Buzzard Electrical v 158 Jan Smuts Avenue Investments 1996 (4) SA 19 (A)

OVERVIEW

Whether the owner of a property is unduly enriched by improvements made to his/her property by a contractor who has concluded an agreement with a third party for the work.

FACTS

158 Jan Smuts Avenue Investments is an investment company that owned a plot in Johannesburg. It hired a contracting company to develop that plot. That company subcontracted the electrical work to Buzzard Electrical. Buzzard Electrical completed the work of the plot which had brought about necessary or useful improvements equal in value to the contract work sum with the original contractor.

The contractor company was then placed in liquidation. Initially, Buzzard Electrical stayed on the property claiming a builder's lien over the property because the owner had been unjustifiably enriched. The parties agreed that Buzzard should vacate the plot, and that Buzzard would be paid if the owner was subsequently held liable. Buzzard left the plot and brought at action of unjustified enrichment to the Transvaal Local Division of the Supreme Court(now South Gauteng High Court, Johannesburg).

Finding that it was bound by the decision of the full bench in Gouws v Jester Pools (Pty) Ltd 1963 (3) SA 563 (T)[link to summary:goo.gl/Ub6dzf  ], the court upheld an exception raised by the investment company that, in fact it was the owner who was contractually obliged pay the contractor and therefore any enrichment was at the expense of the contractor company and not Buzzard.

On appeal, the Appellate Division held that the owner received nothing more that he/she had contracted with the original contractor. The subcontractor could have enforced his contractual rights against the original developer. The contract with the original contractor was the causa of the enrichment of the owner and therefore the enrichment of the owner was not sine causa.

PRECEDENT

Where an owner contracts out the improvements to his property to a contractor and that contractor sub-contracts out the work to be done, this subcontractor (the third party) cannot claim the enrichment is unjustified as the causa is the contract between the owner and the original contractor.

This is contrasted with the situation in Gouws v Jester Pools (Pty) Ltd 1968 (3) SA 63 (T) [link to summary:goo.gl/Ub6dzf ] where the contract between the developer and subcontractor were not as a result of an initial contract with the owner, a scenario on which this court left undecided.