The Legal Aid Board v Modiko and Others

• Jurisdiction: South Africa
• Court: Transvaal Provincial Division
• Judge: Webster, J
• Judgment Date: 26 November 2004
• Citation: 2005 JDR 0077 (T)
• Docket Number: 16191/03

Webster J:

The plaintiff seeks judgment against the defendants jointly and severally, the one paying to absolve the others, on one or more of three alternative causes of action, namely;

1.

that the first and third defendants wrongfully and intentionally caused payments in the total sum of R559 477.80 to be made to the first, second and/or third defendants that were not due, owing or payable to them;

2.

that the first defendant breached his fiduciary duty owed to the plaintiff as a result of which the plaintiff suffered damages in the total sum of R559 477.80;

2005 JDR 0077 p2

Webster J

3.

that the plaintiff paid the sum of R559 477.80, under the bona fide and reasonable but mistaken belief to the third defendant without the aforesaid being owed by the plaintiff to the third defendant.

The first and second defendant's plea is that the money claimed was owed to the third defendant. This was amplified in evidence by evidence that services had been rendered by the third defendant and a sub-contractor, one Hlatshwayo, to the plaintiff. The third defendant admitted that payment was made to it and that the money was not owing to it. It denied, however, that it appropriated it. In evidence this was amplified by evidence that the money had been received by the third defendant in the belief that it was remuneration legitimately earned by the first defendant for services rendered by the first defendant to third parties and that the money had been paid out on the express instructions of the first defendant to the second defendant and other persons.

The following facts are common cause between the parties, namely:

1.

The first defendant was initially employed by the plaintiff as the head of its Internal Audit Department and was promoted as from 1 January, 2003, to the position of Financial and Information Systems Executive, a post that made him the second most senior official in the plaintiff.

2.

The total sum of R559 477.80 was paid during the period 8 August 2002, to 4 March 2003 to the third defendant by cheques. Such payments were based on seven invoices submitted to the plaintiff ostensibly by the third defendant and approved for payment by the first defendant upon receipt of the invoices.

3.

None of the seven invoices were in fact those of the third defendant and the third defendant had not submitted the said invoices to the plaintiff.

4.

The first defendant was aware at all material times that such invoices had not been submitted by the third defendant.

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Webster J

5.

The third defendant did not render any services to the plaintiff.

6.

Of the money paid to the third defendant, R470 150.00 was paid to the second defendant by the third defendant.

7.

The schedule of deposits and withdrawals from the third defendant's account are correctly reflected in the document on page 206 of bundle A of the paginated documents handed in by consent.

8.

The first and second defendants were legally married to each other.

9.

The account that the sum of R470 150.00 was paid into was the joint account of the first and second defendants: the first defendant's salary was paid into the said account.

10.

The first defendant was the financial officer of the third defendant.

The basis of the plaintiff's claim is based essentially on fraud and, in the alternative, on the condictio indebiti. On a claim based on fraud the plaintiff must prove the following:

A representation or non-disclosure by the wrongdoer and/or his agent; knowledge by the wrongdoer or the representor that the representation is false and that the representor intended the innocent party to act upon that representation;

causation in that the representation induced the representee so to act;

that the representee/innocent party suffered damages as a result of the fraud;

that the duty to disclose was deliberately breached in order to deceive.

(See Amler's precedents and pleadings, fifth edition, pages 206-7, and the cases cited therein).

The plaintiff bears the onus of proving the fraudulent representation which must be discharged on a preponderance of probabilities. That is trite.

The essential allegations in a claim based on the condictio indebiti are:

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Webster J

(a)

that the payment was made bona fide, but mistaken belief that it was owing (Iscor Pension Fund v Jerling 1978 (3) SA 858 (T) at 861).

(b)

That the payment must have been made indebite, i.e. there must have been no legal or natural obligation to make it (Bowman NO v Fidelity Bank Ltd [1997] 1 All SA 317(A) at 322-323).

(c)

The error must be a reasonable error (Rahim v Minister of Justice 1964 (4) SA 630 (A) at 634) and must be excusable in the circumstances of the case (Willis Faber Enthoven (Pty) Ltd v Receiver of Revenue 1992 (4) SA 202 (A)).

The onus of proof in an action based on the condictio indebiti 'lies throughout on the plaintiff' (Recsey v Reiche 1927 AD 554 at 556; Willis Faber Enthoven - supra, at page 224). Where an agent receives the money or object on behalf of his principal, the action lies against the principal and not against the agent even though the latter may have been enriched by receiving it (Rand vir Rand (Edms) Bpk v Boswell 1978 (4) SA 468 (W); Minister van Justisie v Jaffer 1995 (1) SA 273 (A) at 280 E-H) where E.M. Grosskopf A.R. states:

"Onder die opskrif 'Against whom the condictio indebiti is given' skryf hy: 'The condictio indebiti is given against him to whom the payment has been made.

The payment is deemed to have been made to me whether it was made to myself or to another at my instruction . . . . That is why . . . it is not against the one to whom the sum which was erroneously believed to be due to me, was paid at my instruction, that the condictio indebiti must be given, but it is against me.'

Hierdie beginsel is in die Romeins-Hollandse reg en ons hedendaagse reg erken en toegepas. Sien Wessels Law of Contract...