Yarona Healthcare Network (Pty) Ltd v Medshield Medical Scheme

• Jurisdiction: South Africa

Yarona Healthcare Network (Pty) Ltd v Medshield Medical Scheme
2018 (1) SA 513 (SCA)

2018 (1) SA p513

Citation	2018 (1) SA 513 (SCA)
Case No	1108/2016; [2017] ZASCA 116
Court	Supreme Court of Appeal
Judge	Navsa ADP, Petse JA, Mathopo JA, Mbatha AJA and Rogers AJA
Heard	September 22, 2017
Judgment	September 22, 2017
Counsel	MC Maritz SC (with DR van Zyl) for the appellant.; D Berger SC (with K Millard) for the respondent.

Flynote : Sleutelwoorde

Enrichment — Condictio indebiti — Requirements — Excusability — Exceptions — E Excusability of mistake not requirement in case of mistaken payments by medical aid schemes.

Enrichment — Condictio indebiti — Requirements — Impoverishment — In case of bilateral performances under void or putative contracts — No requirement that plaintiff claiming under condictio must prove value of, or tender return of, what they received — If plaintiff enriched by performance of F defendant, latter should counterclaim with condictio indebiti.

Headnote : Kopnota

Over the period 6 August 2007 to 17 July 2009, Medshield, a medical scheme registered in terms of the Medical Schemes Act 131 of 1998, made a number of payments to the company Yarona Healthcare Network (Yarona). G Medshield was however mistaken in its belief that such amounts were owing — purportedly for the provision by Yarona to Medshield of network management services. There had never in fact been any contract between the parties. In the High Court, Medshied, by way of the condictio indebiti, sought recovery from Yarona of the sum of such payments, arguing that they had been made in the bona fide and reasonable belief that they were H owing, when in truth they were not, and that Yarona had been unjustifiably enriched by the payments and Medshield correspondingly impoverished. Medshield was successful in its claim to the High Court. Yarona was granted leave to appeal to the SCA.

Aside from unsuccessfully raising a special plea of prescription (see [61] – [66]), I Yarona defended the relief in the SCA on the following grounds: (a) Yarona argued that Medshield could not succeed on the condicto indebiti, because it had failed to discharge the onus of proving that its error in making payment had been 'excusable'. Medshield disputed that its error had been inexcusable, but added, in the alternative, that in the circumstances of the present case excusability was not a requirement. More particularly, it argued that the exception to this requirement previously recognised in J

2018 (1) SA p514

relation A to mistaken payments by executors, as well as liquidators and trustees, should similarly apply to errors made in the administration of a medical scheme's affairs. (b) Yarona further argued that Medshield had failed to prove its true impoverishment, in that it had not taken into account the value that it had received from services in fact provided to it by Yarona, in return for payment.

Held, B that, in light of the evidence, Medshield had been inexcusably slack in approving payment to Yarona (see [37]). However, despite this, Medshield's right to recover such payments by way of the condictio indebiti was not barred (see [46]). A medical scheme existed solely for the benefit of its members, who were often vulnerable persons. Legislation closely regulated C it, to ensure prudent administration of its funds, and imposed a duty upon the board charged with running the scheme's affairs to always act in the best interests of the members. In such circumstances, considerations of policy demanded that an exception to the excusability requirement be recognised, such that a medical scheme should, in the interests of members, be able to recover under the condictio indebiti unowed payments even though its office bearers had acted with inexcusable slackness in making such payments. D (See [43] – [46].)

Held, further, that Medshield had correctly proven its impoverishment in the sum of the unowed payments made to Yarona (see [52] – [53]). To the extent that Medshield might itself have been enriched at Yarona's expense, given the services provided to it, the appropriate course would have been for Yarona E to counterclaim also using the condictio indebiti. It did not do so. (See [54] and [60].) But there was no authority in law that a person who instituted a condictio indebiti in respect of a performance made under a putative or void contract had to prove the value of what was received from the defendant, or to tender the return of what was received (see [49]). Accordingly, appeal dismissed (see [67]).

Cases cited

Southern F Africa

Absa Bank Ltd v Leech and Others NNO 2001 (4) SA 132 (SCA): referred to

Affirmative Portfolios CC v Transnet Ltd t/a Metrorail 2009 (1) SA 196 (SCA): G dictum in para [29] applied and dicta in paras [34] – [35] considered

African Diamond Exporters (Pty) Ltd v Barclays Bank International Ltd 1978 (3) SA 699 (A): dictum at 713 in fine applied

Bowman, De Wet and Du Plessis NNO and Others v Fidelity Bank Ltd 1997 (2) SA 35 (A) ([1997] 1 All SA 317): considered and dicta at paras 44H – 45G compared

Bushney H v Joliffe 1953 (4) SA 273 (W): referred to

Davidson v Bonafede 1981 (2) SA 501 (C): referred to

Diamond Fields Advertiser v Colonial Government Buch App Cases (1910 – 1911) 8: compared

Dugas v Kempster Sedgwick (Pty) Ltd 1961 (1) SA 784 (N): referred to

Feinstein v Niggli and Another 1981 (2) SA 684 (A): referred to

Gericke I v Sack 1978 (1) SA 821 (A): dictum at 826B – 828C applied

Gouws v Jester Pools (Pty) Ltd 1968 (3) SA 563 (T): compared

Grant Thornton Capital Umbrella Fund v Da Silva [2013] ZAGPJHC 231: referred to

Greyling v ISCOR [1984] ZASCA 156: compared

Hall-Thermotank Natal (Pty) Ltd v Hardman 1968 (4) SA 818 (D): referred J to

2018 (1) SA p515

Hartland Implemente (Edms) Bpk v Enal Eiendomme BK en Andere 2002 (3) SA 653 (NC): A referred to

Home Talk Developments (Pty) Ltd and Others v Ekurhuleni Metropolitan Municipality 2018 (1) 391 (SCA) ([2017] 3 All SA 382; [2017] ZASCA 77): referred to

Kudu Granite Operations (Pty) Ltd v Caterna Ltd 2003 (5) SA 193 (SCA) ([2003] 3 All SA 1): referred to

Legh v Nungu Trading 353 (Pty) Ltd and Another 2008 (2) SA 1 (SCA): B referred to

Mattheus v Stratford and Another 1946 TPD 498: referred to

McCarthy Retail Ltd v Shortdistance Carriers CC 2001 (3) SA 482 (SCA) ([2001] 3 All SA 236): referred to

Menqa and Another v Markom and Others 2008 (2) SA 120 (SCA): referred C to

NBS Bank Ltd v Cape Produce Co (Pty Ltd and Others 2002 (1) SA 396 (SCA) ([2002] 2 All SA 262; [2001] ZASCA 107): referred to

PricewaterhouseCoopers Inc and Others v National Potato Cooperative Ltd and Another [2015] 2 All SA 403 (SCA) ([2015] ZASCA 2): dictum in paras [148] – [149] applied D

R v Kritzinger 1971 (2) SA 57 (A): referred to

Rahim v Minister of Justice 1964 (4) SA 630 (A): referred to

Rooth v The State (1888) 2 SAR 259: referred to

Rubin v Botha 1911 AD 568: referred to

Union Government v National Bank of South Africa Ltd 1921 AD 121: referred to E

Van der Berg v Shaw NO 1933 TPD 242: referred to

Vogel NO v Volkersz 1977 (1) SA 537 (T): referred to

Wepener v Schraader 1903 TS 629: referred to

Willis Faber Enthoven (Pty) Ltd v Receiver of Revenue and Another 1992 (4) SA 202 (A): applied. F

Scotland

Haggarty v Scottish Transport and General Workers Union [1954] ScotCS CSIH 6 (1955 SC 109): referred to.

Case Information

MC Maritz SC (with DR van Zyl) for the appellant.

D Berger SC (with K Millard) for the respondent. G

An appeal from the Gauteng Division of the High Court, Pretoria (Molefe J sitting as court of first instance). Appeal dismissed with costs, including the costs of two counsel.

Order

The appeal is dismissed with costs, such costs to include those consequent upon the employment of two counsel.

Judgment

Rogers AJA (Navsa ADP, Mathopo JA, Petse JA and Mbatha AJA H concurring):

Introduction

[1] The appellant (Yarona) and the respondent (Medshield) were the I defendant and plaintiff, respectively, in the court a quo. Medshield, a medical scheme registered in terms of the Medical Schemes Act 131 of 1998 (the Act), sued Yarona for R6 110 237, being the sum of various payments made to Yarona over the period 6 August 2007 to 17 July 2009. Medshield alleged that the payments were made in the bona fide and reasonable but mistaken belief that they were owing, whereas in truth they were not, and that Yarona was unjustifiably enriched by the J

2018 (1) SA p516

Rogers AJA (Navsa ADP, Mathopo JA, Petse JA and Mbatha AJA concurring)

payments A and Medshield correspondingly impoverished. The summons was served on 9 June 2011.

[2] Yarona defended the action, pleading that the payments were made for services rendered in terms of an agreement concluded during June 2007. Yarona counterclaimed for additional amounts allegedly owing B under the agreement. There was also a special plea of prescription in respect of the payments made prior to 7 June 2008 — Yarona alleged that Medshield had the requisite knowledge, or could, by exercising reasonable care, have acquired the requisite knowledge, by the date of each payment, alternatively by 7 June 2008 at the latest. In its replication C Medshield denied the existence of the alleged agreement.

[3] A separation order was made for the determination, in advance of other issues, of the question whether the service agreement had been concluded. The separated issue was enrolled for trial on 2 March 2015. On 26 February 2015 Yarona's attorneys wrote to Medshield's attorneys stating that during their client's trial preparation it had become evident D that Yarona would not be able to prove that the persons who purported to represent Medshield in concluding the agreement had the authority to do so and that Yarona thus conceded the separated...