McCarthy Retail Ltd v Shortdistance Carriers CC

• Jurisdiction: South Africa
• Judge: Smalberger ADCJ, Harms JA, Olivier JA, Schutz JA and Cameron JA
• Judgment Date: 16 March 2001
• Docket Number: 110/99
• Hearing Date: 27 February 2001
• Counsel: J C King for the appellant. P C F van Rooyen for the respondent (respondent's heads of argument having been drawn up by G R Thatcher).
• Court: Supreme Court of Appeal

Schutz JA:

[1] The dispute is whether the appellant, McCarthy Retail Ltd (the garage), has an enrichment claim for repairs to a Peterbilt truck owned by the respondent, Shortdistance Carriers CC (the owner). The agreed value of the repairs is R186 000. F

[2] The truck was damaged in an accident in December 1995, after which the owner took it to Dan Perkins Trucks (Pty) Ltd, an agent of the garage, which together with its principal will also be referred to as 'the garage'. No instruction to repair was given by the owner, who had insured the truck with Truck and General Underwriting Managers G (Pty) Ltd (the insurer) and paid the premiums. On 12 December 1995 the owner submitted a claim. An insurance loss-adjuster, Mr Hamilton, was employed by the insurer to inspect the truck at the garage. At the trial there was a dispute whether he instructed the garage, represented by Mr Dinkel, to proceed with the repairs on behalf of the insurer. H The trial Judge, Booysen J, accepted Hamilton's evidence that no such instruction was given, but held that Dinkel had laboured under the bona fide but mistaken belief that he had. The garage effected the repairs, which were completed by the end of January or early February 1996. The repaired truck was delivered to the owner by the garage at the end February or early March. During December an I agreement had been concluded between Dinkel and Mr Ramdhani, a member of the owner. The excess payable by the owner under the policy was R50 000, but Dinkel agreed to reduce the amount to R25 000 at the expense of the garage, which amount the owner paid in two instalments. J

Schutz JA

[3] The garage, believing it had a contract with the insurer, submitted its invoice to it. On 2 April 1996 the insurer A repudiated the owner's claim in a letter addressed to his insurance broker. This triggered the operation of a clause of the policy which provided that, if legal action were not commenced within six months of the rejection of a claim, all benefits under the policy would be forfeited. This meant that under the policy the owner had until about B 2 October 1996 to launch legal action. Ramdhani's undisputed evidence was that he did not know of the letter of repudiation until his broker transmitted a copy of it to him in September 1996. His further undisputed evidence was that although a Mr Buchanan from the garage asked him for a copy of the claim form in August 1996, Buchanan did not tell him that there was a problem with regard to the payment of C the claim. This despite the fact that Dinkel learned of the repudiation in the middle of June 1996, and had throughout been conducting the dealings with the insurer and informing Ramdhani of progress. The owner did not institute action against the insurer.

[4] On appeal it is common cause that Booysen J was correct in holding that the insurer was not entitled to repudiate the policy on D the grounds that it did. (This has nothing to do with the six months period. The grounds of repudiation alleged were that the owner was not in possession of a certificate of fitness or an operator's card as required by the policy.) What remained in issue was whether a direct contract of repair was concluded between the garage and the insurer. E

[5] With regard to this issue Booysen J held:

'It was equally clear from the evidence that no contract existed between Truck and General/Global and Dan Perkins pursuant to which defendant's truck was repaired. Mr Dinkel, the manager of Dan Perkins, gave evidence to the effect that Mr Hamilton, claims assessor, F authorised Dan Perkins to repair the truck. It is quite clear though that, even if he had done so, he had no mandate or authority from the insurance company to do so. I am, however, in any event, satisfied that Mr Hamilton did not authorise the repairs. His evidence is clear and credible. It accords with the contemporaneous notes and correspondence. He came across in the witness box as a careful man with a perfect understanding of his duties and mandates. Having seen him give evidence G I have no doubt that he did not, as Mr Dinkel claims, instruct the latter to do the repairs. Mr Dinkel, it was clear from his evidence, was an impatient and somewhat impulsive man who, I could see, could easily have jumped to the conclusion that he had the necessary authority to proceed with the repairs when such conclusion was not justified. One could see him misunderstanding what was said to him by H Hamilton.'

I find nothing to criticise in this finding and conclude that there was no contract between the garage and the insurer, although, as the Judge also found, Dinkel bona fide believed that there was. I

[6] Accordingly, the essential facts are: The owner took his damaged truck to the garage but did not instruct it to repair the truck, made a claim on his insurer, but took no active part in the dealings between the garage and the insurer thereafter. The garage repaired the truck, believing that the insurer had instructed it to do so, but it was wrong. There was no contract. Before the insurer repudiated the claim the J

Schutz JA

garage returned the truck to the owner. The value of its repairs was R186 000. The insurer communicated its A repudiation to the owner's broker on 2 April 1996, but the broker did not inform the owner until September. In the mean time the six months period for instituting action had been running, so as to expire by 2 October. The owner did not institute an action at any stage. There had been no basis for the insurer's repudiation before 2 B October and the policy was a valid policy. Despite its knowledge of the repudiation by June 1996, the garage did not alert the owner to the existence of a difficulty about the one or other of them recovering the cost of the repairs from the insurer. Do these facts support an enrichment claim by the garage against the owner?

[7] Booysen J held that they did not, saying: C

'As I understood the argument advanced on behalf of the plaintiff, it was conceded that if the insurance company had not been entitled to repudiate the claim, no unjust enrichment could be said to have taken place. I agree. In that event the plaintiff would have repaired the vehicle under the mistake that it was doing so at the request of the insurance company, and the defendant on the other D hand received the repaired vehicle in terms of its contract with the insurance company. It thus received the benefit for which it had paid its premiums and was not unjustly enriched or enriched sine causa.'

In its notice of application for leave to appeal the statement that the garage had made the concession recorded by the Judge a quo was challenged as a misdirection. Leave to appeal was granted by him and the appeal proceeded on the footing that no such concession E is made.

What are the foundations of our enrichment law?

[8] Unlike other branches of our law, the rich Roman source material has not led to an unqualified judicial recognition (with a few exceptions) of a unified general principle of unjustified enrichment, F from which solutions to particular instances may be derived. Rather there has been an augmentation of the old causes of action, from case to case, usually with reference to rules treated as being of general application. This has led to a more or less unified patchwork (the 'lapwerk' according to Professor De Vos G Verrykingsaanspreeklikheid in die Suid-Afrikaanse Reg 3rd ed). And although there has been no unequivocal recognition of a general enrichment action, time and again unjustified enrichment principles have been treated as a source of obligations being the basis for creating a new class or subclass of liability in particular circumstances. No better example of this can be found than the minority judgment of Ogilvie Thompson JA in Nortje en 'n Ander v Pool H NO 1966 (3) SA 96 (A) - the majority judgment in which is still sometimes held out as having given the final death-blow to a general enrichment action. The question whether such an action should be recognised was passed by in Kommissaris van Binnelandse Inkomste en 'n Ander v Willers en Andere 1994 (3) SA 283 (A), but Botha JA I made it clear that the piecemeal extensions of the old actions, which have been proceeding for over a century in South Africa, have not been impeded by the decision in Nortje's case (at 331B - 333E). See also Bowman, De Wet and Du Plessis NNO and Others v Fidelity Bank Ltd 1997 (2) SA 35 (A) at 40A - B. One of the restraints upon the acceptance of a general action is the belief, or fear, that a tide J

Schutz JA

of litigation would be let loose. Initially there may be some surge of A litigation, particularly under the emotive banner of 'unjust enrichment'. But it should not last long, once the restrictions even on a general action are appreciated. My opinion is that under a general action only very few actions would succeed which would not have succeeded under one or other of the old forms of action or their continued extensions. For this reason, if it be a good one, the B acceptance of a general action may not be as important as is sometimes thought, save, of course, that its denial may lead to occasional individual injustices. A more daunting consequence of acceptance is the possible need for a re-arrangement of old-standing rules. Are the detailed rules to go and new ones to be derived from a broadly stated general principle? Or are the old ones to stand, and be supplemented by C a general action which will fill the gaps? The correct answers to these questions are not obvious. But I would support the second solution. In a rare case where even an extension of an old action will not suffice I would favour the recognition of a general action. The rules governing it should not be too difficult to establish - see De Vos chap D VII for an outline. We have been applying many...