Subsequently, the aforementioned report entitled “Secure in Comfort” recommended that the President pay for the non-security upgrades at his homestead. Nonetheless and despite this report, Parliament’s ad hoc committee on the Nkandla matter (without the participation of opposition parties) conveniently concluded that the State would be unable to prove that President Zuma unduly benefited from the R246 million upgrade of his Nkandla homestead.
While there may be little appetite and precedent on the recovery of expenditure for presidential upgrades – or other unjustified and fruitless expenditure for that matter – this money may arguably and in the absence of effective accountable governance, be recovered by means of remedies available under the common law – more specifically that of the unjust enrichment action. However, importantly, this notion is only concerned with the principle that something is payable, and the question of the amount payable should be referred to an appropriate body for determination.
Unjust Enrichment
Unjust enrichment occurs when one person’s estate is increased unjustifiably at the expense of another. It has four elements, namely enrichment, impoverishment, without legal cause and causality – at the expense of someone else. The basic function of the law of unjustified enrichment is to restore economic benefits to the plaintiff, for her labours, at whose expense they were obtained and for which the retention by the defendant has no legal justification. Enrichment may be constituted by an increase in the defendant’s assets, which would not have taken place but for the enriching fact. The total package of the defendant’s assets and liabilities after the alleged enrichment occurred must be compared with what it was before the enriching act.
Defendant must have been enriched
Enrichment means that the defendant’s assets must increase and that this would not have happened but for the enriching act. When the enrichment consists of an increase in the market value of property, an unjustified enrichment action will succeed only where the increase is the result of tangible, useful improvements that were effected on the property. There must be a causal link between the enrichment and the plaintiff’s subsequent impoverishment.
Plaintiff must have been impoverished
The amount of the plaintiff’s claim is the amount by which the plaintiff has been impoverished or by which the defendant has been enriched, whichever is lesser. Every enrichment action must inquire into both the defendant’s enrichment and the plaintiff’s impoverishment. Impoverishment refers to a decrease or non-increase in the assets. It can also mean the increase or non-decrease in liabilities. So for example, expenses saved as a result of an unjustified alienation of property can reduce the plaintiff’s actual impoverishment.
The enrichment must be unjustified
There must be no sufficient legal ground to justify the transfer or retention of value which has passed from the plaintiff’s estate to that of the defendant.
Defences
Where there is legal justification for enrichment, then an enrichment claim will fail. This means that where there is a valid contract, ‘understandings’ or ‘arrangements’ between parties, there can be no claim for unjustified enrichment. Where legislation provides justification for retaining enrichment, then the unjustified enrichment claim will also fail. The law has to be clear that the respondent is entitled to the enrichment.
Unjustified enrichment and the likes of Nkandla
Despite the ad hoc Parliamentary Committee’s failure to ascribe liability to the President for the security upgrades, from the discussion above, it is clear that a case for unjustified enrichment under common law can be made against the President. The Public Protector’s report found that non-security upgrades at the President’s homestead included a swimming pool, a cattle kraal and an amphitheatre. The report further found that the President’s immediate family improperly benefited from the measures implemented in the name of security, which included non-security comforts such as the visitors’ centre, the cattle kraal, and chicken run. A private medical clinic, also built, would benefit the family forever. The funding for the construction by the Department of Public Works was ostensibly at the request of the South African Police Service and the Department of Defence, but, according to the report, with the tacit approval of the President. In principle, section 96(2) of the Constitution states that members of the Cabinet and deputy ministers may not use their position “to enrich themselves or improperly benefit any other person“. In turn, section 195(1)(b) of the Constitution requires the promotion of “efficient, economic and effective use of resources” by public administration. Neither of these sections, nor the Public Finance Management Act, seemed to have mattered in this case. This represents misappropriation of public funds of which the South African fiscus, primarily supported by the taxpayer, is made the poorer. The fourth element of the unjustified enrichment action requires the enrichment to have no legal basis. The absence of any laws permitting non-security upgrades to the Presidential homestead using public funds means that there is no legal justification in the use of public funds for the non-security upgrades.
Having established, at face value, a case for the common law action of unjustified enrichment, the question is, what happens next? South African courts tend to balance the interests of the parties in determining the preconditions for and measures of relief. Improvements to property must be valued and the test is objective, which means a market- related value is determined. However, in exceptional cases, the courts have adopted a subjective approach, which takes into account the actual benefit of the improvements from the respondent’s perspective. In determining the plaintiff’s (the South African taxpayer) impoverishment, it is accepted that in general, the latter is only entitled to actual expenditures and not to any profit for labour. The Special Investigations Unit (SIU) is reportedly pursuing a claim for unjustified enrichment against the architect responsible for the construction. However, the unjustified enrichment action should, in effect, be pursued against all parties and individuals that unduly benefited from the R246 million upgrade of the Nkandla homestead. Hence, in the absence of accountable, responsive and open governance, but also the apparent unwillingness to address the results of such governance through effective oversight and executive action, perhaps the instruction to “pay back the money” should be coming from the Courts.
Phephelaphi Dube: Legal Officer, Centre for Constitutional Rights
[Photo credit: mg.co.za ]
