PVL3704 - Enrichment and Estoppel
A has demanded payment from B of an amount of R50,000 which he believes B is owing. B
has
checked his records and has paid the amount in the bona fide belief that the amount is owed
in
terms of their contract. Unbeknown to B, his bookkeeper, C had already paid the amount a
week earlier by way of an electronic funds transfer into the account of A. At the time of the
second payment A's account was overdrawn in the amount of R30,000 and was therefore in
credit of R20,000 after the payment. A has taken R15,000 out of his account to pay his
employees their monthly wages. He has also paid R10,000 for a luxury weekend after
realising
that his account was in credit. Discuss whether B has a claim against A and, if so, how much
he
may claim. - correct answer-B has a claim of unjustified enrichment against A and the
relevant remedy applicable is the
condictio indebiti. This action is available where an unowed debt has been paid due to a
justifiable mistake. (1) In this instance A's enrichment took place at the expense of B,
because
B was the person in law who made the payment, even if C physically made the payment.
REQUIREMENTS
(i) The party must have transferred something in ownership to another. (1)
(ii) The transfer must have been as a result of a mistake on the part of the transferor that
performance was due. (1)
(iii) The mistake, whether in law or in fact must have been reasonable under the
circumstances. (1)
(iv) As far as defences are concerned, the issue of loss of enrichment crops-up. Paying-off
an overdraft does not diminish enrichment as it constitutes diminishment of a debt. (1/2)
The payment of wages also does not cause enrichment to diminish. (1/2) However, the
cost of a luxury holiday can constitute an extinction of enrichment if the receiver of the
money did not know or could not have known that he or she had been enriched
In paying the R50, 000 B was under the mistaken belief that the amount was owed in terms
of
their contract while this is not the case. The mistaken belief under the circumstances is
reasonable as B had a bona fide belief that the amount was owed as they had a contract. (1)
A was initially enriched by an amount of R50, 000 on receipt of the money. The paying-off of
the
overdraft does not diminish his enrichment and neither does the payment of wages since
both
debts would have had to have been paid at any rate. However, the cost of the luxury
weekend
will constitute diminishment of his enrichment, as he probably would not have incurred this
expense if his account had not been credited.
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