, 76, 209 nullity, systematic doctrine of see under contract obligationes quasi ex contractu, 2 obligatory enrichment, 174, 176–77, 179, 191, 193 participatory/non-participatory enrichment, 174 Pauw, Willem, 3, 27, 159 Pomponius, principle against unjust enrichment, 2, 55 n 224, 70, 167–68 Pothier, Robert-Joseph, 40–41, 46 precedent, doctrine of, 199–201 prestasiedoelmislukking (failure of the purpose of performance) see under Visser, Daniel primary fact see under unjust factors analysis property, enrichment claim as see under Constitution of the Republic of South Africa protest:    agreement to restore benefit if not due (express/tacit), giving rise to, 106–07, 110–13, 117–18, 122, 125, 127    agreement to restore benefit if not due (implied), giving rise to, 105–11, 117–19, 122    ancillary requirement to duress of goods, 95–99, 103–05, 114–15, 116–18, 122–25, 205–07   condictio indebiti, application to, 105–07    contractual claim, giving rise to, 117–18, 122   Donellus, 106–07    English law, 95–96, 123, 126    function: to prove involuntary (compelled) transfer, 95–98, 104, 114–15, 117, 123–24    function: to alert recipient to involuntary (compelled) transfer, 95–98, 114–15, 124    function: to exclude voluntary payment, 104–08, 117–19, 122    function: to preclude reliance by recipient, 124–25    German law, 125–27    Glück, 107, 119    loss of enrichment defence, relationship to, 124–25   restitutio in integrum, origins in, 96–97, 124    Roman law, 105–07, 119    tax, application to, 125, 127      unconscionable retention of benefit by other party, giving rise to, 96–97, 124    Voet, 106   White Brothers v Treasurer General, 95–97 pyramid, 174–75, 179, 184, 193–94, 201–02

228

Index

restitutio in integrum:      bilateral restitutionary response, 16, 18, 34, 142, 145   condictio indebiti, influence on/relationship to, 16–17, 33, 36–39, 48, 54–55, 56–57, 68–71, 79–80, 94–65, 114, 122–24, 165    contractual remedy, 15–18, 35, 90, 92, 150    English Equity, conduit for, 39, 48–51, 55, 68    enrichment claim, 17–18, 150   extraordinary/independent/equitable remedy, 16–17, 34–39, 68–71, 79, 96–97, 124, 137, 141, 148, 150, 161, 198    grounds in the civilian tradition, 17, 36–37, 94, 135    nineteenth-century law, 17, 36–39, 68, 94–97    Roman law, 16, 33–34, 85–87    Roman-Dutch law, 16–17, 34–36, 68, 89–91, 135    unjust factors, arising from, 17, 99, 109, 149–50, 161, 165, 179, 197–98     Willis Faber Enthoven v Receiver of Revenue, 64, 66   see also under iustus error; metus; dolus; minority Rooth v The State, 28–30, 38, 60, 63–64, 68, 73–74, 131, 181 Savigny, Friedrich von, 27–28 Schulz, Fritz, 86 sine causa see unjustified Smith, Lionel, 202 swaps litigation, 169, 172–73 tax:    restitutionary regime, 71–72, 125–28    unconstitutionally levied, 127–28 Tjollo Ateljees (Eins) Bpk v Small, 17, 150 tutela see guardianship ultra vires, doctrine of see juristic incapacity Umhlebi v Estate Umhlebi, 37–38, 53, 64, 69 unconscionable conduct:    by defendant, 48–49, 54–55, 66, 70–71, 96–97, 124    by plaintiff, 148, 150   see also under excusable mistake; fraudulent misrepresentation by minor; iustus error; protest Union Government (Minister of Finance) v Gowar, 1915 AD 426, 101–10, 112–13, 116–17, 119–20, 123 unjust factors analysis:    ‘four questions’, 12, 167    origins and development, 166–67    relationship of indebtedness as a defence, 13, 168, 181–82    restitution of performance under invalid contracts, 177–79, 184–87

   taxonomy of unjust factors, 12–14, 168–69    unjust factors as primary facts, 194, 202   see also under Birks; compulsion; juristic incapacity; Meier; mistake; minority; restitutio in integrum unjustified (sine causa), meaning in South African law, 7–9, 188–89, 201–02   see also under De Vos, Wouter; Du Plessis, Jacques; Visser, Daniel Van Bijnkershoek, Cornelius, 3 Van der Walt, JC, 7, 188–89 Vangerow, Adolph von:    general criterion of excusable mistake, 27–28 Van Leeuwen, Simon, 27, 29, 89, 90, 102, 136-37 vindicatio see under juristic incapacity; minority Vinnius, Arnold, 29, 37, 94–95 Virgo, Graham:    ignorance, classification of unjust factor, 13    incapacity, classification of unjust factor, 13 Visser, Daniel:    algorithm, 8–9, 201–02    characterisation of claim to recover performance under voidable contracts as an enrichment claim, 6, 18    excusable mistake, Pandectist analysis of excusable mistake: influence on South African law, 30, 68    excusable mistake in Roman-Dutch law, 27, 159   prestasiedoelmislukking (failure of the purpose of performance), 8–9, 191, 195, 202    structure of the law of enrichment, 5    survival of Roman forms of action, 5–6    unjust factors, analytical significance, 8–9, 11, 84, 129, 195    unjustified, meaning in South African law, 7–9, 201 Voet, Johannes:    agreement to restore benefit if not due, 106     error nec supina nec affectata, 26–27, 31–32, 57–60, 73   error probabilis, 40    fraudulent misrepresentation by minor, 146    general doctrine of enrichment, 3   metus iustus, 89–90, 101, 109–10   metus, requirement of contra bonos mores, 89–90    minority, effect on validity of contract, 136     restitutio in integrum, grounds of, 17, 36–38, 94, 135   restitutio in integrum, loss/prejudice requirement, 90–91, 100, 135   restitutio in integrum, wide scope, 35, 90 voluntary enrichment, 174–75, 191, 193–94 Wessels, Sir John, 58–60, 119–20 White Brothers v Treasurer General, 17, 37, 39, 48, 93–98, 101–03, 107, 115, 120, 124

Index Wilburg/Von Caemmerer taxonomy, 170, 174    influence on Visser and Du Plessis, 5   see also Leistungskondiktion; Eingriffskondiktion Wilken v Kohler, 186–87

229

Willis Faber Enthoven (Pty) Ltd v Receiver of Revenue, 10, 24, 62–72 Wood v Davies, 142, 145, 150 Woolwich principle/ exaction of money ultra vires, 14, 126, 169