THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case no: 251/2023
In the matter between:
PORTIA KHENSANI MHLARI NO FIRST APPELLANT/
FIRST RESPONDENT IN CROSS-APPEAL
PATRICK JEALOUSY MALABELA NO SECOND APPELLANT/
SECOND RESPONDENT IN CROSS-APPEAL
PORTIA KHENSANI MHLARI THIRD APPELLANT/
THIRD RESPONDENT IN CROSS-APPEAL
PATRICK JEALOUSY MALABELA FOURTH APPELLANT/
FOURTH RESPONDENT IN CROSS-APPEAL
LULAMA BUSINESS ENTERPRISES CC FIFTH APPELLANT/
FIFTH RESPONDENT IN CROSS-APPEAL
MAMPEPU PROJECTS CC SIXTH APPELLANT/
SIXTH RESPONDENT IN CROSS-APPEAL
PATIENCE LETHABO MLENGANA NO SEVENTH APPELLANT/
SEVENTH RESPONDENT IN CROSS-APPEAL
and
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NEDBANK LIMITED RESPONDENT/APPELLANT IN CROSS-APPEAL
Neutral citation: Mhlari NO and Others v Nedbank Limited (251/2023) [2024]
ZASCA 39 (4 April 2024)
Coram: GORVEN and MATOJANE JJA, COPPIN, SMITH and KEIGHTLEY
AJJA
Heard: 27 February 2024
Delivered: This judgment was handed down electronically by circulation to the
parties’ representatives via email, publication on the Supreme Court of Appeal website
and released to SAFLII. The date and time for hand -down is deemed to be 11h00 on
4 April 2024.
Summary: Unjust enrichment ─ conditio indebiti and conditio sine causa specialis
─ when available ─ not required to plead reliance on one to the exclusion of the other
─ where the pleading puts the claim in the ambit of the condictio indebiti to the
exclusion of the condictio sine causa, not entitled to an election ─ the requirements of
the pleaded condictio must be proved to succeed.
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___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: Gauteng Division of the High Court, Johannesburg (Mdalana -
Mayisela J sitting as court of first instance):
1. The appeal is upheld.
2. The cross-appeal is upheld with costs, including the costs of two counsel where
so employed.
3. The order of the High Court is set aside and is substituted by the following order:
‘(1) The trustees of the PATRICK MALABELA FAMILY TRUST are ordered to pay
the amount of R5 436 347.57 to the plaintiff, together with mora interest thereon,
calculated from 12 September 2019 to date of final payment, both days inclusive.
(2) The plaintiff is directed to take such steps as may be necessary for the
cancellation of the covering mortgage bond executed in its favour and registered with
the Registrar of Deeds, Pretoria, with registration number B2260/2023.
(3) In the event of the plaintiff failing to comply with paragraph (2) within 30 days
from the date of this order, the sheriff is hereby authorized to sign and execute all such
documents, and do all such things as may be necessary , for the implementation of
paragraph (2).
(4) The trustees of the PATRICK MALABELA FAMILY TRUST are ordered to pay
the plaintiff’s costs of suit.’
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Smith AJA (Gorven and Matojane JJA, Coppin and Keightley AJJA concurring):
Introduction
[1] The appellants appeal against the judgment of the Gauteng Division of the High
Court in terms of which they were, inter alia, ordered to pay the respondent, Nedbank
Limited (Nedbank) the sum of R12 316 632,37. Th e order also declared specially
executable an immovable property owned by the trustees of the Patrick Malabela
Family Trust (the Trust), situated in Sandton, Johannesburg. The respondent has filed
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a conditional cross-appeal against the dismissal of its alternative claim based on unjust
enrichment. Both appeals are with the leave of the High Court. The appellants will be
referred to as in the main appeal.
[2] The first, second and seventh appellants are trustees of the Trust, and the third
to sixth appellants were cited as sureties for and co-principal debtors with the Trust for
the due performance of its contractual obligations vis-a-vis Nedbank.
[3] Nedbank is a duly registered and incorporated public company with limited
liability. It trades as a deposit -taking institution in terms of the Banks Act 94 of 1990,
and is a credit provider duly registered in terms of the National Credit Act 34 of 2005.
The common cause facts
[4] The following material facts are common cause. On 7 May 2013, Nedbank and
the Trust, represented by the second appellant, purportedly concluded a loan
agreement in terms of which the former lent R14 million to the Trust. As security for
the loan , a covering mortgage bond was registered over the Trust’s immovable
property and the third to s ixth appellants bound themselves as sureties for, and co-
principal debtors with, the Trust.
[5] After the registration of the bond, Nedbank duly paid the sum of R14 million to
the Trust in accordance with the terms of the loan agreement. The Trust initially made
regular payments by way of debit order but subsequently defaulted, with the last
payment having been made on 23 June 2018. Nedbank consequently instituted civil
action against the Trust and the appellants on 12 October 2018, claiming th e sum of
R12 316 632,37, an order declaring the mortgaged immovable property specially
executable, and other ancillary relief (the contractual claim).
[6] In their plea, the appellants disputed that the Trust had the requisite capacity to
conclude the agreement. They averred that the trust deed required that there should
be no fewer than three and no more than five trustees in office at any time. One of the
be no fewer than three and no more than five trustees in office at any time. One of the
trustees had resigned in October 2010, leaving only the first and second appellants as
trustees. However, it was only on 4 October 2018 that the Master issued the certificate
appointing a third trustee, namely the seventh appellant. Thus, when the loan
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agreement was concluded on 7 May 2013, there were an insufficient number of
trustees in office to bind the Trust legally. The appellants asserted that the loan
agreement and the mortgage bond registered in pursuance of the invalid loan
agreement were consequently also null and void.
[7] Nedbank thereafter successfully applied to join the seventh appellant in h er
capacity as the third trustee. It also amended its particulars of claim to introduce an
alternative claim based on unjust enrichment (the unjust enrichment claim).
[8] In response, t he appellants filed a counter -claim for the cancellation of the
mortgage bond and amended their plea, averring that Nedbank’s alternative claim had
become prescribed. They asserted furthermore that by the exercise of reasonable
care, Nedbank could have ascertained more than three years prior to 12 September
2019 (when it filed its unjust enrichment claim) that the Trust did not have the requisite
number of trustees at the time of co ntracting. In terms of s 12(b) of the Prescription
Act 68 of 1969 (the Prescription Act) , it is consequently deemed to have had
knowledge of that fact when the loan agreement was concluded. The appellants
contended for this reason that Nedbank’s alternative claim had prescribed.
Proceedings in the High Court
[9] At the trial, Nedbank called only one witness, namely Mr Perie Kemp, who was
employed in its Paarl recoveries division. Mr Kemp confirmed that: (a) the capital sum
was duly advanced to the Trust in terms of the loan agreement: (b) the Trust had made
various payments by way of debit order; and (c) the Trust had defaulted on its
contractual obligations and no further payments were made after 23 June 2023.
[10] Certificates of Indebtedness, issued in terms of the loan agreement and
reflecting an outstanding amount of R5 436 347.57, were also admitted into evidence.
The appellants did not dispute any aspect of Mr Kemp’s testimony and closed their
case without calling any witnesses.
case without calling any witnesses.
[11] In respect of the contractual claim, Nedbank relied on ostensible authority and
estoppel as defences to the appellants' contention that the loan agreement was null
and void. The High Court upheld Nedbank’s argument that the Trust should be
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estopped from relying on the invalidity of th e loan agreement. The Court found that
there was no ‘legitimate basis upon which it can be asserted that these defences
[ostensible authority and estoppel] cannot be invoked in the case of the action of the
Trust, where the other party was lured to believe that informal (sic) formalities were
complied with when in fact it was not so.’ The Court therefore concluded that the
agreement was enforceable against the Trust and the sureties. In the light of that
finding, the Court declined to pronounce on Nedbank’s unjust enrichment claim or the
first, second and seventh appellants’ counter-claim. And, having found that the
appellants were in material breach of their contractual obligations, the Court granted
the order prayed for by Nedbank.
[12] Nedbank has conceded in its written argument that the loan agreement is null
and void because at the material time there were an insufficient number of trustees in
office to legally bind the Trust. 1 This concession was correctly made and nothing
further needs to be said about that issue. Nedbank has consequently also conceded
that the main appeal should succeed, the agreement must be set aside, and the
mortgage bond cancelled. It follows that Nedbank’s claim against the third and fourth
appellants, as sureties, shares the same fate.
[13] Thus, only the appellants’ special plea regarding prescription and Nedbank’s
alternative claim based on enrichment remain for consideration.
Did Nedbank’s unjust enrichment claim become prescribed?
[14] Because the High Court found for Nedbank on the issue of the Trust’s capacity,
it declined to decide the prescription issue. Nonetheless, that defence can be
dismissed out of hand. Section 12(3) of the Prescription Act provides that ‘[a] debt
shall not be deemed to be due until the credit or has knowledge of the identity of the
debtor and the facts from which the debt arises: Provided that a creditor shall be
debtor and the facts from which the debt arises: Provided that a creditor shall be
deemed to have such knowledge if he could have acquired it by exercising reasonable
1 Land and Agricultural Development Bank of SA v Parker and Others [2004] ZASCA 56; 2005 (2) SA
77 (SCA); [2004] 4 All SA 261 (SCA) para 11, where Cameron JA said that: ‘It follows that a provision
requiring that a specified minimum number of trustees must hold office is a capacity-defining condition.
It lays down a prerequisite that must be fulfilled before the trust estate can be bound. When fewer
trustees than the number specified are in office, the trust suffers from an incapacity that precludes action
on its behalf.’
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care.’ The first and second appellants represente d to Nedbank that they were duly
authorised to bind the Trust and that the latter had the requisite capacity to conclude
the loan agreement. They also provided Nedbank with the necessary resolutions and
other relevant written instruments in support of those representations.
[15] Furthermore, it is common cause that the appellants ha d, at least until June
2018, acquiesced in the implementation of the loan agreement. The Trust made
regular payments in terms thereof and had by that date repaid more than half of the
capital amount.
[16] There was, in my view, therefore nothing that could have alerted Nedbank to
the fact that the loan agreement was invalid, until the appellants raised the point in
their plea. The onus was on the appellants to adduce evidence in suppor t of their
contention that Nedbank could have become aware of that fact ‘by exercising
reasonable care.’ 2 They have failed to do so, and the prescription defence must
accordingly fail.
The unjust enrichment claim
[17] The requirements for a claim based on unjust enrichment are that the defendant
must be enriched, the plaintiff must be impoverished, the enrichment must be at the
expense of the plaintiff, and the enrichment must have been unjustified (sine causa).
Although there is no unified general enrichment action, these are requirements
common to all enrichment actions.3
[18] A person who pays money (or delivers a thing) to another because of a
reasonable error of fact or law in the belief that the money is owing, whereas it is not,
has a claim for repayment in terms of the condictio indebiti , to the extent that the
person who received the payment has been enriched at his or her expense. 4 The
condictio sine causa specialis lies where the money is in the hands of the defendant
without cause, whether due to the plaintiff’s mistake or not. Therefore, a defendant
may raise as a defence to the condictio indebiti that the mistake was unreasonable
may raise as a defence to the condictio indebiti that the mistake was unreasonable
2 McLeod v Kweyiya [2013] ZASCA 28; 2013 (6) SA 1 (SCA).
3 McCarthy Retail Ltd v Short-distance Carriers CC [2001] ZASCA 14; [2001] 3 All SA 236 (A) paras 8-
10; Kudu Granite Operations (Pty) Ltd v Caterna Ltd [2003] ZASCA 64; 2003 (5) SA 193 (SCA).
4 Govender v Standard Bank of South Africa Limited 1984 (4) SA 392 (C) at 400 (Govender).
8
and negligent, but in a claim based on the condictio sine causa specialis that
consideration is irrelevant.
[19] In Willis Faber Enthoven (Pty) Ltd v Receiver of Revenue,5 this court held that
the condictio indebiti is an equitable remedy and its object is to prevent one person
being unjustifiably enriched at the expense of another . The principles underlying the
condictiones are not immutable but are constantly evolving to accommodate new
circumstances.6
[20] In its written argument, Nedbank relied on the condictio sine causa specialis
and in the alternative, on the condictio indebiti. Nedbank’s purported reliance on the
condictio sine ca usa specialis is understandable. As mentioned, if the unjust
enrichment claim were to be decided based on the conditio sine causa specialis, any
negligence on Nedbank’s part is irrelevant. If, however, it w ere to be determined
according to the principles applicable to the condictio indebiti, Nedbank’s negligence,
if proved, may preclude reliance on that condictio.
[21] Before us, counsel for Nedbank argued that notwithstanding the f actual matrix
pleaded in its counterclaim, which brings its enrichment claim within the ambit of the
condictio indebiti, Nedbank is not precluded from relying on the condictio sine causa
specialis. He submitted that in circumstances where the underlying causa for the
payment was an invalid contract, the latter condictio is the correct remedy. In such a
case the payment was not made indebiti because Nedbank was not settling a debt
when making the payment to the Trust but was purportedly performing in terms of a
void contract. There was consequently no causa for the payment , and Nedbank’s
counterclaim must accordingly be decided in terms of the legal principles applicable
to the condictio sine causa specialis . The issue regarding the reasonableness of its
mistake therefore does not arise, or so he argued.
5 Willis Faber Enthoven (Edms) Bpk v Receiver of Revenue and Another [1991] ZASCA 163; 1992 (4)
SA 202 (A) (Willis Faber).
6 Bowman, De Wet and Du Plessis NNO and Others v Fidelity Bank Ltd 1997 (2) SA 35 (AD), at page
40A-C, where Harmse JA said that the principles underlying the condictio are not immutable and that,
in principle, a party is entitled to rely “op die analogiese aanwending van die condictio indebiti…”’
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[22] In my view, even though that submission is legally sound as a general
proposition, the facts pleaded in this matter bring the enrichment claim squarely within
the ambit of the condictio indebiti. Although it is not necessary for a claimant to commit
in its pleadings to either condictiones to the exclusion of the other,7 Nedbank has firmly
nailed its colours to the mast of the condictio indebiti. It has pleaded, inter alia, that
the payment was made ‘in the reasonable, but mistaken, belief that it was owing in
terms of the loan agreement.’ And furthermore, that the payment was made ‘indebiti,’
in that there was no legal obligation to make it. It is furthermore common cause that
Nedbank made the payment to the Trust in the mistaken bel ief that the underlying
agreement was valid and enforceable. Nedbank’s counterclaim must accordingly be
decided based on the legal principles applicable to the condictio indebiti.8 In any event,
for reasons that follow below, holding Nedbank to its pleaded cause of action makes
no difference to the outcome of the case.
[23] That the trust has been enriched at Nedbank’s expense is manifest and
incontrovertible. On the common cause facts, the Trust has been enriched in the sum
of R5 436 347,57, being the original loan amount advanced to it in terms of the invalid
agreement, less the payments it made from time to time. It is also not disputed that,
apart from the issue whether Nedbank’s mistake was reasonable and thus excusable,
all the other requi sites for a claim based on enrichment have been established. The
only issue that thus remains for determination is whether Ne dbank’s mistake was
reasonable and excusable.
Was Nedbank’s mistake reasonable?
[24] The reasonableness of Nedbank’s mistake depends on the facts, on which the
Court must exercise a value judgment. In this regard the Court must consider the
relationship between the parties, the conduct of the Trust, whether the trustees were
relationship between the parties, the conduct of the Trust, whether the trustees were
aware of the mistake, whether their conduct contributed to the mistake, Nedbank’s
7 Govender at 396C-D, cited with approval in B & H Engineering v First National Bank of SA Ltd 1995
(2) 279 (A). See also: First National Bank of Southern Africa Ltd v Perry NO and Others 2001 (3) SA
60 (SCA) at para [23].
8 In Kudu (supra), at 201G -H, this court dealt with a void contract, albeit when void due to statutory
prohibition. The court held that the condictio applies if the contract which gave rise to the transfer of
property was ab initio unenforceable or has subsequently become unenforceable. And that ‘[t]he same
principle applies if the contract is void due to a statutory prohibition ( Wilken v Kohler 1913 AD 135 at
149-50), in which case the condictio indebiti applies.’
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state of mind, and the culpability of its ignorance in making the payment.9 It is trite that
Nedbank bears the onus of proving that its conduct was not so slack that it is
undeserving of the Court’s protection.
[25] In my view, it would be unreasonable to ascribe negligence to Nedbank’s failure
to perform a due diligence exercise to verify the Trust’s capacity bey ond its reliance
on the documents provided by the trustees. Before the conclusion of the loan
agreement, Nedbank was provided with a Trust resolution indicating that the first and
second appellants had been duly authorized to conclude the agreement on its behalf.
In addition, in terms of the loan agreement the first and second appellants warranted
the correctness of the information provided to Nedbank and declared that ‘no
information that may affect Nedbank’s decision to approve the loan has been withheld.’
The first and second appellants also provided Nedbank with a certificate confirming
that the loan agreement was for the benefit of the Trust beneficiaries and proof that
the agreement has been duly authorized in terms of a resolution adopted by the Trust.
In addition, the loan was secured by a covering mortgage bond, as well as by
suretyships.
[26] While it is possible that the first and second appellants initially acted in the bona
fide but mistaken belief that their actions conformed to the trust deed, as trustees they
nevertheless bore the primary responsibility of ensuring that the Trust complied with
all its internal formalities before concluding the contact.10 The Trust acquiesced in the
implementation of the loan agreement for some five years and purported to perform
its contractual obligations in terms thereof. It is common cause that it continued to pay
the monthly instalments and had in fact paid about 60 instalments, amounting to more
than R11 million. It also went so far as to mortgage its immovable property as security.
Thus, the undisputed evidence regarding the appellants’ conduct, both before and
Thus, the undisputed evidence regarding the appellants’ conduct, both before and
after the conclusion of the loan agreement, significantly a ttenuates Nedbank’s
culpability and renders its mistake excusable.
9 Willis Faber at 224G-226A.
10 Land and Agricultural Bank of South Africa v Parker & Others 2005 (2) SA 77 (SCA).
11
[27] In conclusion then, I find that Nedbank ’s reliance on the first and second
appellants’ representations regarding the capacity of the Trust was reasonable in the
circumstances. Nedbank’s failure to undertake a due diligence exercise in respect of
the trust deed under these ci rcumstances was therefore understandable and, in my
view, did not constitute inexcusable slackness. Its mistake was therefore reasonable
and excusable, and the counterclaim must consequently succeed.
Costs
[28] There can be little doubt that Nedbank was s ubstantially successful and is
therefore entitled to its costs, including the costs of two counsel. There are, however,
different considerations in respect of the main appeal. In concluding the loan, the first
and second appellants purported to act on behalf of the Trust and in the process made
extensive representations to Nedbank regarding the Trust’s capacity. They did so in
circumstances where they ought to have been aware of the trust deed terms and
should have known that the Trust had been incapacitate d because there were an
insufficient number of trustees in office at the material time. It is therefore only fair that
they should bear their own costs in respect of the main appeal.
Order
[29] In the result the following order issues:
1. The appeal is upheld.
2. The cross-appeal is upheld with costs, including the costs of two counsel where
so employed.
3. The order of the High Court is set aside and is substituted by the following order:
‘(1) The trustees of the PATRICK MALABELA FAMILY TRUST are ordered to pay
the amount of R5 436 347.57 to the plaintiff, together with mora interest thereon,
calculated from 12 September 2019 to date of final payment, both days inclusive.
(2) The plaintiff is direc ted to take such steps as may be necessary for the
cancellation of the covering mortgage bond executed in its favour and registered with
the Registrar of Deeds, Pretoria, with registration number B2260/2023.
the Registrar of Deeds, Pretoria, with registration number B2260/2023.
(3) In the event of the plaintiff failing to com ply with paragraph (2) within 30 days
from the date of this order, the sheriff is hereby authorized to sign and execute all such
documents, and do all such things as may be necessary, for the implementation of
paragraph (2).
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(4) The trustees of the PATRICK MALABELA FAMILY TRUST are ordered to pay
the plaintiff’s costs of suit.’
________________________
J E SMITH
ACTING JUDGE OF APPEAL
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Appearances
For the appellants: L Hollander
Instructed by: Faber Goërtz Ellis Austen Inc, Bryanston
Lovius Block Inc, Bloemfontein
For the respondent: JG Wasserman SC and JM Kilian
Instructed by: O’Connell Attorneys, Bryanston
Honey & Partners Inc, Bloemfontein