Unjustified enrichment is a concept so pure and easy to comprehend and return to with an easy solution to solve.

However, there is a huge debate as to what really constitutes unjustified enrichment and whether there should be any compensation or restitution towards an aggrieved or impoverished party.

In the current legal sense, a guideline has been put forward through the leading case of McCarthy;[1] whereby there must be an impoverished plaintiff bringing their case forward and an enriched defendant that must defend such enrichment. In order for there to be an unjustified enrichment claim there are two more factors that needs to be taken into consideration which is firstly that the enrichment of the defendant is at the expense of the plaintiff and secondly that there is no legal justification for the defendant’s enrichment.

The courts in South Africa have yet to make a pronouncement on whether a unified general enrichment action exists within the prescripts of the current law. As it currently stands, South African law does not recognise such an action because of the last two points of the guidelines given in the mentioned case.

This is because it is quite a daunting task that will reduce a whole case to be reduced to hearsay at the bare minimum, moreover there is a rule coined as the “Double Cap Rule”[2] which makes it very difficult for the courts to authoritatively recognise a general enrichment action because not all enrichment claims are unjustified even in the absence of a legal justification.

Three examples that may come to mind are in the following manner:

  1. Where a defendant is an owner of a piece of land and his / her neighbour made a short cut on the land without the permission or to detriment of the plaintiff, but merely based on the act that the plaintiff saved on fuel using the short cut.
  2. Where a parent[3] provided for maintenance of a child, whereas at a later stage it is discovered that the parent is not the biological parent of that child.
  3. Where a bank receives money on behalf of a client according to a bank-client relationship without the knowledge of how the client had obtained money and allowed the client to make a withdrawal.

In all the aforementioned examples, if the double cap rule is to be applied, then parties who are aggrieved will be left with no remedy.

The courts had many opportunities to make a pronouncement on the recognition of a general enrichment action, however, the main argument that has been advanced is that it would be opening a floodgate of opportunistic and baseless claims that would have otherwise failed in delict and contract.

At this juncture it is clear that the “unique” case that will call upon the courts to revisit this conversation may not be forthcoming and this creates a lot of uncertainty as to how a general enrichment action would look like.

There is a need for a total overhaul of this particular area of the law and a more aggressive approach should be taken rather than a piecemeal extension of the existing system that is going to be rendered obsolete through the progression of time.

[1] McCarthy Retail Ltd v Shortdistance Carriers CC 2001 ZASCA 14.

[2] At close of pleadings to determine whether there is unjustified enrichment the plaintiff must be impoverished at the expense of the defendant and if there is no legal justification then the plaintiff is entitled to the excess amount that will place them on an equal footing with the defendant had the whole matter began.

[3] As defined in the Children Act with the responsibilities accorded to them by Chapter 3 of the act.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.