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[2022] ZAKZPHC 80
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Umgeni Water v Naidoo and Another (11489/2017P) [2022] ZAKZPHC 80; [2023] 1 All SA 857 (KZP) (15 December 2022)

FLYNOTES:
FRAUD AND FAKE DEGREE
Contract
– Fraud – Fake degree used to secure place in graduate
programme – Whether contract void or voidable
–
Restitutio in integrum – Defendant ordered to disgorge what
he received – Plaintiff entitled to execute
against
defendant’s pension benefits – Former
Pension Funds
Act 24 of 1956
,
s 37D(1)(b).
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION, PIETERMARITZBURG
Case
No: 11489/2017P
In
the matter between:
UMGENI
WATER

PLAINTIFF
and
SHELDON
NAIDOO

FIRST DEFENDANT
UMGENI
WATER PROVIDENT FUND

SECOND DEFENDANT
This
judgment was handed down electronically by circulation to the
parties’ legal representatives by email. The date and time
upon
which it was handed down is deemed to be 10h30 on 15 December 2022.
ORDER
The
following order is granted:
1.
There shall be
judgment in favour of the plaintiff against the first defendant for
payment of the amount of R2 203 565.04;
2.
Interest shall
run on the judgment amount at the prescribed legal rate of interest
from date of demand to the date of final payment;
3.
It is declared
that the plaintiff is entitled to execute this judgment against the
first defendant’s provident fund administered
by the second
defendant;
4.
The first
defendant shall pay the plaintiff’s costs on the scale as
between attorney and client.
JUDGMENT
MOSSOP
J:
‘
Oh,
what a tangled web we weave when first we practise to deceive.’
[1]
[1]
The plaintiff
is involved in the bulk distribution of water in KwaZulu-Natal and
has designed a graduate development programme (the
programme) for
which it accepts selected graduates from universities to be trained
by it, with a hope that they will remain with
the plaintiff once they
have successfully completed the programme. The first defendant
successfully applied for a place in the
programme. The plaintiff
alleges that this occurred because of a fraud perpetrated on it by
the first defendant.
[2]
In its
particulars of claim, the plaintiff sets out the basis of its
allegation of fraudulent conduct on the part of the first defendant.

It pleads that it had advertised that applicants for the position of
process control technician were required to possess, at least,
a
bachelor’s degree in Engineering. The first defendant applied
for the position and represented that he had a B.Sc. degree
in
Engineering that he had obtained from the University of KwaZulu-Natal
(the University). He put up a copy of his degree certificate
and his
academic results. His application succeeded and he was appointed to
the position.
[3]
The
plaintiff alleges that the first defendant’s representations
were false and fraudulent and that he did not have a B.Sc.
degree
from the University, or from any other university.
[2]
Not knowing of the falsity of the first defendant’s
representations, the plaintiff appointed him to the advertised
position
on 1 September 2008 and he remained with the plaintiff until
he tendered his second, and final, resignation on 29 November 2016.

The plaintiff pleaded further that it would not have appointed the
first defendant if the true facts were known to it.
It
now seeks the repayment to it of all amounts that it paid the first
defendant.
[4]
The second
defendant is joined in the action because of the interest that it has
in the matter and no relief is sought against it
by the plaintiff.
The first defendant has a pension benefit with the second defendant,
a fact that is not in dispute. The plaintiff
seeks a declaratory
order that should it obtain a judgment against the first defendant
that it be permitted to execute against
such pension benefit.
[5]
The first
defendant asserts in his plea that he is indeed possessed of a B.Sc.
degree conferred upon him by the University. In support
of that plea,
he attached to it both his degree certificate and his academic
record. He pleads that he applied for a position on
the programme and
pleads that later he applied for a position with the plaintiff as a
process technician. He was successful and
was appointed and it is
from that position that he resigned at the end of November 2016.
[6]
The essential
issue to be determined therefore is whether the first defendant
graduated from the University with a B.Sc. degree
in Chemical
Engineering.
[7]
At trial, the
plaintiff was represented by Mr de Wet SC and the first defendant was
represented by Ms Qono. They are both thanked
for the assistance that
they provided to the court.
[8]
The plaintiff
called two witnesses. Mr Peter Anthony Gray Thompson is presently the
managing director of Umgeni Water Services,
a subsidiary of the
plaintiff. However, at the relevant time he was the manager of
Process Services with the plaintiff and was
the first defendant’s
superior. He confirmed that the advertisement that the plaintiff ran
called for applicants possessed
of a university degree in chemical
engineering to apply for appointment. The first defendant applied and
confirmed that he had
a B.Sc. Chemical Engineering degree and
presented his degree certificate confirming this.
[9]
Mr Thompson
indicated that the programme has a duration of five years but may be
extended. It is structured so that the appointees
are exposed to
mentors who guide them through the different facets of the programme.
The appointees are rotated through a number
of disciplines so that
they acquire experience in each discipline. The goal of the programme
is to allow appointees to become professional
engineers registered
with the Engineering Counsel of South Africa (ECSA).
[10]
When the first
defendant was initially appointed, Mr Thompson explained that the
plaintiff accepted his qualifications without demur
and did not
validate them. As pleaded by the first defendant, he confirmed that
in 2016 the first defendant had applied for appointment
as a process
technician. The minimum entry level qualification for that position
was a B.Sc. degree in Chemical Engineering. Mr
Thompson testified
further that in the period between the first defendant entering the
programme and the date upon which he applied
for the position of
process technician, a change had occurred at the plaintiff. It now
employed a private company to do that which
it had not done when it
first allowed the first defendant into the programme: all
qualifications now had to be verified, including
the first
defendant’s qualification. The first defendant submitted his
degree certificate and his academic transcript reflecting
the
subjects that he studied and the results and marks that he achieved
for each subject to the plaintiff, who supplied them to
the verifying
company.
[11]
The
verification of the first defendant’s degree failed. The
plaintiff, and Mr Thompson, were notified by the verifying company

that the University had no record of a B.Sc. Chemical Engineering
degree ever being conferred upon the first defendant. The first

defendant’s degree certificate was therefore false.
[12]
Mr Thompson
testified that he called the first defendant in and broke the news to
him. Mr Thompson initially was of the view that
there must be a
mistake. He asked the first defendant to give him something tangible
to demonstrate that he had attended the University
and did have the
degree that he claimed to have. This could be either in the form of
the original record of his academic results
or his official
graduation photographs or even family snapshots of the happy
occasion. The first defendant confirmed that he had
such snapshots.
Mr Thompson is himself scientifically qualified and knew that in the
final year of study in the Faculty of Chemical
Engineering students
are required to break up into groups comprised of approximately six
students and work collectively on a design
project. This apparently
takes up much of the final year of study towards that degree. Mr
Thompson asked the first defendant to
give him the names of those
fellow students who were members of his project design group. His
intention was to contact them and
confirm that the first defendant
had, indeed, been at the University, contrary to the feedback that he
was receiving from the verification
company.
[13]
Mr Thompson
recalled that the first defendant initially indicated that he had
lost his academic results, but shortly thereafter
said that he had
located them. Having initially said that he did have family
photographs of his graduation ceremony, he later said
that he did not
attend his graduation ceremony and therefore did not have any. He
further indicated that he could not recall the
names of any of the
people who he had worked with in his project design group.
[14]
Mr Thompson
then contacted the University personally. He was told that the first
defendant did not hold a degree awarded by it.
Mr Thompson testified
that he called the first defendant in again and gave him time off to
allow him to go to the University personally
to sort out the problem.
Mr Thompson remained convinced that a simple mistake had been made
that should be easily capable of being
resolved, although he was
beginning to develop certain misgivings. He testified that he liked
the first defendant, had invested
a lot of time and effort in him,
and wanted to help him sort out this strange turn of events.
[15]
Notwithstanding
the time off that he was given, the first defendant was not able to
clarify anything, or produce anything, from
the University when he
returned to the plaintiff that assisted in assuaging the misgivings
of the plaintiff, or the growing misgivings
of Mr Thompson. The
University, according to the first defendant, apparently told him
that if he wished to raise any query with
it, it should be done
‘through lawyers’.
[16]
Having
presented nothing to Mr Thompson to substantiate that he had a
degree, the first defendant then tendered his resignation
to Mr
Thompson and indicated that he would serve out his month-long
contractually agreed notice period. This was not accepted by
Mr
Thompson, as disciplinary proceedings had by then already been
commenced by the plaintiff against the first defendant. However,
a
few days later, on 29 November 2016, the first defendant submitted
another resignation letter, indicating that he now would be
resigning
with immediate effect. He indicated that this had been necessitated
by the fact that he had an illness that posed a serious
threat to his
life and on medical advice, he was compelled to stop working. The
plaintiff accepted this letter of resignation.
[17]
Mr Thompson
finally testified that had the plaintiff known that the first
defendant did not have a degree, he would never have been
accepted
into the programme. The programme was designed for, and intended for,
graduates. The plaintiff only employs graduates.
He explained that
having an unqualified person working for the plaintiff could
potentially be extremely hazardous to the well-being
of a large
number of people who are dependent on water supplied to them by the
plaintiff. Graduates employed by the plaintiff are,
inter alia,
required to perform calculations to determine which chemicals, and in
what quantity, should be added to water that
is supplied, literally,
to millions of people within the province of KwaZulu-Natal by the
plaintiff. Any error in performing such
calculations caused through a
lack of knowledge could potentially have incredibly serious
consequences for the general populace.
[18]
Under cross
examination, Mr Thompson confirmed that graduates in the programme
are closely supervised but that as they gained more
experience, they
were given greater responsibilities. He mentioned that
notwithstanding that the first defendant was with the plaintiff
for
eight years and had been provided with the necessary exposure to
permit him to be registered with ECSA, he never registered.
In
retrospect, Mr Thompson said that this was a warning sign that had
been overlooked by him and the plaintiff, the inference being
that
such registration did not occur as the first defendant knew that his
qualifications would never withstand serious scrutiny
by ECSA.
[19]
The only other
witness called by the plaintiff was Ms Nonhlanhla Gladness Mofokeng,
who is the acting head of central student records
of the University.
She identified a document that the plaintiff claimed is the true
record of the first defendant’s academic
progress at the
institution where she is employed and confirmed that it accorded with
the University’s records. It revealed
that the first defendant
commenced his studies in the Faculty of Chemical Engineering in 2002
but was thereafter excluded from
that faculty in 2004 because he had
failed to make significant academic progress with his studies. By way
of contrast, the academic
record relied upon by the first defendant
shows six years of successful study by him and makes no reference at
all to him being
excluded from the faculty.
[20]
Ms Mofokeng
also considered the first defendant’s degree certificate and
stated that it was not valid. The certificate reads
as follows:
‘
This
is to certify that
Sheldon
Naidoo
was
admitted this day
at
a congregation of the University
to
the degree of
Bachelor
of Science in Engineering
(Chemical
Engineering)
having
satisfied the conditions prescribed for the degree
24
th
April 2008’
[21]
She
testified that on such certificate the date at the bottom of the
certificate (which appears in a substantially smaller font
to those
employed in the rest of the degree certificate) was the date upon
which that faculty conducted its graduation ceremony
and was,
therefore, the date upon which the degree was conferred upon a
graduate. In this case, the degree certificate indicated
that the
Faculty of Engineering had its graduation ceremony on 24 April 2008.
She had with her in the witness box a printed and
bound book that
recorded all the relevant details of all graduation ceremonies held
by the University during the year of 2008,
being the year in which
the first defendant claimed that his degree was conferred upon him,
as well as the names of all persons
who graduated that year from the
University. By referring to her book, she was able to confirm that
the Faculty of Law and Management
had their graduation ceremony on 24
April 2008, and not the Faculty of Engineering. The Faculty of
Engineering had its graduation
ceremony on 18 April 2008. That then
should have been the date that appeared on the first defendant’s
degree certificate.
The first defendant’s degree certificate
was accordingly originally a Faculty of Law and Management degree
certificate and
was, therefore, not a valid degree certificate.
[3]
Ms Mofokeng confirmed that irrespective of whether a graduate
attended his or her graduation ceremony, his or her name would still

appear in her book. The first defendant's name did not appear in it.
That meant he had not graduated in 2008 at all.
[22]
The
defendant testified and called no witnesses. He asserted that he has
a B.Sc. Chemical Engineering degree and had initially commenced
his
studies at the University of Durban-Westville in 2002 and finished
them at the end of 2007 at the University.
[4]
He testified that he had gone to the University’s student
record centre and picked up a copy of his degree certificate and
his
academic results on the same day and that these were the documents
that he relied upon to establish that he does have the requisite

qualification. They were documents issued to him by the University.
He further confirmed that he had not gone to his graduation
ceremony
as he was working at the time outside the province of KwaZulu-Natal.
He claimed that he could not get to his graduation
ceremony due to
financial constraints.
[5]
He
also mentioned that he had a serious health issue that had flared up
shortly before the issue of his qualification arose. For
some reason,
he did not wish anyone to know of the problem and did not even tell
his immediate family about it. Only he and his
partner knew of it.
The partner was not called to testify. He was compelled to see a
psychologist because of the effect that his
health had on him. His
health was the true reason why he had resigned from the employ of the
plaintiff and not the issue of his
qualification.
[23]
The first
defendant’s counsel took him through the amounts identified in
the particulars of claim as comprising the plaintiff’s
claim
against him. He accepted that he had been paid those amounts and did
not dispute any of them, but he denied that he was obliged
to repay
anything to the plaintiff. He testified that he had rendered a
service to the plaintiff and had been paid for those services
by the
plaintiff and that there had never been any queries raised by the
plaintiff regarding the quality of the work that he had
performed for
it.
[24]
Before
the first defendant was cross examined, Ms Qono sought an amendment
to the plea to the effect that if fraud on the part of
the first
defendant was established by the plaintiff, to permit it to recover
the amounts claimed in the particulars of claim from
the first
defendant would cause the plaintiff to be unjustly enriched. The
trial stood down for the amendment to be formulated,
subject to
strict timelines that I imposed on the first defendant. The plaintiff
replicated overnight, and the trial proceeded
the next morning.
[6]
In its replication, the plaintiff stated that it could not have been
enriched by the services of an unqualified engineer. Everything
that
the first defendant had received from the plaintiff, his training,
and his salary, had been occasioned by his fraud and to
permit him to
keep what he received would be akin to rewarding him for his
fraudulent conduct. His conduct was so scandalous and
morally
reprehensible that no court could come to his assistance.
[25]
Under cross
examination, the first defendant was asked to consider the academic
results that he relied upon to establish that he
had met the academic
requirements for the awarding of the degree that he claimed to have.
Those results showed progress each year
through the subjects
necessary for the awarding of a B.Sc. Chemical Engineering degree.
The prescribed period for the obtaining
of such a degree is four
years but the first defendant completed his degree, according to him,
after six years of study. Those
results indicate that these were six
consecutive years of study, from 2002 to 2007. However, the first
defendant had discovered
a document, dated 9 February 2006, that had
been written by a Professor N M Ijumba (Professor Ijumba), the Dean
of the Faculty
of Engineering, and which was addressed to the first
defendant. It is entitled ‘Re-Admission to Faculty’. It
stated
the following:
‘
The
Faculty Exclusions Appeals Committee has considered your application
for re-admission. I am pleased to inform you that your
appeal has
been successful. You may therefore register for study in this Faculty
in the 1
st
semester of 2006 under the conditions specified below.’
[7]
[26]
The academic
record that the first defendant relies upon makes no mention
whatsoever of him at any stage being excluded from the
Faculty of
Engineering. It was put to him by Mr de Wet that there simply is no
opportunity for this to have occurred as, on the
first defendant’s
version, he progressed, albeit slowly, through each year of study
without any controversy. However, the
academic results relied upon by
the plaintiff, confirmed by the University as being correct, records
that he was excluded from
the Faculty of Engineering at the end of
2004. The wording used on the academic results recording his
exclusion was the following:
‘
Excluded
from Engineering Faculty – Bachelor of Science in Chemical
Engineering 31-DEC-2004.’
The
letter from Professor Ijumba consequently fits seamlessly into the
plaintiff’s narrative but finds no traction in the
first
defendant’s version. The first defendant could not explain how
the letter from Professor Ijumba could be reconciled
with the
academic record that he relied upon.
[27]
The first
defendant’s attention was then drawn to the two sets of
academic results that were mentioned in evidence, those
relied upon
by the plaintiff and those relied upon by the first defendant
respectively. The academic results relied upon by the
plaintiff, and
confirmed by Ms Mofokeng as being accurate, commence at the beginning
of 2002 and terminate at the end of 2004.
The results relied upon by
the first defendant also commence at the beginning of 2002 and run
continuously beyond 2004 until the
end of 2007. There is thus a
period where the competing documents record results and marks
achieved over the same period (2002
to 2004). But that common period
has different results and marks for the same subjects. For example:
(a)
For the
subject identified as ‘Engineering Physics’ in his first
year of study, the plaintiff’s results record
that the first
defendant failed with a mark of 42, while the first defendant’s
results indicate that he passed with a mark
of 57;
(b)
For the
subject identified as ‘Fluid Mechanics’ in his second
year of study, the plaintiff’s results record that
he was
absent from the examination, while the first defendant’s
results indicate that he passed with a mark of 60; and
(c)
For the same
subject, ‘Fluid Mechanics’, which he now wrote in his
third year of study, the plaintiff’s results
show that he
failed with a mark of 28. There is no mention of that subject in the
first defendant’s results in his third
year of study because he
had already passed it, according to him, in his second year of study.
These
are but some of the discrepancies that arise from a consideration of
the two competing sets of results in the common period.
There are
more.
[28]
The position
is thus not that the plaintiff’s version of the academic
results is an incomplete version of the first defendant’s
much
longer version. The subjects recorded in both documents are the same,
but the results achieved are different in virtually
every instance.
When asked to explain this, the first defendant was forced to concede
the obvious, namely, that they are the results
of two different
students. Yet both academic results bear his name and his student
number. One is therefore a forgery. The question
must then be asked:
who has the greater incentive to forge these academic results, the
University or the first defendant?
[29]
Concerning the
quality of the witnesses, Mr Thompson appeared to be an intelligent,
kind and considerate man who initially completely
believed in the
first defendant and was more than prepared to assist him in resolving
the issue. When it became obvious to him
that the first defendant did
not have a degree, he became a formidable opponent to the first
defendant. No criticism can be levelled
at Ms Mofokeng who simply
provided a voice to the academic records possessed by the University
pertaining to the first defendant.
She was not challenged in her
evidence, which was clear and to the point, and she was a good and
confident witness.
[30]
The first
defendant was, generally, a witness who had an answer for every
question he was asked, even if the answer was weak in
its content. He
was an unimpressive witness. When it was put to him that he initially
told Mr Thompson that he had family snapshots
of his graduation
ceremony but later said that he had not attended the ceremony, his
answer was that he could not remember saying
that he had family
snapshots. When asked why he had not given Mr Thompson the names of
the members of his design project, his initial
answer was that he had
not kept in touch with them. That, of course, was no answer to the
question. As previously stated, the first
defendant said that he
could not remember a single name of any of his design team members.
He also indicated that he never kept
a copy of the design project
thus he could not produce it for Mr Thompson’s consideration.
That he could not remember a single
name of any of his design team
members that he worked with over the final year of his studies
beggar’s belief and is worthy
only of rejection. Asked why he
did not call his final year design project supervisor to verify that
he was an active member of
the faculty and a participant in the final
year design project, the first defendant answered vaguely that it had
‘crossed
his mind’, but that:
‘
Life
in general just happened.’
I
am not entirely sure what that answer was intended to convey, but it
seems to be that the first defendant could not be bothered
to make
the effort of speaking to his supervisor or calling her to give
evidence. I find this to be a strange, unsatisfactory response
that
appears to demonstrate a seeming indifference on the part of the
first defendant to the undoubtedly serious allegations levelled

against him.
[31]
On the issue
of his life-threatening disease, the first defendant was far from
convincing. He and his partner knew of it, but not
a single member of
his family was told of it. He was invited to disclose it to the court
on several occasions when cross examined
but refused to do so. He
called no medical experts to confirm it.
[32]
After a
careful consideration of the competing versions, and after observing
the
witnesses,
I have no doubt that the first defendant was an untruthful witness.
The documentary evidence put up by the plaintiff
is convincing and
overwhelming in its effect. I must thus conclude that the degree
certificate claimed by the first defendant to
be his is a forgery, as
are the academic results upon which he relies. I accept the academic
results validated by Ms Mofekeng,
and which are relied upon by the
plaintiff, as being the true and correct history of the first
defendant’s academic achievements.
He was excluded from the
Faculty of Engineering in 2004 and despite being offered the
opportunity to be readmitted in 2006, never
resumed his academic
studies at the University. He could not have acquired his degree with
the marks that he received in the three
years that he spent at the
University (the degree being a four-year degree) prior to being
excluded. In the result, I must conclude
that the first defendant
does not have a B.Sc. Chemical Engineering degree conferred upon him
by the University.
[33]
In asserting
as he did in his application for employment with the plaintiff that
he was possessed of such a degree, the first defendant
falsely
represented the true state of his qualifications with the intention
of securing the benefit of employment from the plaintiff.
The
misrepresentation succeeded and he gained the prize that he sought,
to the detriment of the plaintiff, who would otherwise
not have
offered him any form of employment. In so doing, the first defendant
acted fraudulently.
[34]
The esteemed
English judge Lord Denning uttered these oft quoted words in relation
to fraud in
Lazarus
Estates Ltd v Beasley
:
'No
court in this land will allow a person to keep an advantage which he
has obtained by fraud. No judgment of a court, no order
of a
Minister, can be allowed to stand if it has been obtained by fraud.
Fraud unravels everything. The court is careful not to
find fraud
unless it is distinctly pleaded and proved; but once it is proved it
vitiates judgments, contracts and all transactions
whatsoever . .
.'.
[8]
[35]
It
is settled law in this country
that
‘[f]raud is conduct which vitiates every transaction known to
the law.’
[9]
That having been said, fraud is not easily inferred,
[10]
nor when it is established should it be considered as a ‘flame
thrower, withering all within reach’.
[11]
As Cameron J remarked further in
Absa
Bank Limited v Moore and another:
[12]
‘
Fraud
unravels all directly within its compass, but only between victim and
perpetrator, at the instance of the victim. Whether
fraud unravels a
contract depends on its victim, not the fraudster or third parties'.
[36]
The plaintiff,
being the victim, seeks the unravelling of the contract concluded
with the first defendant. The existence of the
contract was put an
end to by the first defendant when he tendered his second resignation
on 29 November 2016. The contract has
accordingly been rescinded. The
plaintiff now seeks the restoration of the situation prior to the
contract being concluded. It
holds the view that the contract
concluded with the first defendant is void and not merely voidable.
Indeed, in his heads of argument,
Mr de Wet stated that any contract
induced by fraud is void ab initio. I cannot share that view.
[37]
In
my understanding, different consequences may occur from contracts
induced by fraud. The contract may either be void ab initio
or it may
be voidable at the instance of the aggrieved party. In
Dalrymple,
Frank and Feinstein v Friedman (2),
[13]
the position was explained thus:
‘
Transactions
induced by fraudulent misrepresentation may be void
ab
initio
, or they may be voidable only. This distinction is well
known in the sphere of contract, and is illustrated in the case of
Cundy
v Lindsay, L.R.3 App Ca 459. Where, as in that case, there is
no consent on the part of the owner to the passing of the property
to
the person who obtained it by fraud, the transaction is void
ab
initio
and the ownership of the property remains in the
person defrauded. But if the owner consents to the passing of the
property,
although his consent was obtained by means of a fraudulent
misrepresentation, the transaction is voidable only. In such cases,
ownership passes to the fraudulent party. Where the fraud is such
that the transaction is void
ab initio
, ownership of the
property fraudulently taken or obtained remains in the owner who can
vindicate it in the hands of an innocent
third party. Here the
transaction is voidable only, an innocent third party can acquire
good title.’
[38]
In determining
whether a transaction induced by fraud is void or merely voidable,
the test is whether the person seeking to have
it set aside:
‘…
entered
into the transaction wilfully and knowingly, with the intention
to bring about the legal consequences which it entailed,
or not. If
so, then it is a valid transaction until it is declared invalid,
although it may be voidable at his instance on the
ground that he was
induced to enter into it in an unlawful manner. If, however, it was
not his intention to enter into the transaction
(indien egter sy wil
nie met die handeling bepaard gegaan het nie), then the transaction
(apart from whatever effect estoppel might
have) has no legal
consequences.’
[14]
[39]
In
this instance, the victim, the plaintiff, intended to contract with
the first defendant on the basis that it believed that he
had the
required degree from the University. It turned out that he did not
have that degree.  Had the plaintiff known this,
it would never
have contracted with the first defendant or appointed him to any
position. In other words, had the truth been known
to it in 2008, no
relationship with the first defendant would have been countenanced or
developed and no money would consequently
have been paid by the
plaintiff to him. On the other hand, had the first defendant
possessed the qualification that he professed
to have, the plaintiff
would have been content. It seems to me in those circumstances that
the plaintiff had intended to contract
with the first defendant until
the truth was revealed to it. In my view, the contract was thus not
void ab initio but was voidable
at the instance of the plaintiff.
[15]
[40]
The
plaintiff claims restitutio in integrum and seeks the return of all
that it paid the first defendant. Where restitution is claimed,
the
party claiming it is ordinarily required to tender that which it had
received during the impugned relationship. The plaintiff
has not
pleaded this. That is, however, not always a requirement. In
Radiotronics
(Pty) Ltd v Scott, Lindberg & Co. Ltd
,
[16]
van Zyl J stated as follows when considering contracts of service and
contracts for work and labour:
‘…
from
the very nature of things upon the cancellation of such a contract
there can, in the true sense of the word, never be any question
of
both parties returning what they have received under the contract.
The wages can be returned but how are the services, the labour
and
the time to be returned?’
[41]
Henning
J in
Hall-Thermotank
Natal (Pty) Ltd v Hardman,
[17]
approved of this statement and went on to state, with reference
thereto that:
‘
With
respect, the learned Judge posed the question correctly. The short
answer seems to me that work and labour need not be “returned”.’
[42]
Henning
J went on to state the following:
‘
One
might well pose the further question: why should an innocent party be
deprived of his right to rescind on the ground of fraud
or material
breach of contract and to be paid back with what he has parted
because he is unable through no fault of his to restore
the work and
labour rendered by the party at fault?  Which one of the two
should be the loser?  As
Voet
,
4.1.1 says restitutio in integrum is based on sheer common fairness.
It does not seem to me unjust that the party who committed
the fraud
or the breach should bear the loss rather than that the aggrieved
party should forfeit his remedy to rescind and be confined
to a claim
for damages.’
[18]
The
learned judge concluded by saying that the obligation by a claimant
to restore that which he received:
‘…
is
not necessarily a
sine
qua non
to his right of rescission, so that his own inability to make
restitution is excused if it is not due to his own fault, for
example,
where the fruits of the labour have perished
casu
fortuito
,
or where the restitution of work and labour which were of no benefit
to him is not possible.’
[19]
[43]
In
his work,
Verrykingsaanspreeklikheid
in die Suid-Afrikaanse Reg,
[20]
Professor
W de Vos states that where restitutio in integrum is claimed, the
claimant need not make such a tender where what he received
was a
factum (a service).
[21]
In
this case, it is not possible for the plaintiff to tender restitution
of any benefit that it derived from the contract with the
first
defendant, nor has it tendered such restitution. In my view, it was
not necessary for it to do so.
[44]
Once
the plaintiff proved the fraud perpetrated on it and that the
contract had been terminated, it became entitled to
repayment
of the amounts that it paid the first defendant in the absence of any
evidence affording a basis for a finding that restitution
would be
unjust.
[22]
An attempt was
made by the first defendant, through the amendment of his plea, to
suggest that some value was provided by him to
the plaintiff through
the services that he allegedly rendered to it that would result in
the plaintiff being unduly enriched if
restitution was ordered. It
may well be questioned what value the services of a person who
fraudulently represents his qualifications
have. In any event, the
value of these services can only have had their source in the
evidence of the first defendant. He ought
to have explained when he
testified what he did, when he rendered such services, the value
thereof and the like. He did not do
so. He did not even attempt to do
so. An amended plea not backed up by any evidence to establish what
has been pleaded is valueless.
[45]
On
the evidence led before me, there was no basis upon which the
equitable remedy of restitution should be withheld from the
plaintiff.
The first defendant must be ordered to disgorge what he
received from the plaintiff arising out of the fraud that he
perpetrated
on it. If the first defendant is of the view that he is
entitled to compensation for unjust enrichment from the plaintiff, he
is
free to establish that claim in appropriate legal proceedings.
[23]
[46]
Relief is sought by the plaintiff in
terms of the provisions of
section 37D(1)
(b)
of
the
Pension Funds Act (the
Act),
[24]
that it be entitled to execute against the pension benefits that
stand to the first defendant’s credit with the second
defendant.
Those benefits have clearly been retained pending
determination of the plaintiff’s action.
[25]
The purpose of this section of the Act is
to protect the employer’s right to pursue the recovery of money
due to it arising, inter alia, out of any fraud perpetrated
against
it by its employee.
[26]
[47]
Section
37D(1)
(b)
(ii)
of the Act reads as follows:
‘
(1)
A registered fund may-
(b)
deduct any amount due by a member to his
employer on the date of his retirement or on which he ceases to be a
member of the fund,
in respect of-
(ii)
compensation (including any legal costs recoverable from the member
in a matter contemplated
in subparagraph (bb)) in respect of any
damage caused to the employer by reason of any theft, dishonesty,
fraud or misconduct by
the member, and in respect of which-
(aa)
the member has
in writing admitted liability to the employer; or
(bb)
judgment has been obtained against the
member in any court, including a magistrate's court, from any benefit

payable in respect of the member or a beneficiary in terms of the
rules of the fund, and pay such amount to the employer concerned;’
[48]
In my view,
the first defendant’s conduct falls fairly into the provisions
of the Act just quoted. I received no argument
from the first
defendant on whether I should uphold the relief claimed by the
plaintiff in this regard. I accordingly shall grant
it.
[49]
On the issue
of costs, the cause of the litigation has been the dishonest conduct
of the first defendant. He has demonstrated no
contrition for his
conduct but has continued to falsely assert that he has a degree when
it is palpably clear that he does not.
He has made no attempt to
prove that he has what he claims he has but, at the same time, he has
made no real attempt to weaken
the plaintiff’s case. Given that
approach, it is not clear on what basis he opposed the relief sought
against him. He has
had ample time to consider his position as this
trial has inched its way through the rolls until it was ready to
commence. Costs
on the party-party scale have been claimed in the
particulars of claim but Mr de Wet called for costs on a punitive
scale in his
heads of argument.
[50]
Costs
on an attorney and client scale are not to be awarded lightly. Such
orders should be reserved for those cases where a party
has been
guilty of reprehensible conduct. Such an example of reprehensible
conduct may arise where a party has been guilty of dishonesty
or
fraud.
[27]
In
Nel
v Waterberg Landbouwers Ko-operatiewe Vereeniging,
[28]
the
court expressed itself as follows on the issue:
‘
[t]he
true explanation of
awards of attorney and client costs not expressly authorised by
Statute seems to be that, by reason of special
considerations arising
either from the circumstances which give rise to the action or from
the conduct of the losing party, the
court in a particular case
considers it just, by means of such an order, to ensure more
effectually than it can do by means of
a judgment for party and party
costs that the successful party will not be out of pocket in respect
of the expense caused to him
by the litigation
.’
[51]
The
issue of costs, and the scale on which they are to be awarded, is a
matter for the discretion of a trial court. In
Intercontinental
Exports (Pty) Ltd v Fowles
[29]
the court considered the nature of this discretion:
‘
The
court's discretion is a wide, unfettered and equitable one. It is a
facet of the court's control over the proceedings before
it. It is to
be exercised judicially with due regard to all relevant
considerations. These would include the nature of the
litigation
being conducted before it and the conduct of the parties (or their
representatives). A court may wish, in certain circumstances,
to
deprive a party of costs, or a portion thereof, or order lesser costs
than it might otherwise have done as a mark of its displeasure
at
such party's conduct in relation to the litigation.
’
[52]
Considering
the facts of this matter and in the exercise of my discretion, I am
of the view that a costs order on the scale of attorney
and client is
justified.
[53]
To sum up: the
indisputable facts reveal that the first defendant set out to deceive
and wove his web accordingly. He achieved his
goal. He has now become
entangled in a web that he alone devised and cannot now be heard to
complain of the consequences that must
follow.
[54]
I accordingly
grant the following order:
1.
There shall be
judgment in favour of the plaintiff against the first defendant for
payment of the amount of R2 203 565.04;
2.
Interest shall
run on the judgment amount at the prescribed legal rate of interest
from date of demand to the date of final payment;
3.
It is declared
that the plaintiff is entitled to execute this judgment against the
first defendant’s provident fund administered
by the second
defendant;
4.
The first
defendant shall pay the plaintiff’s costs on the scale as
between attorney and client.
MOSSOP
J
APPEARANCES
Counsel
for the plaintiff:

Mr. A De Wet SC
Instructed
by:

Xaba Attorneys
223
Boom Street
Central
Office Park
Pietermaritzburg
Counsel
for the first defendant:
Ms

Z. Qono
Instructed
by:
Nerissa

Farrington
Suite
5, Temple Complex
24
Somtseu Road
Durban
Counsel
for the second defendant:

No
appearance
Date
of Hearing

:
28 and 29 November

2022
Date
of Judgment

:
15 December 2022
[1]
Sir
Walter Scott in his epic poem ‘
Marmion:
A Tale of Flodden Field
,’
1808.
[2]
Home
Talk Developments (Pty) Ltd & others v Ekurhuleni Metropolitan
Municipality
[2017] ZASCA 77
;
2018 (1) SA 391
(SCA);
[2017] 3 All SA 382
(SCA)
paras 29-31.
[3]
The
original degree certificate was never produced by the first
defendant. He claims that it was placed in a safe at his parents’

home together with another document that recorded only the subjects
that he passed (and did not record any of the subjects that
he
initially failed), but that the safe itself, and all its contents,
was thereafter stolen.
[4]
The
University of Durban-Westville and the University of Natal merged
with effect from 1 January 2004 and became the University
of
KwaZulu-Natal.
[5]
He
confirmed later that he had been working as a driver for a family
business. Why his family would not have loaned him money
to attend
his graduation ceremony was never satisfactorily explained.
[6]
The
amended page of the plea was handed up by Ms Qono.
[7]
The
condition imposed was that the first defendant had to pass 64
credits in the first semester of 2006.
[8]
Lazarus
Estates Ltd v Beasley
[1956] 1 QB 702
(CA) at 712. Quoted with approval in
Esorfranki
Pipelines (Pty) Ltd and another v Mopani District Municipality and
others
[2014]
ZASCA 21
;
[2014] 2 All SA 493
(SCA) para 25.
[9]
Esorfranki
Pipelines (Pty) Ltd and another v Mopani District Municipality and
others
[2014] ZASCA 2
;
[2014] 2 All SA 493
(SCA) para 25.
[10]
Gilbey
Distillers & Vintners (Pty) Ltd and others v Morris NO and
another
1990
(2) SA 217
(SE)
at 226A.
[11]
Absa
Bank Ltd v Moore and Another
[2016]
ZACC 34
;
2017 (1) SA 255
(CC) para 39.
[12]
Ibid.
[13]
Dalrymple,
Frank and Feinstein v Friedman (2)
19654 (4) SA 649 (W) 664A-D.
[14]
Preller
and others v Jordaan
1956 (1) SA 483 (A).
[15]
North
East Finance (Pty) Ltd v Standard Bank of South Africa Ltd
[2013] ZASCA 76
;
2013 (5) SA 1
(SCA) para 14;
Sim
Road Investments CC v Morgan Air Cargo (Pty) Ltd
[2011]
ZASCA 81
para 22; and
Pepkor
Holdings Ltd and others v AJVH Holdings (Pty) Ltd and others and
related matters
[2020] ZASCA 134
;
[2021] 1 All SA 42
(SCA) para 32.
[16]
Radiotronics
(Pty) Ltd v Scott, Lindberg & Co. Ltd
1951 (1) SA 312
(C) at 335H.
[17]
Hall
-
Thermotank
Natal
(Pty)
Ltd v Hardman
1968
(4) SA 818
(D) at 831A.
[18]
Ibid
at
831A-C.
[19]
Ibid
at
833B-C.
[20]
W De Vos
Verrykingsaanspreeklikheid
in die Suid-Afrikaanse Reg
3 ed.
[21]
Ibid
at 166-167.
[22]
North
West Provincial Government and another v Tswaing Consulting CC and
others
[2006] ZASCA 108
;
2007 (4) SA 452
(SCA) para 21.
[23]
Ibid
para 22.
[24]
Pension
Funds Act 24 of 1956
.
[25]
Highveld
Steel & Vanadium Corporation Ltd v Oosthuizen
[2008]
ZASCA 164; 2009 (4) SA 1 (SCA).
[26]
Twigg v
Orion Money Purchase Pension Fund and another
(1)
[2001] 12 BPLR 2870 (PFA) para 21;
Charlton
and others v Tongaat-Hulett Pension Fund and others
[2006]
2 BPLR 94 (D) at 97-98.
[27]
Matchett
v Pretorius and others
[2022] ZAKZPHC 60 para 8.
[28]
Nel
v Waterberg Landbouwers Ko-operatiewe
Vereeniging
1946 AD 597
at 607.
[29]
Intercontinental
Exports (Pty) Ltd v Fowles
1999 (2) SA 1045
(SCA) para 25.