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Case No 71/90 TPD

IN THE SUPREME COURT OF SOUTH AFRICA APPELLATE DIVISION

In the matter between

WILLIS FABER ENTHOVEN (EDMS) BPK APPELLANT

and

THE RECEIVER OF REVENUE FIRST RESPONDENT

THE REGISTRAR OF INSURANCE SECOND RESPONDENT

CORAM :JOUBERT, HEFER, NIENABER, VAN DEN HEEVER JJA et KRIEGLER AJJ

HEARD :6 SEPTEMBER 1991.

DELIVERED : 26 NOVEMBER 1991.

JUDGMENT

HEFER /

HEFER JA:

In terms of sec 5 of the Insurance Act 27 of

1943 as amended ("the Act") no one is allowed to carry on

"insurance business" in the Republic unless he is regis-

tered as an insurer. Although "insurance business" is

defined in sec 1 as "any transaction in connection with

any business defined in this section" (such as "life busi-

ness", "fire business", "marine business" and various other

forms of insurance) certain transactions are deemed not to

amount to insurance business. Among these are

"the activities of persons transacting business in the Republic underwritten by underwriters at Lloyds, but subject to the provisions of sec-tion 60."

Sec 60 has two sub-sections. Sub-sec (1) ap-pears under the heading "Requirements in respect of busi-ness underwritten by underwriters at Lloyds". The intro-ductory part reads as follows:

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"(1) The following provisions shall apply in connection with business underwritten by un-derwriters at Lloyds and any person who dces any act in the Republic relating to the re-ceiving of applications for policies or the issue of policies or the collection of pre-miums in respect of such business; and any such person shall, for the purposes of this section, be deemed to be carrying on insu-rance business in the Republic; and any ex-pression used in this section shall according-ly bear the meaning assigned to it in secticn 1, notwithstanding the provisions of para-graph (g) in the definition of the expres-sicn 'insurance business' in section 1 con-tained:... "

(The importance of the words that I emphasized will soon

emerge.)

The"following provisions" mentioned in the

introduction are listed in twenty separate paragraphs.

Par (f) reads as follows:

"(f) Any person who carries on such insurance business in the Republic shall within.a period of two months as from the expiration of each calendar year or within such further period as the registrar may allow, pay to the receiver of revenue referred to in paragraph (e) a sum

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equal to two and a half per cent. of the aggre-gate of all premiums paid during the preceding calendar year 011 policies which were effected through his agency in terms of this section."

Sec 60(2) is in the following terms:

" (2) Except with the prior written approval of the registrar, applied for as prescribed by re-gulation, no person who is deemed for the pur-poses of subsection (1) to be carrying on insu-rance business in the Republic shall effect or renew any insurance business (other than rein-surance business) through a broker at Lloyds which is not underwritten by an underwriter at Lloyds."

The first question in the present appeal is whether the

tax imposed in terms of sec 60(1)(f) is payable, not only

in respect of policies underwritten by underwriters at Lloyds,

but also in respect of policies not so underwritten but ef-

fected or renewed through a broker at Lloyds in terms of

sub-sec (2). How this question arose appears from what

follows.

Until December 1985 two companies - Willis Faber

and Company (Pty) Limited ("Willis Faber") and Robert

5. Enthoven and Company (Pty) Limited ("Robert Enthoven") traded separately as insurance brokers in the Republic. Part of their business fell squarely within the ambit of sec 60(1); but, presumably with the registrar's appro-val, they also effected and renewed insurance business (other than reinsurance) through a broker at Lloyds which was not underwritten by an underwriter at Lloyds. In the belief that the latter type of business also attracted the tax payable under sec 60(1)(f) they paid certain amounts to first respondent.

During December 1985 willis Faber and Robert Enthoven merged and became the present appellant who sub-sequently instituted action in the Transvaal Provincial Division to recover the payments made in respect of 1984 and 1985 from first respondent. Second respondent (the registrar of insurance) was joined as co-defendant by rea-son of the interest that he might have in the matter. The pertinent averments in the particulars of claim were the

6. following:

"10. The said payments referred to in paragraphs 6 to 9 above were paid under the bona fide and reasonable but mistaken belief that the said amounts were due and payable to the First Defendant whereas in law and in fact the said monies were not due nor payable to the rirst Defendant at all.

11. In the premises the First Defendant has ceen unjustly enriched at the expense of the Plain-tiff in the aggregate sum of R209 627,15. "

(The payments mentioned in para 10 were those made in

respect of policies not underwritten at Lloyds.)

In his plea first respondent denied these al-

legations and pleaded that the amounts paid "were due

and owing in terms of the provisions of section 60(1)

and section 60(2) of the Act".

The matter eventually came to trial before SPOEL-STRA J on the following issues:

1. Mhether the payments in question were due in terms of sec 60(l((f) of the Act and, if not,

2. whether the appellant was entitled to recover

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them. Respondents' case on the second issue was that the mistake on which the plaintiff relied, was one of law and that this entailed that the payments were not recoverable. SPOEL-STRA J decided the first issue in appellant's favour but upheld respondents' argument on the second issue and dis-missed the claim. Subsequently he granted the appellant leave to appeal.

At the hearing of the appeal appellant's coun-sel argued in limine that, in the absence of a cross-appeal, the first issue must be taken to have been finally disposed of in favour of his client. But he is plainly wrong since there is no judgment or order as envisaged

in sec 20(1) of the Supreme Court Act 59 of 1959, as amen-ded, read with Rule 5(3) of the rules of this court against which the respondonts could appeal. As explained in Pub-lications Control Board v Central News Agency Ltd 1977(1) SA 717 (A) at 745 A

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"(t)heterms 'judgment' and 'order' in the statute and Rule of Court do not embrace every decision or ruling of a court. These terms are confined to decisions granting 'definite and distinct re-lief'."

(See also Van Streepen and Germs (Pty) Ltd v Transvaal Pro-

vincial Administration 1987(4) SA 569 (A) at 580 D-F.) In

the present case there is only a ruling that the wording of

sec 60(1)(f) of the Act "excludes section 60(2) business.

from tax". No relief having been sought or granted on the

first issue there is nothing against which the respondents

could appeal. Not unlike the respondents in the Publica-

tions Control Board case (vid 748 A-B of the report) they

are seeking to resist the appeal on a ground raised but re-

jected in the trial court; and precisely like the respon-

dents in that case they are entitled to do so even though

they did not cross-appeal.

I turn to consider the provisions of sec 60

of the Act. (To avoid unnecessary repetition I shall re-

fer to business underwritten by underwriters at Lloyds

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as "Lloyds business"; to business not so underwritten but effected through brokers at Lloyds as "other business";and to a person who does any of the acts mentioned in the in-troductory part of sec 60(1) in respect of Lloyds business as a "Lloyds agent".) By way of introduction to his ar-gument that the tax imposed in sec 60(1)(f) is payable in respect of both types of business respondents' counsel rightly stressed (1) that a person who is entitled to carry on Lloyds business in terms of sub-sec (1) may, with the registrar's approval, transact other business in terms of sub-sec (2) as well; (2) that sec 60(1)(f) thus relates to a person whose business may consist partly of Lloyds business and partly of other business and (3) that the tax is levied on "the agqregate of all premiums paid during the preceding calendar year on policies which were effected through his agency in terms of this section". His argu-ment proceeded as follows: policies effected through a broker at Lloyds in terms of sub-sec (2) are also "effected

10. through his agency" and are so effected "in terms of this section" since "this section" means the entire section 60 including sec 60(2); and therefore the tax is payable in respect of such policies as well. This result is achieved, he submitted, by applying the plain language which the legis-lature used and which brooks no departure.

If we were to look only at par (f) and sub-sec (2) the argument is undoubtedly a strong one. But this is not how the question of the interpretation of par (f) should be approached since an examination of the other pro-visions of the Act may reveal that the words used do not mean what at first blush they appear to convey. This does not entail a departure from their ordinary meaning; it is a quest for the intention behind the words in the context in which they were used. And when this is done the short-comings in the contention begin to appear.

The argument depends entirely on the correct interpretation of the words "policies which were effected

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through his agency in terms of this section". Seeing that par (f) forms part of sub-sec (1) the first question is whether "this section" means the entire sec 60 or whet-her it means sec 60(1) only. In support of his contention that it means the entire section respondents' counsel sub-mitted in his written heads of argument that "the legisla-ture also carefully distinguishes between sections and sub-sections" and referred by way of example to secs 57 A(2), 56(1), 60(1)(f) and 60(2) of the Act. But an examination of the Act as a whole reveals that there is no consistency in the references to sections and sub-sections: some of the provisions do reveal the careful distinction mentioned by counsel, but there is an equally large number of examples of the indiscriminate use of the word "section". A striking illustration is afforded by sec 60 itself. In terms of sub-sec (1) a Lloyds agent shall "for the purpose of this section" be deemed to be carrying on insurance business in the Republic. In sec 60(2) it is expressly stated,

12. however, that the deeming is for the purposes of sub-sec (1) only. Whatever certainty one might otherwise have had about the meaning of the expression in sec 60(1)(f) is, to say the least, seriously eroded by its inconsistent use elsewhere in the Act and particularly in sec 60 itself. Then there is the expression "policies effected through his agency". In parr (b) and (c) "a policy effected through the agency of the depositor" is mentioned (the"depositor" being a Lloyds agent) and in par (d) "a policy which was effected through the agency of the said person" (again a Lloyds agent). "A policy" may mean "any policy" but in every instance it is abundantly clear fróm the context that a Lloyds policy only is intended. Bearing in mind that these paragraphs, precisely like par (f), relate to a Lloyds agent who may be conducting other business as well, it is not unnatural to ask: why should the same expression in par (f) be construed differently so as to include other business? There is no discernible reason either in par (f)

13. or in any of the other provisions. It will be noticed that the delimitation in the introductory part of sec 60(1) of the operation of the succeeding paragraphs is in two parts - the one relating to a group of persons (Lloyds agents) and the other to a type of business (Lloyds busi-ness). It does not emerge from the introduction whether they were intended to operate in respect of Lloyds agents in relation to Lloyds business only or to other business as well. But all the succeeding paragraphs - leaving a-side par (f) for the moment - have this in common that they regulate the manner in which Lloyds business is to be conducted. Many of them relate moreover to Lloyds agents who, plainly to the knowledge of the legislature, may conduct other business as well. Again it is not un-natural to ask: can it reasonably be accepted that the legislature would in par (f) interpose a provision aimed at other business too? The answer is obvious particu-larly if par (f) is recognised for what it is - a provision

14.

purely and simply for the imposition of a tax. Had this been the intention one would have expected it to be ex-pressed in much clearer terms than those appearing in par

(f).

In my judgment, on the correct interpretation of par (f), the tax is not payable in respect of other busi-ness. The provision is in any event at least reasonably capable of such a construction and, being one in which a burden is imposed, it must be construed in the way more favourable to the subject (Israelsohn v Commissioner for Inland Revenue 1952(3) SA 529 (A) at 540 F-H, Glen Anil Development Corporation Ltd v Secretary for Inland Revenue 1975(4) SA 715 (A) at 727 F-G).

This brings me to the second issue which, it will be recalled, was decided against the appellant on the ground that the tax was paid to first respondent as a result of an error of law. The trial judge regarded himself bound by the decisions of the full court of the

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erstwhile South African Republic in Rooth v The State (1888) 2 SAR 259 and of this court in Benninq v Union Government (Minister of Finance) 1914 AD 420 to the ef-fect that such an error is as a rule a bar to the con-

dictio indebiti. In this court appellant's counsel ar-gued that 'the mistake was not one of law but a mistake of fact or of mixed law and fact. He submitted further that the decisions just referred to should in any event not be followed.

The submission that the mistake was not one of law is plainly wrong. How it came about that the pay-ments were made will be discussed later. At this stage it is sufficient to say that Willis Faber and Robert Ent-hoven paid the tax because they laboured under the mista-ken impression that they were legally obliged to do so. There was no misconception of any fact and the mistake was purely one of law. What remains to be considered is therefore, firstly, whether a mistake of law is indeed

16.

as a rule a bar to the condictio and if not, secondly, whether the appellant is in the circumstances of the case entitled to recover the amounts paid. I will deal with each guestion in turn.

More than two centuriês ago Schomaker (Cons et Resp Jur 6.163) wrote that the effect of an error of law on the ccndictio indebiti was "tussen de Rechtsge-leerden niet uitgemaakt, maar tot heden toe gebleven, en zal altoos wel blyven een grote twisappel onder dezelve, zo lang het Jus Civile Romanum eenige meerdere ofte min-dere auctoriteit in de dagelykshe vierscharen blyft be-houden". The dispute to which Schomaker refers stemmed from Justinian's adoption of certain principles of clas-sical Roman law in the Corpus Juris which at the same time extended and amended certain others. To keep the judgment within reasonable bounds I will not deal with this aspect of the matter, or with the development of the dispute to which it led, in great detail. It is in any

17. event unnecessary to do so in view of the extensive re-search conducted, not only in Rooth's case, but in recent years by academics like prof W de Vos and prof D P Visser. A full account will be found in the former's "Verrykings-aanspreeklikheid in die Suid-Afrikaanse Reg" 3rd ed at 23-26 and 70-71 and in prof Visser's thesis "Die rol van Dwaling by die Condictio Indebiti" (1986) at 31-60 and 144-176. My own researches have revealed nothing new. For present purposes a brief resume of the main texts in the Corpus Juris and how they were applied by the jurists of the sixteenth and seventeenth century will suffice.

The condictio indebiti was dealt with under its own title in D 12.6 and C 4.5. According to D 12.6.1

"Et quidem, si guis indebitum ignorans solvit, per hanc actionem condicere potest; sed sciens se non debere solvit, cessat repetitio."

According to C 4.5. 1

"Pecuniae indebiti, per errorem, non ex causa judicati solutae, esse repetitionem, non

ambigatur."

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No distiction is drawn in these texts between ignorance

or mistake of fact and ignorance or mistake of law but

according to D 22.6.9

"regula est, juris quidem ignorantiam cuique nocere, facti vero ignorantiam non nocere."

And in C 1.18.10 it is explicitly stated that

"cum quis jus ignorans, indebitam pecuniam solverit: cessat repetitio ."

The fact that the texts dealing specifically

with the condictio indebiti speak generally of "ignorans"

or "per errorem" and do not limit the remedy to cases

where payment was made as a result of an error of fact

later became one of the arguments in the debate. But

there were more material points of difference arising

from other texts which were either irreconcilable or sus-

ceptible to different interpretations and from which an

almost random selection could be made according to each

writer's personal preferences. From the time of the Glos-

sators the jurists were never in agreement on the effect '

19.

of an error of law and after the reception of the Roman law in Western Europe two very distinct schools of thcught developed. On the one hand there were writers like Cuja-cius, Donellus, Noodt, and Johannes Voet who were of the opinion that the payment of an indebitum made in errorem iuris was as a rule not recoverable. But there were others who took the opposite view. Among these were Grotius, Vinnius, Huber, Van Leeuwenand Van der Keessel. (I mention only a few of the better known writers; each side had many other supporters, not only in Holland and the other Dutch provinces, but also in France and Germany. In France eg Pothier and D'Aguesseau entered the arena and in Germany Carpzovius, Muhlenbruch, Brunnemann and Leyser (and later

Gluck, Von Savigny and Windscheid).

Amidst the dissension in the ranks of the jurists the Dutch courts remained unaccountably silent. Resear-chers have been able to find only one case (it is mentioned

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in Pauw's Observationes Tumultuariae Novae No 1134) that is of some relevance although it is of little assistance since only two of the judges of the Hoge Raad upheld the claim on the ground that "errorem juris, certe moribus, non excludere indebiti condictionem". (The majority de-cided the case on other grounds.) It is difficult to un-derstand why the words "certe moribus" were used because more than a hundred years later Van der Keessel still said (Praelectiones 3.30.6) by way of commentary on De Groot's Inleidinge 3.30.6:

"6. dwaalde of twyfelde aan't recht. By die Romeinse Reg stel ek dit gewoonlik so dat die condictio indebiti nie beskikbaar gestel word t.a.v. wat in regsdwaling betaal is nie. Maar De Groot verkondig hier die teendeel, vermoede-lik eerder o.g.v. sy opvatting van die Romeinse Reg as van sake wat by ons uitgewys of deur die hofgebruik goedgekeur is; want Groenewegen het ook in aant. 19 niks uit die reg van Hol-land aangevoer om De Groot se leer te staaf nie, en tot steun van die teenoorgestelde stand-punt het hy niks anders aangevoer nie behalwe fragmente uit die Corpus Juris en gesaghebben-de verklarings van skrywers oor die Romeinse Reg. En sover my wete strek, is daar deur diegene

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wat die gewysdes van Holland uiteengesit het, geen enkele beslissing van een van die twee howe in die een of die ander rigting aangevoer nie. En vir sover ek weet, het Groenewegen in sy Tractatus de Legibus Abrogatis by die wette wat die kwessie raak, niks aangemerk i.v.m. wat daar in die hedendaagse reg aan-gaande hierdie strydvraag erkenning verkry of verdien het nie. Daarenteen getuig Van Leeuwen i.v.m. ons hedendaagse reg dat die condictio indebiti wel beskikbaar gestel word t.a.v. wat in regsdwaling betaal is, terwyl hy hom veral op hierdie passasie in De Groot beroep. Maar Voet is van mening dat daar geen rede be-staan waarom ons in die howe van die suiwerder standpunt van die Romeinse Reg sou afwyk nie waar dit die condictio nie toestaan nie; maar hy voer self ook niks uit die reg van Holland tot steun van sy leer aan nie. In 'n konsul-tasie waar daar 'n treffende geval i.v.m. 'n regsdwaling voorkom, staan ook 'n gesiene regs-geleerde op grond van dieselfde dwaling die geleentheid vir terugvordering voor, hoewel ook hy nie kans sien om hom op die gebruik van die howe te beroep nie."

(The translation is that of Gonin et al.)

This is how the law in South Africa stood

when the question came up for decision in Rooth v

The State (supra) before a court of three judges pre-

sided over by KOTZE CJ. Since we have been urged

22.

not to follow the court's judgment I am obliged to

cite extensive portions thereof.

After mentioning the difference of opinion

among the commentators, KOTZE CJ proceeded as follows

(at 263-4):

Vinnius and D'Aguesseau have on their side discussed the matter very fully, and their opinion is chiefly based on conside-rations of natural equity. They say that the condictio indebiti is founded ex aequo et bono, and no one is allowed to enrich himself through the loss of another, which would be the case if anyone who has paid in error of law is not allowed to reco-ver back what he has so unjustly paid. They also urge that in the title de condictione indebiti no distinction is drawn between mistake in law and mistake of fact. These arguments appear to me sufficiently refuted by Voet, Gluck, and Savigny, who observe that where the leges are clear and specially lay down as a well-recognised rule (or, as Windscheid puts it, axiom) of law, that in case of er-ror juris the condictio indebiti does not lie (vid. cod.,1, 18, 10; Dijg. 22, 6, 9, pr.), there can be no question of natural equity; and that although in the chapter

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de condictione indebiti no distinction is made between error juris and error facti, it is plain that where this chapter merely treats the subject in general it cannot im-pair the force of other and later passages in the corpus juris, where such distinction

is specially drawn D'Aguesseau also

strongly relies on the lex 7 and 3, Dig. 22, 6, where Papinian says: 'Ignorance of the law is of no avail to those who seek to acquire (something); nor does it pre-judice those who seek their own (suum peten-tibus) .... but ignorance of the law never prejudices in averting a loss of one's own.' Now it is quite useless to investigate whether the explanation of this passage given by Cujacius or that given by D'Agues-seau be the correct one, for even if it be granted that (as D'Aguesseau wishes it) the words suum petentibus indicate that Papinian was of opinion that the condictio indebiti ought to be allowed in case of a mistake in law, inasmuch as he who has unjustly paid what is not due seeks but to recover back his own, such opinion cannot prevail against the later and express language of the lex. 10, cod. 1, 18, where we read: 'Whenever anyone has in ignorance of the law paid a sum of money, the action to recover it back ceases; for you are aware that the right to recover back what has been unduly paid is only allowed by reason of a mistake of fact, and this (as Gluck has pointed out) is sup-ported by the lex. 9, Dig. 22, 6, where

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Paulus says: 'It is indeed a rule that ig-norance of the law prejudices, but not also ignorance of fact.' (Et vid. per Paulus d. 1, 9, par. 5; per Ulpian, 1. 29 par 1, Dig. 17,2; per. Papinian 1, 48; pr. Dig 46.1.)"

Having thus rejected the view of Vinnius and

D'Aguesseau and accepted that propounded inter alia by

Voet, KOTZE CJ proceeded as follows (at 265):

"It appears to me, however, that the jurists of our own time, regard being had to these exceptions, are more or less inclined to adopt a middle view, and (as Gluck expres-ses it) discard the distinction between mis-take of law and mistake of fact, and simply consider if the error, whether juris or facti, be excusable (verzeilich, entschuldbar) or not. (Cf. Thibaut, par. 29, and Savigny l.c. note (a) thereon; Mackeldey, Lehrbuch, edit. 1862, pars. 165 and 467; Goudsmit, par. 52; Modderman,par. 79; Windscheid par. 79a, and par. 426, n. 3.) Whether, accor-ding to the strict interpretation of the Roman law, we are justified in adopting this view of the modern school as correct, is a question upon which I need not enter; for even admitting the correctness of that view, there exists no element of excusability in the pre-sent case."

In the course of the discussion which then follows of

25.

the "element of excusability" the following was said

" I can discover no equity in favour of the applicants, but rather the reverse; and here I wish to point out that the rule 'igno-rance of law is no excuse,' and the disallow-ing of an action for the recovery of that which has been unduly paid, do not conflict with the principles of the aequum et bonum, and in suo-port of this reference may be made to what Story says in his Equity Jurisprudence (par lll):'It is a well-known maxim that ignorance of the law will not furnish an excuse for any person either for a breach or for an omission of duty; ignorantia legis neminem excusat; and this maxim is equally as much respected in equity as in law......' "

In an article "Daedalus in the supreme court -the common law today" published in Vol 49 (1986) T H R H R 127 at 136 prof Visser critisizedthe judgment in Rooth's case on the following grounds:

"If the court in Rooth v The State had adopted the historical method it might ob-viously have been swayed by the fact that the view of those who bar the condictio if error of law is present, was essentially based on an inappropriate application of the Aristotelian principle, an application which did not take account of the true basis of the condictio indebiti. Had it further regarded only Roman-

26.

Dutch writers as authoritive, it would have found (although the position in Roman-Dutch law is unclear as well) that the majority see it as no bar to the condictio. "

These considerations, although plainly relevant,

do not bring about that the decision should not be followed.

The fact of the matter is that the court was faced with a

situation where the Roman-Dutch writers whom we usually

turn to for an exposition of the law were not in agreement.

As VAN DEN HEEVER JA explained in Tjollo Ateljees (Eins)

Bpk v Small 1949(1) SA 856 (A) at 874, in such a

situation "we may choose to rely upon those opinions

which appear to us to be more comformable to reason"

(and, I would add, more in conformance with the law and

requirements of our time). In Rooth's case the court,

probably as a matter of legal policy, elected to follow

Voet.

Moreover we cannot overlook the fact that in Benning's case (supra) this court in effect confirmed the

27. decision albeit without specific reference thereto. Ad-mittedly the court did not consider the question afresh -all that appears in the judgment is a terse statement that "there is ample authority for holding that (ignorance of the law) by itself affords no suffi-cient ground for the claim". It nevertheless remains a decision of this court which was acted upon in later cases such as Miller & Others v Bellville Munici-pality 1973(1) SA 914 (C) at 919 A-C and Barker v Bent-ley 1973(4) SA 204 (N) at 206 F-G. This also applies, of course, to Rooth v The State which has stood for more than a century and has also been consistently followed in the provincial courts - although, in some cases,with an obvious measure of reluctance. In short we must face the fact that it has generally come to be accepted that these two decisions reflect the current state of the law in this country (vid De Vos, op cit at 182 and the cases cited there; Joubert, The Law of South Africa Vol 9 p 50).

28.

On the other hand we must bear in mind Lord Tomlin's famous words in Pearl Assurance Company Limited v Government of the Union of South Africa 1934 AC 570 at 579

(which were cited with approval eg in Peldman (Pty) Ltd v Mall 1945 AD 733 at 789 ) that the Roman-Dutch law is

" a virile living system of law, ever seekinc,

as every such system must, to adapt itself con-sistently with its inherent basic principles to deal effectively with the increasing complexi-ties of modern organised society: '

This being the nature of our system the courts should not

hesitate to adapt a principle which is found not to be

in line with present-day developments in the particular

branch or other branches of the law. As INNES CJ aptly

said in Blower v Van Noorden 1909 TS 890 at 905:

"There comes a time in the growth of every living system of law when old practice and ancient for-mulae must be modified in order to keep in touch with the expansion of legal ideas, and to keep pace with the requirements of changing conditions.

29.

And it is for the courts to decide when the modi-fications, which time has proved to be desirable, are of a nature to be effected by judicial de-cision, and when they are so important or so ra-dical that they should be left to the legisla-ture."

It is with this in mind that one has to look at the judg-

ment in Rooth v The State again.

What is immediately apparent is that there is no

logic in the distinction between mistakes of fact and mis-

takes of law in the context of the condictio indebiti.This

condictio has since Roman times always been regarded as a

remedy ex aequo et bono to prevent one person being unjus-

tifiably enriched at the expense of another. (Even those

favouring the distinction concede that this is so.) Bearing

in mind that the remedy lies in respect of the payment of

an indebitum (ie a payment,without any underlying civil or

natural obligation) it is clear that, where such a payment

is made in error, it matters not whether the error is one

of fact or of law: in either case it remains the payment of

an indebitum and, if not repaid, the receiver remains enriched.

30.

The nature of the error thus has no bearing either on the inde-bitum or on the enrichment. The same result is achieved when the condictio indebiti is viewed (as it often is) as one of the condictiones sine causa. Again it matters not whether the error is one of fact or law for in both cases the payment is made sine causa (Cf J C Van der Walt, "Die Condictio indebiti as verrykkingsaksie" Vol 29 (1966) T H R H R 220 at 227).

It is equally plain that a strict application of the distinction will often, if indeed not in the majo-rity of cases, work an injustice on the payer. Considered as a matter of simple justice between man and man there is no conceivable reason why the receiver of money paid in error of fact should in the eyes of the law be in a better position than one who has received money paid in error of law. It is not inappropriate to quote again from INNES CJ's judgment in Blower v Van Noorden (supra) at 900 where he indicated that "we should be slow to

31. perpetuate a form of legal remedy which may work hard-ship, if it can be modified so as to do away with that possibility".

The inequity to the payer that the disallowance
of the remedy in the case of an error of law may entail,
did not sway the judges in Rooth v The State. Their
reasoning appears from the passage at 266 of the report
cited earlier and is to the effect that the disallowance
of the remedy does not conflict with the principles of
aequum et bonum since the ignorantia juris rule also
applies in equity. The court plainly regarded this rule
as the determining consideration overriding all others;
this is why Voet's view was preferred to that of
De Groot and the latter's supporters. (Voet actually
goes the length of saying - in 12.6.7 of his commentary
- that "to penaliza the person who is ignorant of the
law, the law has denied every action, persónal suit or
right to reclaim " (Gane's translation) ). What

32.

we must decide is whether an error of law still deserves

this censure.

An important consideration in seeking an answer to this question is that there is no evidence of a gene-ral application of the ignorantia juris rule in South Af-rican civil law. On the contrary there are many cases in which it was not applied. The law relating to the renunciation of rights is a good example. As early as 1891 DE VILLIERS CJ said in Watson v Burchell 9 SC 2 at 5 that "no doctrine is better settled in our law than that a person cannot be held to have renounced his legal rights by acquiescence unless it is clear that he had full knowledge of his rights and intended to part with them". The reason is plain for, as DE VILLIERS J remarked in Tighy v Putter 1949(1.)SA 1087 (T) at 1095, rights cannot be renounced unless the person concerned "knew what those rights were both in fact and in law". Save for a sómewhat discordant note sounded in Schwarzer v John Roderick's

33. Motors (Pty) Ltd 1940 OPD 170 at 185 this has always been

and still is our law (Laws v Rutherford 1924 AD 261 at

263; Martin v De Kock 1948(2) SA 719 (A) at 733; Fein-

stein v Niggli and Another 1981(2) SA 684 (A) at 698 F-G

where an election to rescind or affirm an agreement re-

ceived similar treatment).

Ignorance of rights is often the ground on

which restitutio in integrum is granted. In Stewart's

Assignee v Nall's Trustee and Others (1885) 3 SC 243

DE VILLIERS CJ indicated on the authority of Voet 4.6.9

that the question in such a case is whether "a just cause

is alleged in the declaration to exist" and added at 246:

"In deciding this question, our Courts would not be bound by the strict rules of the Civil Law, but would take for their guidance the more liberal principles which guided the Dutch courts."

After citing this dictum Sir John KOTZE - who had by then

become the Judge-President of the Eastern Districts Court

- said in Umhlebi v Estate Umhlebi and Fina Umhlebi 1905

34. EDC 237 at 249:

" The equitable spirit of our own Roman-Dutch
law, to a large extent due to the influence
of the Canon law, is indeed one of its lead-
ing features. Hence ignorance of one's right,
if it be a just and probable ignorance, is a
good ground for restitution or relief accor-
ding to the practice adopted in the Netherlands,
as appears from an examination of the authori-
ties "

The effect of the judgment was to release the widow Umhlebi

from a renunciation of her right to half of her late hus-

band's assets by virtue of their marriage in community- of

property on grounds which were stated as follows at 248:

"Upon every principle of law and equity the plain-tiff is entitled to the relief which she asks. If we regard the case as one of mutual mistake, we find that both the plaintiff and her son Zachariah, at the time of the application to the Supreme Court in 1892, were under the impression that native law and custom applied to the land and regulated the succession thereto. They were both of them in ignorance of the plaintiff's right arising from the marriage in community and its effect upon the succession of the land."

These pronouncements cleared the way for relief

35.

in a number of subsequent cases where parties had acted

in ignorance of their rights. A practice developed eg

whereby parties to ante-nuptial contracts were allowed

to depart from the terms of their agreements. It was

described as follows in Ex Parte Joannou et Uxor 1942

TPD 193 at 195-6:

" there are numerous cases in which the

Court has come to the assistance of applicants who have been mistaken or ignorant as to the law. The practice in the Transvaal has gone so far as to assist applicants ignorant of the law in cases where there was no agreement but the parties were under a wrong impression of the law and believed that community of proper-ty would be excluded, and entered into the mar-

riage upon that understanding Ignorance of

one's right, if it be a just and probable igno-rance is a good ground for the relief according to our. law, see Umhlebi v Estate Umhlebi (19 E.D.C. 237)."

Another area of the law that developed along similar lines

involves the exercise by an heir of his right to adiate

or to repudiate the terms of a will. One case deserving

special mention is Van Nyk v Van Wyk's Estate 1943 OPD

36.

117 concernïng a widow who had performed acts whïch could

be coostrued as tantamount to adiating under a joint will

in the mistaken belief that she was irrevocably bound by

its terms. At 126 of the report PISCHER JP said:

"However that may be, I think it must be accep-ted that the Courts of South Africa have regar-ded it as a natural extension of the rule of ecuity that the strict rule of law - that ig-norance of law afford? no excuse - is not or may not be applicable to a case where the fact in issue is whether an election has been made or not."

Relying inter alia on this dictum relief was grantad in

Ex Parte Estate Van Rensburq 1965(3) SA 251 (c) to an

heir who had repudiated a will in ignorance of the legal

consecuences of his act.

All the cases referred to thus far related to ignorance

of the parties' rights - their so-called private rights. I

mention this because there is a reference in sccne of the cases

(eg in Putter v Tighy,supra ) to the decision of the House of

Lords in Cooper v Phibbs (1867) LR 2 HL 149 to the effect that the

37.

ignorantia juris rule has no applicatión to private rights.

In Putter's case at 1102 ROPER J said:

"The rule that a man cannot be held to waive rights of

which he is ignorant dces not in my view ap-ply where the ignorance relied upon is simple igno ance of a rule of law; in such a case the maxim errorem juris cuique nocere is applicable. It arises when owing to mistake or ignorance of law the party is unaware of his rights."

Only Cooper v Phibbs and other English authorities are

cited to support this proposition. With respect,

I am unable to follow ROPER J's reasoning and particu-

larly the distinction between "simple ignorance of a

rule of law" and ignorance of one's rights "owing to

mistake or ignorance of law". The learned judge ack-

nowledged at 1103 that "in a sense almost any mis-

take as to, or ignorance of,a rule of law involves mis-

take orignorance of private rights...." The converse

is also true: a mistake of law as to a private right

is hardly conceivable except in the context of amistake

as to, or ignorance of, a general rule of law. In the

38. cases referred to (and many others that I did not mention)

the parties' ignorance of their rights stemmed from their ignorance of the general law. These cases are thus a clear indication that the ignorantia juris rule has for quite a considerable period of time not been of general application in South African civil law.

Bearing in mind that,since this court's deci-

sion in S v De Blom 1977(3) SA 513, ignorance of the law may even provide an excuse for otherwise criminal behaviour, we have to ask ourselves whether there is any reason for retaining the age old distinction between errors of law and fact in claims for the repayment of money unduly paid in error. I can conceive of none. In the sixth (1957) edition of Gar-diner & Lansdown's South African Criminal Law and Pro-cedure Vol 1 at 60 it is stated that "if ignorance of law were generally admitted as a valid ground of excuse for unlawful conduct, the administration of law would become impracticable". But the administration of law suffered

39. no ill effects as a result of the decision in De Blom's

case; and it cannot seriously be suggested that it would

if the distinction between errors of law and fact were

to be abolished for purposes of the condictio indebiti

which affects no one but the payer and payee. Nor can

legal policy stand in the way of its abolition; on the

contrary, legal policy would seem to demand rather than

preclude the abolition of a principle that is manifestly

unjust in the majority of cases. Taking account fur-

ther of the complexities of contemporary legal "and com-

mercial practices which differ toto caelo from those fol-

lowed in earlier times, I would accordingly rule that the

fact that money was unduly paid in error of law is not by

itself a bar to its recovery by way of the condictio in-

debiti.

It does not follow, however, that any error of

law would be sufficient ground for a succesful condiction.

In Rahim v Minister of Justice 1964(4) SA 630 this court

40. held that an amount of money paid indebite in mistake of fact could not be recovered by means of the condictio in-

debiti where the conduct of the payer was found to have been "inexcusably slack" (635 E-F). As appears from 634 A-C of the report the court adopted the view of Gluck and Leyser that, to guote Leyser, crassus et inexcusabilis er-ror condictionem indebiti impedit; and Voet's statement that "the ignorance of fact should appear to be neither slack nor studied (nec supina nec affectata)",which was approved of in Union Government v National Bank of South Africa Ltd 1921 AD 121 at 126. (See also Miller & Others v Bellville Municipality supra at 919 F-G; Rulten NO v Herald Industries (Pty) Ltd 1982(3) SA 600 (D & CDL) at

607 C-E.) Mistakes of law should be treated in similar fashion so that the assimilation between the two kinds of error be complete.

Accordingly in my judgment our law is to be adap-ted in such a manner as to allow no distinction to be

41. drawn in the application of the condictio indebiti be-tween mistake in law (error juris) and mistake of fact (error facti). It follows that an indebitum paid as a result of a mistake of law may be recovered provided that the mistake is found to be excusable in the circumstances of the particular case.

I am not unmindful of the criticism against such an approach inter alia by prof Visser; nor of the fact that the retention of an element of excusability will not entire-ly rid the condictio indebiti of its illogical character. But the historic nature of the remedy as one granted ex'ae-quo et bono should be preserved and care should be taken to avoid it being turned into a tool of injustice to the receiver of money paid indebite. As TINDALL J (as he then was) warned in Trahair v Webb & Co 1924 WLD 227 at 235 "where the plaintiff bases his claim for relief on an equit-able doctrine the Court must be careful that, in a desire to do justice to the plaintiff, an injustice is not done

42.

to the defendant".

It is not possible nor would it be prudent to define the circumstances in which an error of law can be said to be excusable or, conversely, to supply a compen-dium of instances where it is not. All that need be said is that if the payer's conduct is so slack that he does not in the court's view deserve the protection of the law he should, as a matter of policy, not receive it. There can obviously be no rules of thumb; conduct regarded as inexcusably slack in one case need not necessarily be so re-garded in others,and vice versa. Much will depend on the re-lationship between the parties; on the conduct of the defen-dant who may or may not have been aware that there was no debi-tum and whose conduct may or may not have contributed to the plaintiff's decision to pay; and on the plaintiff's state of mind and the culpability of his ignorance in making the payment. (Consider eg the case of a person who, whilst in doubt as to whether money is legally due, pays it not caring

43.

whether it is and without bothering to find out.) These are only a few considerations that come to mind; others will no doubt manifest themselves with the passage of time as claims for the recovery of money paid in error of law come before the courts.

There is also the question of the onus of proof. In Recsey v Reiche 1927 AD 554 at 556 it was said that the onus in an action based on the condictio indebiti "lies throughout the whole case" on the plaintiff. This remark was obviously intended to refer to every element constitu-ting the plaintiff's cause of action. This includes the excusability of the error. As was pointed out in Mabaso v Felix 1981(3) SA 865 (A) at 872 H considerations of policy, practice and fairness inter partes largely determine the in-cidence of the onus in civil cases; and I can conceive of nothing unfair in,and of no consideration of policy or prac-tice militating against, expecting of a plaintiff who alleges that he paid an amount of money in mistake of law to prove

44. sufficient facts to justify a finding that his error is excusable. The rule otherwise would in the majo-rity of cases require the defendant to produce proof of matters of which he has not the slightest knowledge (Ma-baso v Felix at 873 D-E).

What finally remains to be examined is the ex-cusability of the error in the present case.

The information presented to the trial court about the circumstances in which the tax had been paid

took the form of a statement of agreed facts and the evi-dence of a single witness called by the appellant - Mr C F H Vaux, the financial manager of Robert Enthoven from 1980 to 1934. Mr Vaux's evidence is to the effect that when he assumed duty with the company he found in its files a circular (Exh A) issued by the office of the re-gistrar of insurance. Exh A is dated Xovember 1972 and bears the heading "Requirements to be complied with by

45. agents for brokers at Lloyds". It contains certain ad-ministrative directives and the following information about "taxation".

"4. Taxation

(a) A tax equal to 2½% of premiums paid

on policies effected through the licen-cee's agency is payable annually. The tax is payable before the end of Febru-ary each year on premiums paid during the preceding calendar year in respect of -

(i) Business (including reinsurance

business) placed with underwriters at Lloyds's under section 60(1) of

the Insurance Act, and

(ii) business placed outside the Lloyds's market, with the Registrar's approval, in terms of section 60(2) of the In-surance Act. "

Because he found the provisions of the Act to be

unclear Vaux at one stage telephoned the registrar's office

and enquired whether the tax was indeed payable on other

business. As far as he could recollect he spoke to an

assistant registrar who referred him to Exh A. He could

46.

not remember whether he consulted the company's attorneys.

He continued paying the tax since he was "reasonably satis-

fied" that it was payable "after having cleared the matter

up with the registrar". It was apparently only after

the merger of the two companies that the matter received

further attention.

In the statement of agreed facts the parties

agreed that the two companies paid a total amount of

R179 607,60 to first respondent as they "believed in the

circumstances (they were) obliged to in terns of section 60(1)(f) of the Act, in respect of section 60(2) business

carried on by (them) for the calendar years 1984 and 1985

respectively". In a supplementary agreement they recor-

ded the following:

"The parties are in agreement that since Section 60 of Act 27 of 1943 was amended in 1966 the De-fendants consistently took the attitude that busi-ness in terms of Section 60(2) attracts tax in terms of Section 60(1)(f), and brokers registered to do business in terms of Section 60(1) accepted

47.

this and paid the tax until approximately 1986 when it was for the first time disputed that such tax is payable by various brokers in South Africa, including the Plaintiff, which brokers either refuse to pay the tax or pay it under pro-test. Other brokers still pay the tax without protest."

I have no doubt that the error on Robert Entho-

ven's part was excusable. The company was faced with

Exh A. Initially the directives therein were followed

and when Vaux questioned their validity he was assured

that the tax was indeed payable. He cannot be blamed

for turning to, or for accepting the ruling of, the of-

ficial to whom the administration of the Act has been

entrusted and to whom members of the public would natu-

rally turn for guidance. As Vaux said in his evidence

he accepted the registrar's view as the most authorita-

tive. It was not a view that could be dismissed as

patently wrong; respondent's counsel supported it with

confidence and great conviction even in this court. More-

over the registrar's view was not only shared by the

48. Receiver of Revenue, but accepted and acted upon without demur for many years by every broker registered to do Lloyds' business. Bearing in mind that failure to pay the tax carries a criminal sanction it comes as no sur-prise that Robert Enthoven followed suit. ït is idle to suggest that it could and should have been paid under pro-test - an expedient usually resorted to when a person is confronted with a demand for money that he believes not to be due. This is not what Vaux believed.

Willis Faber's position is not as clear since there is no direct evidence of the circumstances in which it paid the tax. We know from the statement of agreed facts that the company paid it in the belief that it was legally obliged to do so but, apart from such inferences as may be drawn from the common cause or proved facts, there is no information on which the excusability of the error can be determined. There is no evidence disclosing the source of the error for, even assuming that the company

49. received Ex A, it cannot be inferred as a matter of pro-bability that it was this directive that engendered the belief that the tax was payable. Nor is there evidence of any enquiries made or other steps taken to explore the position and ascertain the extent of the company's liabi-lity. In short, how the belief came to be entertained and what steps were taken to verify it are simply not known. In my view there is insufficient information to justify a finding that the mistake is excusable.

Thë result is that the appellant is entitled to recover the amount unduly paid by Robert Enthoven only - R165 278,00 according to the statement of agreed facts. The appeal is accordingly upheld with costs in-cluding the costs of two counsel. The order of the court a quo is set aside. Substitutéd for it is the following order:

"Judgment is granted in favour of the plaintiff for

50.

1. payment of an amount of R165 278,00;

2. interest a tempore morae on the amount of R165 278,00 at the rate of 12% per annum;

(3) costs of suit including the costs of two
counsel."

J J F HEFER JA.

JOUBERT JA ) NIENABER JA ) CONCUR. KRIEGLER AJA )

CASE NUMBER: 71/90

IN THE SUPREME COURT OF SOUTH AFRICA (APPELLATE DIVISION)

In the matter between:

WILLIS FABER ENTHOVEN (EDMS) BPK Appellant

and

RECEIVER OF REVENUE First Respondent

THE REGISTRAR OF INSURANCE Second Respondent

CORAM: JOUBERT, HEFER, NIENABER, VAN DEN HEEVER JJA et KRIEGLER AJA

HEARD ON: 6 SEPTEMBER 1991

DELIVERED ON: 26 NOVEMBER 1991

JUDGMENT VAN DEN HEEVER JA

2

I respectfully agree with the conclusions of law arrived at by Hefer JA and that the claim based on payments by Willis Faber should fail. I, equally respectfully, disagree with the finding that Robert Enthoven's error was shown to have been excusable.

We are not dealing with a situation where the mistake relied on is one affecting only the rights of individual immediate parties to a relationship. What is in issue is the interpretation of a statute. One of the parties is the state, not in a one-to-one - say, for example, contractual - relationship with appellant, but the state in its more customary authoritarian guise applying a general law. The matter accordingly has a far more general dimension and affects both the state itself and large numbers of others who arrange or have arranged their affairs on a certain view of that law.

The citizen in his relationship with the state, though no longer expected to be legally omniscient, has a

3

duty to acquaint himself with the various laws or regulations applicable to the particular occupation in which he engages (per Friedman J in S v SAYED 1981 (1) SA 982 (C) at 990).

Although the test applied in the criminal law in assessing the culpability of a citizen's ignorance has refinements not relevant to the present matter, the cases following on R v DE BLOM 1977 (3) SA 513 (A) are instructive. The duty to take reasonable steps to discover the law is a real one. Mere casual enquiry will not suffice to excuse ignorance. (Cf S v LEHMBECKERS TRANSPORT (EDMS) BPK EN 'n ANDER 1989 (2) SA 53 (A).) The interests of the community as a whole require there to be certainty as to the law. I can think of no reason why the citizen should have a more onerous duty when his liberty is at stake than when it is merely his money that matters.

In my view telephonic enquiry from an unnamed

4

assistant registrar who referred Mr Vaux back to the 1972 circular, did not discharge appellant's duty where Mr Vaux was aware of the ambiguity in the Act and that the circular "was in my opinion not quite what the Act said". What, in all honesty, could any agent expect an official administering the law to say, other than that his view, shared and applied by his colleagues and predecessors for decades, is the correct one? To my mind the reasoning adopted in MILLER AND OTHERS v BELLVILLE MUNICIPALITY 1973 (1) SA 914 (C) at 919 H is realistic.

Nor does the fact recorded in the supplementary agreement, that brokers accepted the state's view for many years, take the matter any further. In the first instance we do not know why this was so. Was it easier and cheaper to pay up and shut up than to challenge that view - particularly since failure to pay might result in a criminal sanction? In any event the fact recorded in that supplementary agreement cannot assist appellant

5

where it did not inf luence Vaux and through him the

company:

"I think I did think about contacting other agents, but I do not think I ever got round to it. After speaking to the Registrar" - it should of course be "an assistant registrar" -"to me that was good enough.

Q: So you would not know what the attitude of the other agents would have been during the same time? - I do not know, I have no idea."

I would dismiss the appeal with costs.

L VAN DEN HEEVER JA

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