The Supreme Court of Appeal has reaffirmed that there is no general enrichment action recognised in South African law. The fact that one person is enriched at the expense of another does not automatically give rise to a claim for damages for loss suffered to the benefit of another person.
Enrichment actions may be specifically used to restore economic benefits to a person at whose expense they were obtained and where there is no legal justification for refusing to do so. For instance, a double payment to a creditor or a claim for partial performance by a building contractor may be the subject of such an action.
In this case, a service level agreement was entered into by a municipality which found out, towards the end of the term of the contract, that there had been no tender process and the agreement was unlawful. The municipality refused to pay amounts due under the service level agreement and a general enrichment action was denied to the service provide.
However, as is often the case with unlawful government contracts, the court resorted to section 172 of the Constitution which entitles the court to provide a just and equitable remedy. The court declared that the service provider was entitled to compensation for the services rendered and referred the matter back to the lower court to determine the amount of compensation to be awarded.
There is no closed list of possible enrichment actions and there is scope for the courts to develop further specific enrichment actions. That will not include this kind of claim for compensation for performing an unlawful government contract where process was not followed.
Greater Tzaneen Municipality v Bravospan 252 CC [2022] ZA SCA 155 (7 November 2022)
