The Relevance of the Plaintiff’s Impoverishment in Awarding Claims Based on Unjustified Enrichment

• Jurisdiction: South Africa
• Citation: (2009) 20 Stell LR 494
• Pages: 494-516
• Author: Jacques du Plessis
• Published date: 16 August 2019
• Date: 16 August 2019

494

THE RELEVANCE OF THE PLAINTIFF’S

IMPOVERISHMENT IN AWARDING CLAIMS

BASED ON UNJUSTIFIED ENRICHMENT

Jacques du Plessis*

BComm LLB LLM PhD

Professor of Private law, University of Stellenbosch

1 Introduction

The purpose of this paper is to evaluate two prominent features of the South

African law of unjustied en richment. The rst i s the general requirement

that the plaintiff must be impoverished.1 This essentially means that the

plaintiff’s estate must actually decrease, or would actually have increased had

it not been for the event giving rise to the defendant’s enrichment.2 The

second featur e is the test for mea suring the quant um of enrichment l iability,

namely the lesser of the plaintiff ’s impoverish ment and the defendant’s

enrichment, determined at the moment the action is instituted3 (the “double

ceiling”4 or “double cap”5 rule).

Before proceedi ng further, it is worth me ntioning that a remark able

divergence exists among legal system s as to the degre e of prominence

which is accorded to i mpoverish ment (or loss - a term sometimes used as

functional equivalent) when imposing liability on the basis of unjustied

enrichment.6 Thus, in the civil-law context, Germa n law does not generally

* This article is based on a pap er presented at a colloquiu m on the development of the South Afr ican law of

unjustif ied enrichme nt held on 27 October 2 007 at the Faculty of Law of the Universit y of Stellenbosch

The financial suppor t of the Nat ional Re search Foundation (NRF) for this c olloquium and t he work

on which this research is based is g ratefully acknowled ged A ny opi nion, findings and conclusions

or recom mendations expressed in this article are those of the a uthor I f urther would like to than k the

participa nts in the colloqui um and Reinhard Z immerman n for their valuable com ments

1 See eg Firstrand Bank Lt d v Nedbank (Swazila nd) Ltd 2004 6 SA 317 (SCA) para 8 (per Scott JA):

“The basic ingredients of any enrichment action include the enrichment of one party (the defendant)

and a corresponding impoverishment of another (the plaintiff). In the absence of an impoverishment

there can be no right of action”.

See furth er Lotz “Enrichme nt” in LAWSA 9 rev Bra nd (1996) para 209(b); Visser Unjustif ied Enrichment

(2008) 159; Sonnekus Unjustif ied Enri chment in South African Law (2008) 42-43; Eiselen & Pienaar

Unjustifi ed Enrichment – A Ca sebook 3 ed (2008) 25

2 See Lotz/Brand L AWSA 9 para 209(b); De Vos Verrykingsaa nspreeklikhei d in die Suid-Afrik aanse Reg 3

ed (1987) 339 A decr ease in the estate can eit her result from a decre ase in assets or increa se in liabilities

Likewise, an estate would otherw ise have incr eased if t here would have been an i ncrease in assets or a

decrease i n liabilities

3 See eg Kudu Gra nite Operation s (Pty) Ltd v Caterna Ltd 20 03 5 SA 193 (SCA) para 17; Mndi v Malgas

2006 2 SA 182 (E) para 25; Goudi ni Chrome (Pty) Lt d v MCC Contract s (Pty) Ltd 1993 1 SA 77 (A)

84J-85A, Visser Unju stified Enric hment 161-164

4 See Linssen “Remedies for Wrongdoing – The Measure of Recover y” 2006 14(3) ERPL 351 357; in French

law reference is ma de to the double plafo nd

5 Visser Unjustifie d Enrichment 115, 161, 266, 730

6 For comparative overviews see Beatson & Schra ge Cases, Materials and Texts on Unjustif ied Enrichment

(2003) ch 4; Schlechtrie m Restitution un d Bereicherungsa usgleich in Europa1 (20 00) 231-237

(2009) 20 Stell LR 494

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require impoverishment,7 whereas D utch law does,8 and also r ecognises the

“double ceiling” rule.9 In t he common-law context, it has not been resolved

in English l aw whether a claim for restitution based on unjust enr ichment of

the defendant requires proof of loss on the side of the plaintiff. It is recognised

that the enrichment has to be at the plaintiff’s expense, but it is not settled that

this means that the plaintiff had to suffer a loss or had to be i mpoverished.10

Canadian law however, requi res that a claim based on u njust enrichment

should be mirrored by a loss,11 and also follows the “double ceiling” rule.12

Finally, divergence also char acterises systems that contain a mixture of civil

law and common law. It has been said that in Scots law “loss on the part

of the pursuer does not appear with in the term ‘u njustied enrichment’ as

a den itional necessity of the claim at the same level as ‘enrich ment’, but a

requirement of loss is nevertheless often stated”.13 The position in Louisiana,

in tur n, closely resembles that of Sout h Africa: its Civil Code unequivocally

requires loss and also re cognises the “double ceiling” rule.14

Against the background of this brief comparative overview, which simply

serves to d ispel the notions that the plai ntiff’s impoverishment is a u niversal

requirement for imposing l iability on the basis of unjustied enrichment, a nd

that the measure of such liability is un iversally regarded as the lesser of the

plaintiff’s impoverish ment and the defendant’s enr ichment, the justications

for these notions will now be examined more closely. This will be followed by

an evaluation of their application in certain fact pat terns involving unjustied

enrichment.

2 Justications for requiring impoverishment

It is not easy to answer the quest ion why South A frican law t raditionally

requires that the plainti ff must be impoverished for purposes of i mposing

enrichment liability, since the requirement is often stated in a way which gives

7 See eg Wieling Bere icherungsrec ht 3 ed (2004) 1-2; Zim mermann “ Unjustified En richment: T he

Modern Civilian App roach” 1995 OJLS 403; for con trary v iews see Ja nsen “Die Korrektur grundlos er

Vermögensversc hiebungen al s Restitut ion” 2003 ZSS (RA) 106 132 sqq The fi rst draf t of the German

Civil C ode still require d that the en richment had to come f rom the estate (aus dem Vermögen) of the

plaintiff (see para 748) However, t he final version of the Ge rman Civi l Code simply requi res that the

enrichme nt had to be “at the expen se of” the plaint iff (para 812 BGB)

8 See Art 6:212 BW (“he who is unjustifia bly enriched at the expense of another is obliged, to the extent tha t

it is reasonable, to compensate his [ie the other perso n’s] loss up to the amount of his enrichment ”); further

see Linssen 20 06 ERPL 356 and the extra cts in Beatson & Schr age Unjustified E nrichment 192-203 The

duty to retu rn performa nces that are not owed i s specifically reg ulated in Ar ts 6:203–6:211 BW

9 See Art 6:212 BW

10Birks Unjust Enr ichment 2 ed (2005) 79 den ied the implication of a los s; also see Sempr a Metals Ltd

(formerl y Metallgesell schaft Ltd v Her Majesty’s C ommissioners of Inlan d Revenue[2007] UKHL 34

para 31, but contrast eg McInnes “Intercept ive Subtract ion, Unjust Enrichment and Wrongs – A Reply

to Professor Bi rks” 2003 CLJ 697; Banqu e Financière de la Cité v Parc (Batte rsea) Ltd [1991] 1 AC 221

237

11Cf Air Canada v Brit ish Columbia (1989) 59 DLR (4th) 161 194 (SCC); also see Pettk us v Becker [1980] 2

SCR 217 227

12See McInnes “The Canadian Prin ciple of Unjust Enrichme nt: Com parative Insights into the Law of

Restitutio n” 1999 Alberta LR 1 20

13Evans-Jones Unju stified Enri chment – Enrichme nt by Deliberate Conf erral: Condictio (20 04) para 7 35

14Art 2298

THE RELEVANCE OF THE PLAINTIFF’S IMPOVERISHMENT 495

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