Afrisure CC and Another v Watson NO and Another

Publiserve Healthcare Scheme, a medical scheme under the Medical Schemes Act 131 of 1998, became insolvent and was wound up in May 2001. Prior to liquidation, Publiserve made five payments totalling R5 454 636.50 to Afrisure CC, an accredited broker and alter ego of its sole member, Mr Ettienne de Villiers, who was also a trustee of Publiserve during part of the relevant period. The payments were made pursuant to a proposal under which Afrisure introduced approximately 6 750 members to Publiserve and received broker’s commissions and ongoing monthly ‘service fees’. After liquidation, the liquidator, Mr Watson, sued Afrisure for repayment of the amounts on the basis of unjustified enrichment, alleging that the payments were illegal as they contravened the Medical Schemes Act and regulations, were in fraudem legis, and/or were made by mistake. In addition, Watson sued De Villiers personally for damages on the basis that he breached his fiduciary duties as a trustee by causing or permitting these illegal payments.

The appeals by both Afrisure CC and De Villiers were dismissed. They were held jointly and severally liable to repay R5 454 636.50, together with interest and costs, including the costs of two counsel.

The case is significant for clarifying the application of unjustified enrichment remedies, particularly the condictio ob turpem vel iniustam causam, in the context of statutory illegality. It affirms that schemes structured to evade statutory limits under the Medical Schemes Act are unlawful and recoverable, and that courts may relax the par delictum rule to protect insolvent estates and creditors. The judgment also underscores the strict fiduciary duties of trustees of medical schemes and their potential personal liability for unlawful payments.