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[2013] ZASCA 116
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Capricorn Beach Home Owners Association v H.E.S. Potgieter t/a Nilands and Another (752/2012) [2013] ZASCA 116; 2014 (1) SA 46 (SCA) (19 September 2013)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
C
ase No:
752/2012
Reportable
In the matter between:
CAPRICORN BEACH HOME OWNERS
ASSOCIATION
..........................................................................
APPELLANT
and
H.E.S. POTGIETER t/a NILANDS
..........................
FIRST
RESPONDENT
PINCUS MATZ MARQUARD
ATTORNEYS
.........................................................
SECOND
RESPONDENT
Neutral citation:
Capricorn
Home Owners v Potgieter
(752/2012)
[2013] ZASCA 116
(19 September
2013)
Coram:
Mthiyane AP, Maya,
Wallis JJA, Van der Merwe and Swain AJJA
Heard: 2 September 2013
Delivered: 19 September 2013
Summary: Attorney erroneously
transferring money ─ recipient refusing to refund it ─
relying on set-off ─ parties
not mutually indebted to each
other ─ funds drawn on trust account ─ attorney operating
trust account acts as principal
not as agent ─ entitled to
recover erroneously transferred funds with
condictio
indebiti
.
_____________________________________________________________________
ORDER
On appeal from:
Western
Cape High Court, Cape Town (Gangen AJ sitting as court of first
instance):
The appeal is dismissed with
costs.
___________________________________________________________
JUDGMENT
MTHIYANE AP (MAYA, WALLIS JJA,
VAN DER MERWE AND SWAIN AJJA CONCURRING):
[1] This is an appeal against a
judgment and order of the Western Cape High Court (Gangen AJ) in
which the appellant, Capricorn
Beach Home Owners Association, was
ordered to repay the first respondent, H.E.S Potgieter t/a Nilands,
an amount of R451 614.03,
being a portion of the amount which the
first respondent erroneously paid to the appellant from his (first
respondent’s)
trust account. The appeal is before us with leave
of this court.
[2] In August 2006 the first
respondent was instructed by his client, Capricorn Beach Joint
Venture, which is not a party to these
proceedings, to attend to the
transfer of Erf 2323 Capricorn (the property) from itself, as seller,
to Mr Maregesi Ben Manyama,
as purchaser. Mr Manyama, too, is not a
party to these proceedings. The transfer of the property was duly
registered in the Deeds
Office at Cape Town on 15 July 2008.
[3] It is standard practice in a
property transfer such as this for the conveyancer to pay the
proceeds of the sale to the seller
simultaneously with the
registration of transfer. This is what was required of the first
respondent. The first respondent’s
bookkeeper, Ms Lizelle du
Toit, unfortunately, on 16 July 2008 erroneously paid the proceeds of
the sale amounting to R735 859.15,
to the appellant instead of to the
first respondent’s client. The appellant does not dispute this
payment and the fact that
it was made erroneously.
[4] The erroneous payment arose
in the following circumstances. Ms du Toit had previously made a
number of payments to the appellant,
on the instruction of the first
respondent’s client, in respect of levies due to the appellant
from time to time. At the
relevant time the first respondent’s
client owned certain residential units at Capricorn Beach and was
consequently periodically
liable to the appellant for the payment of
levies.
[5] In terms of the payment
system used in the first respondent’s office, Ms du Toit,
effected payments electronically and
loaded beneficiaries onto the
payment system to facilitate such payments. The respective account
names, the payment details of
the appellant (Capricorn Beach Levies
Account) and those of the first respondent’s client (Capricorn
Beach Joint Venture)
are similar. When generating an electronic
payment, Ms du Toit was required to select a payment beneficiary by
identifying and
logging in the correct account name. In this
particular instance she erroneously selected the incorrect account
name and paid the
proceeds of the Manyama sale transaction to the
Capricorn Beach Levies Account, and therefore incorrectly credited
the appellant
instead of the Capricorn Beach Joint Venture account.
[6] On being informed of the
erroneous transfer, the first respondent contacted the appellant by
e-mail on 21 July 2008, advised
it of the mistake and requested an
immediate refund. The relevant portion of the e-mail sent by Mr
Potgieter, to the appellant
drew attention to the problem as follows:
‘
Please
be advised that we have erroneously made payment into the account of
Capricorn Beach Levies account in the sum of R735 859.15
on the 16
th
instant.
This amount should in fact have been credited to Capricorn Beach
Joint Venture being proceeds of a sale of Erf 2323 Capricorn.
Please
would you be so kind as to refund us the said payment so that same
may be correctly allocated.’
[7] The first respondent also
telephonically contacted a trustee of the appellant, Mr Vincent
Rutherford on 23 July 2008 in an effort
to obtain repayment of these
funds.
[8] At that stage Mr Rutherford
informed the first respondent that the appellant was not able to
attend to the repayment that day
as it was in the process of changing
its managing agents and the signatories on the appellant’s
banking accounts which would,
as the first respondent understood,
facilitate payment of the refund to the first respondent, and that
such refund would be finalised
either on that day or the following
day.
[9] Mr Rutherford gave the first
respondent to understand that the appellant would make payment to the
first respondent once the
signatories to the appellant’s
banking account had been loaded onto the payment system by its
bankers. Mr Rutherford confirmed
the appellant’s intention to
pay in an e-mail to Mr Potgieter dated 24 July 2008, the relevant
portion of which reads as
follows:
‘
As
discussed with Mr Potgieter yesterday, we are currently changing
Managing agents and bank signatories and will finalise today
or
tomorrow.
At this stage we can
not make any payments until our bank loads new signatories.
I apologise for the
delay, unfortunately bad timing.’
[10] At this stage it seemed that
there was no question that the erroneously transferred funds would be
refunded. However, subsequently
the appellant refused to refund the
funds, alleging that the first respondent’s client, Capricorn
Beach Joint Venture, was
indebted to it in the sum of R451 614.03 for
arrear levies, water, rates and taxes. It did repay the balance of
R284 245.12.
[11] The second respondent,
Pincus Matz Marquard Attorneys, acting on the appellant’s
behalf subsequently came into the picture
and advised the first
respondent that the appellant was exercising its rights of set-off
with respect to the arrear amounts due
by the first respondent’s
client to the appellant. The relevant portion of the letter of the
second respondent dated 29 July
2008, addressed to the first
respondent reads as follows:
‘
We
confirm that our client is presently holding the amount which your
offices representing the Capricorn Beach Joint Venture, transferred
into their [the appellant’s] banking account.
We have advised our
client that it is entitled,
with respect to those
monies, to exercise its rights of set-off against several amounts
owed by your client to ours arising from
non-payment of levy
contributions, water charges, rates and taxes.
Our client will, in
the course of the day, furnish us with the exact amount which it
contends is due by your client to it. This
amount, we propose, should
be received into our Trust Account and immediately invested in an
interest bearing account pursuant
to the provisions of Section 78(2A)
of the Attorneys Act pending ultimate determination of the dispute/s
whether by agreement or
Order of Court.
Our client
undertakes to repay the balance of the amount to your offices
immediately.’
[12] The appellant’s
alleged entitlement to retain the payment made in error is founded on
two propositions. First, it is
premised on the fact that the proceeds
of the sale erroneously paid by the first respondent into the
appellant’s bank account
may be set-off against a debt owed to
the appellant by the first respondent’s client, the Capricorn
Beach Joint Venture.
The second basis relied upon by the appellant is
that there was an agreement between the appellant and the first
respondent that
the erroneously transferred funds would be retained
by the appellant until the dispute concerning the liability of
Capricorn Beach
Joint Venture to the appellant in respect of levies
and other charges had been resolved either by agreement or an order
of court.
[13] I deal first with the
appellant’s defence based on set-off. The appellant’s
claim to set-off the client’s
debt against the erroneous
payment made by the first respondent is ill-conceived. The appellant
and the first respondent are not
mutually indebted to each other.
Set-off operates only where two persons reciprocally owe each other
something in their own right.
Wille’s Principles of South
African Law
9 ed (2007) at 1834. In
Schierhout v Union
Government (Minister of Justice)
1926 AD 286
at 289, Innes CJ
commented as follows with regard to set-off:
‘
The
doctrine of set-off with us is not derived from statute and regulated
by rule of court, as in England. It is a recognised principle
of our
common law.
When
two parties are mutually indebted to each other, both debts being
liquidated and fully due, then the doctrine of compensation
comes
into operation.
The
one debt extinguishes the other
pro
tanto
as
effectually as if payment had been made.’
(Emphasis
added.)
[14] In the present matter the
appellant and the first respondent are not mutually indebted to each
other. The appellant knew that
the payment was made in error and was
therefore not entitled to appropriate the erroneously transferred
funds. See
Nissan South Africa (Pty) Ltd v Marnitz NO & others
2005 (1) SA 441
(SCA) para 24. Even on the appellant’s own
version no grounds exist for set-off to operate against the first
respondent.
[15] Counsel for the appellant
attempted to meet this point by submitting that in transferring the
money, the first respondent acted
as an agent of its client,
Capricorn Beach Joint Venture, which was indebted to the appellant
for arrear levies, water, rates and
taxes. It followed therefore, so
the argument went, that the appellant was entitled to set the amount
of the debt off against the
payment transferred to it in error.
[16] This argument however
flounders in the face of the weight of authority of this court
against it. First, it is at odds with
the judgment of this court in
Wypkema v Lubbe
2007 (5) SA 138
(SCA) para 7. That case held
that, when an attorney draws a cheque on his trust account, he
exercises his right to dispose of the
amounts standing to the credit
of that account and does so as principal and not in a representative
capacity. In my view that puts
paid to the submission that the first
respondent, a duly admitted attorney, notary and conveyancer, was
acting as an agent when
through his bookkeeper, he made the erroneous
transfer of money to the appellant. It is true that in this case we
are not concerned
with the drawing of a trust cheque but in principle
it makes no difference that the payment was made in the modern way by
electronic
transfer. The account from which the erroneous payment was
drawn, was a trust account controlled by the first respondent.
Therefore
the principle laid down in
Wypkema
applies.
[17] The second reason for
rejecting the argument that the first respondent acted as an agent is
evident from the facts of the case
themselves. Payment to the
appellant was made in error. There is nothing to show that the first
respondent had the authority from
his client, Capricorn Beach Joint
Venture, to make the payment. As an attorney, the first respondent is
obliged to keep proper
accounting records, containing particulars and
information of any money received, held or paid by him for or on
account of any
person. See s 78(4) of the Attorneys Act 53 of 1979.
The first respondent was therefore under an obligation to account to
his clients
concerning the proceeds of the sale, namely R735 859.15,
received from the purchaser in respect of the sale of the property.
Any
failure on the first respondent’s part to do so would
certainly have resulted in a violation of the rules and regulations
applicable to attorneys.
[18] It follows that the
appellant’s refusal to refund the money transferred in error,
based on the defence of set-off, is
without merit and falls to be
rejected.
[19] Turning to appellant’s
defence that there was an agreement between itself and the first
respondent to retain the erroneously
paid funds, the correspondence
exchanged between the parties clearly shows that no such agreement
was concluded between the parties.
In the letter of 29 July 2008,
which has already been referred to above, the second respondent
acting on the appellant’s
behalf ‘proposed’ that an
amount of R451 614.03 be retained in their trust account and invested
pursuant to s 78(2A)
of the Attorneys Act, pending resolution of the
dispute in respect of levies and other charges said to be owed to the
appellant
by Capricorn Beach Joint Venture. There is no evidence that
this proposal was accepted. In his reply by e-mail addressed to Mr
Rutherford, the first respondent made it clear that the appellant was
not entitled to keep the money and threatened to bring an
application
to court for the recovery of the aforesaid amount. The first
respondent emphasised that the payment to the appellant
was a bona
fide mistake which did not entitle the appellant to keep the money.
On this ground the appellant must also fail.
[20] This brings me to the
question of enrichment which was said by counsel for the first
respondent to be the ground upon which
reliance is placed by his
client for the recovery of the erroneous payment. The general
requirements underlying all enrichment
actions are that (a) the
defendant must be enriched; (b) the plaintiff must be impoverished;
(c) the defendant’s enrichment
must be at the expense of the
plaintiff and (d) the enrichment must be without cause (
sine
causa) ie unjustified. See
McCarthy Retail Ltd v Shortdistance
Carriers CC
2001 (3) SA 482
(SCA) at 496E. There can be no
question that the appellant in this case has been enriched. The first
respondent has been impoverished.
The appellant’s estate has
been increased by the amount erroneously transferred and this
increase has been at the expense
of the first respondent. No
justification for it has been established. Someone who has paid a sum
of money or transferred property
to another erroneously believing
that it was due to that person, when in fact it was not due, is
entitled to recover the sum of
money or the property, see
Wille’s
Principles of South African Law
9 ed (2007) at 1058.
[21] The
condictio indebiti
is available provided that the mistake (whether of fact or law) was
excusable. (See
Willis Faber Enthoven (Pty) Ltd v Receiver of
Revenue
[1991] ZASCA 163
;
1992 (4) SA 202
(A) at 203H;
ABSA Bank Ltd v Leech &
others NNO
2001 (4) SA 132
(SCA) para 8.) The question whether
the mistake on the part of the bookkeeper is excusable did not arise.
It was not suggested
at any stage during the hearing of the appeal
that the first respondent’s bookkeeper had been slack in
effecting the erroneous
transfer. In any event there was, in my view,
no slackness on her part. In the founding affidavit, Mr Potgieter
averred that such
an error had never occurred before and that it was
extremely unfortunate that despite every diligence the error
occurred. If one
has regard to the similarities of the account names
listed as beneficiaries in the first respondent’s electronic
payment
system, the erroneous allocation is understandable and
excusable. In my view the first respondent’s claim for the
recovery
of the erroneously transferred money, based on the
indebiti
,
should be upheld.
[22] It is clear that the
appellant has failed to show any justification for the retention of
the money paid into its account by
the first respondent’s
bookkeeper. Accordingly the third essential element of enrichment
liability has been established by
the first respondent and with that
the appellant’s appeal must fail.
[23] During the preparation of
this judgment counsel for the appellant, without seeking this court’s
leave to do so, filed
supplementary heads of argument which do not
add anything to the debate. They are speculative and miss the point
completely.
[24] In the result the following
order is made:
The appeal is dismissed with
costs.
___________________
K K MTHIYANE
ACTING PRESIDENT
APPEARANCES
For Appellant: C H J Maree
Instructed by:
Paul Weber Attorney, Cape Town
Naudes, Bloemfontein
For First Respondent: R J Howie
Instructed by:
Randall Titus & Associates,
Cape Town
Webbers, Bloemfontein