Unjustified enrichment is a common law principle that arises when one party (the enriched party) gains a benefit at the expense of another party (the impoverished party) without a legitimate legal foundation. It provides a basis for an impoverished party to recover damages from an unjustly enriched party. There are various types of unjustified enrichment claims differentiated by subtle nuances but sharing the similar foundational requirements of impoverishment causally linked to unjust enrichment. This article does not provide a detailed discussion of the various types of enrichment claims but rather provides a brief overview of a case where an aggrieved party successfully recovered funds by utilizing the principle of unjustified enrichment in respect of an erroneous bank transfer.
In the recent High Court case, Firstrand Bank Limited v Moremedi (666/2023) [2024] ZANCHC 118 (“Firstrand Bank”) a representative of the applicant, Firstrand Bank Limited, contacted the respondent, Mr. Moremedi, regarding a higher-interest-earning bank account for a Trust, for which he was the Treasurer. Mr. Moremedi, acting on behalf of the Trust, consented to the opening of the new account. Mr. Moremedi was also joint administrator on the Trust’s bank account profile, and thus the Trust’s account was linked to his personal profile. Later, the bank transferred an amount of R962,449.84 into the account. Mr. Moremedi subsequently used the funds primarily for home renovations. The applicant contended that the transfer was made in error, as the funds were neither due nor owing to the respondent, but rather, the Trust.
Pursuant to the above, the applicant reached an agreement with the Trust under which the Trust accepted an amount of R987 769.76, in settlement of any claims which it may have had against the bank, and further ceded its rights to claim any money from implicated parties to the bank. Mr. Moremedi did not dispute the existence of this settlement and cession agreement, which formed the basis for the bank’s decision to proceed with the condictio sine causa cause of action. The condictio sine causa is one of various types of unjustified enrichment claims. It applies regardless of whether the plaintiff was mistaken or not, unlike the condictio indebiti, which requires the applicant’s mistake to be reasonable.
According to Kudu Granite Operations, a presumption of enrichment arises when money is paid or goods are delivered. The receiving party is then burdened with proving that they have not been enriched. In Firstrand Bank, Mr. Moremedi attempted to discharge this onus by claiming that he believed the funds transferred into the account were part of a revolving credit facility. However, on consideration of the sequence of events and Mr. Moremedi’s doctoral qualifications, the Court determined that he could not claim ignorance.
On the facts, it was clear that Mr. Moremedi’s enrichment occurred at the expense of the applicant. He received and used the funds deposited into the account, knowing they were not owed to him. In Nissan South Africa (Pty) Ltd v Marnitz NO and Others, Streicher JA emphasized that payment is a bilateral juristic act requiring mutual consent. Thus, where an individual appropriates money transferred mistakenly into their account, fully aware it is not owed to them, they are equally liable for theft. Consequently, the Court found no legal justification for Mr. Moremedi’s use of the transferred funds and ruled that the applicant was entitled to recover the funds.
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