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[2019] ZAECPEHC 41
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Jurgens and Another v Volschenk (4067/18) [2019] ZAECPEHC 41 (27 June 2019)
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE LOCAL DIVISION, PORT ELIZABETH)
Case No: 4067/18
In
the matter between:
BEN
ADRIAN JURGENS
First
Applicant
WENDY
JURGENS
.
Second
Applicant
and
LYNETTE
VOLSCHENK
Respondent
JUDGMENT
TOKOTA
J:
[1]
The applicants seek an order for the payment of damages in the amount
of R967 510.53
from the respondent, an attorney and a
conveyancer who was mandated to sell their property. The amount
claimed is the net amount
resulting from the sale of their property.
At the time the mandate was given they were in the Republic of South
Africa. They subsequently
emigrated to the United States of America.
The claim is resisted by the respondent on the basis that she was not
negligent in any
manner.
Factual
background:
[2]
The applicants have since relocated to the United States of America.
The material
facts are largely common cause or not seriously
disputed. Prior to their emigration and during April 2017 the
applicants instructed
the respondent, a conveyancer, to effect
transfer of one of the applicants’ properties situated at
Bogonia Street, Uitenhage.
The transfer was successful and the
applicants were duly paid the proceeds of the sale using their
Standard Bank account which
they had furnished to the respondent.
[3]
The applicants were the joint owners of Erf 6496 situated at 11
Couldridge Crescent,
Jansedal, Uitenhage. During October 2017 they
appointed the respondent to act as their conveyancer in the sale of
the said property.
As the applicants were intending to relocate to
the United States of America they expected the sate transaction to be
finalised
before their departure.
[4]
On 13 December 2017 the first applicant (hereinafter referred to as
Jurgens) received
an email from one Natasha Viviers (Natasha), the
respondent’s secretary, advising him that the transfer papers
of the property
had been lodged with the Deeds Office the previous
day. On the same day Jurgens advised Natasha that the proceeds of the
property
should be transferred into his Standard Bank account, which
was previously used in the Bogonia property. He assumed that since
there was a previous transfer of money into that account the
respondent was in possession thereof.
[5]
On 14 December 2017 Jurgens received an email purporting to be from
Natasha requesting
proof of the account number in Standard Bank.
Unbeknown to Jurgens that this was a hacked email address he
responded thereto by
furnishing his bank account number. Since this
email address was different from the one he knew as that of Natasha,
he also forwarded
the details to the legitimate email address of
Natasha. At all times, when dealing with Natasha, Jurgens always
copied the respondent
all the correspondence between him and Natasha.
[6]
On 15 December 2017, using both the hacked and legitimate addresses,
Jurgens enquired
as to when he could expect payment of the proceeds
of the sale.
On
18 December 2017, Natasha responded and informed Jurgens via email
that the transaction had yet to come for registration. Natasha’s
hacked address, together with that of the respondent, was included in
the correspondence. On 21 December 2017, Jurgens received
an email
from Natasha’s hacked email address to which a registration
letter, final account and proof of payment were enclosed.
Jurgens was
requested to direct any further correspondence to the hacked email
address since the offices were to be closed for
holiday.
[7]
Proof of payment aforesaid reflected transfer of the proceeds from
respondent’s Nedbank account to Jurgens’ Standard
Bank
account.
[8]
On 26 December 2017 Jurgens addressed an email to the respondent
advising her that
he had not yet received the money notwithstanding
the purported proof of payment dated 21 December 2017.
[9]
On 27 December 2017 Jurgens sought clarification from Nedbank and
copied such email
to both the respondent and Natasha. Following that
the respondent advised Jurgens that the emails between his and that
of Natasha
had been hacked. Apparently, his email address had been
hacked and was used to furnish the Absa bank account to Natasha. The
applicants
did not have any account with Absa Bank.
[10]
The respondent alleges that she was not aware that Jurgens’
address had been hacked. On
a Friday the 15
th
of December
2017 Natasha received an email purporting to be from Jurgens advising
her that the money should be deposited in “his”
interest
bearing account with Absa Bank details which would be furnished on
the following Monday.
[11]
On Monday 18 December 2017 Natasha received two documents purporting
to be from Jurgens. These
were a letter confirming that Jurgens had
an account with Absa Bank and a “statement” purporting to
have been drawn
from the account.
[12]
On Friday 20 December 2017 the purchaser’s bond attorneys paid
into the trust account of
the respondent a sum of R850 000 being
the balance of the purchase price of the property. On 21 December
2017, the respondent
went to the office to effect transfer of the
money to the applicants. The bank account of Jurgens appeared to have
been amended
to be that of Absa Bank. After payment was effected
proof of payment was forwarded to the hackers. The hackers then
amended proof
of payment into the legitimate Standard Bank account of
Jurgens and forwarded the same to him together with legitimate
registration
letter and final statement of account.
[13]
Jurgens did not receive any money as expected. He then made enquiries
with NedBank, where the
account of the respondent was kept, as to why
the money had not been paid. It was then that it was discovered that
fraud had been
perpetrated. By that time it was too late
because the balance left at Absa Bank was R65 584.21 of the
R967 510.53
amount paid.
[14]
In view of the above the applicants did not receive the money of the
proceeds of the sale of
their property. They hold the respondent
liable for the loss in that they allege that after an agreement was
concluded that she
would act on their behalf she owed them a duty of
care and that she was negligent in paying the amount to the hackers
and that
such negligence caused the loss.
[15]
The respondent denies that she was negligent in any manner. She
admits that she owed the applicants
a duty of care to ensure that her
mandate was carried out with due care, skill, and diligence but avers
that she indeed carried
out the mandate with due care, skill and
diligence expected of a reasonable attorney and a conveyancer in the
circumstances.
[16]
Attorney’s profession is an honourable profession which demands
complete reliability and
integrity from the members thereof. It is,
therefore, the duty of an individual attorney to ensure, as far as
she/he is able to
do so, that he/she measures up to the high
standards demanded of him/her. A client who entrusts his affairs to
an attorney must
be able to be rest assured that the attorney
concerned is an honourable man who can be trusted to manage his
affairs meticulously
in the interests of the client. When money comes
to an attorney to be held in trust, the general public is entitled to
expect that
that money will not be distributed for any other purpose
than that for which it is being held, and that it will be available
to
be paid to the persons on whose behalf it is held whenever it is
required.
[17]
Van Zyl in his work
Judicial Practice of South Africa 4th ed:
says
“
The law
extracts from an attorney uberrima fides — that is, the highest
possible degree of good faith. He must manifest in
all business
matters an inflexible regard for truth; there must be a vigorous
accuracy in minutiae, a high sense of honour and
incorruptible
integrity; he must serve his client faithfully and diligently.”
[18]
If regard is had to paragraphs 15 and 16 of the applicants’
founding affidavit the claim
by the applicants is based purely on
contract of mandate which they had entered into with the respondent.
[19]
In
Lillicrap, Wassenaar and Partners v Pilkington Brothers (SA)
(Pty) Ltd
1985 (1) SA 475
(A),
Grosskopf AJA stated the
following at 499D – E.
“
In the present
case we do not have an infringement of any of the respondent's rights
of property or person. The only infringement
of which the respondent
complains is the infringement of the appellant's contractual duty to
perform specific professional work
with due diligence; and the
damages which the respondent claims, are those which would place it
in the position it would have occupied
if the contract had been
properly performed.”
The
learned Judge of Appeal concluded at 499A-501H that he considered
that policy considerations militated strongly against delictual
liability being imposed for the negligent breach of a contract. He
stated:
'In applying the test of reasonableness to the facts of
the present case, the first consideration to be borne in mind is that
the
respondent does not contend that the appellant would have been
under a duty to the respondent to exercise diligence if no contract
had been concluded requiring it to perform professional
services.'
The
applicants’ main contention is that the respondent, being a
conveyancer, failed to execute the necessary diligence, skill
and
care required of a reasonable attorney as contemplated in their
agreement.
[1]
[20]
In
Margalit v Standard Bank of SA Ltd
2013 (2) SA 466
(SCA)
para.23
Leach JA said:
“
[23]
A
conveyancer is of course 'an attorney who has specialized in the
preparation of deeds and documents which by law or custom are
registerable in a deeds office and who is permitted to do so after
practical examination and admission . . .'.Like any other
professional,
a conveyancer may make mistakes. But not every mistake
is to be equated with negligence, and in a claim against a
conveyancer based
on negligence it must be shown that the
conveyancer's mistake resulted from a failure to exercise that degree
of skill and care
that would have been exercised by a reasonable
conveyancer in the same position. As was remarked many years ago by
De Villiers
CJ, in a dictum recently followed by this court:
'I do not dispute the
doctrine that an attorney is liable for negligence and want of skill.
Every attorney is supposed to be reasonably
proficient in his
calling, and if he does not bestow sufficient care and attention, in
the conduct of business entrusted to him,
he is liable; and where
this is proved the Court will give damages against him.'”
[21]
The court has to determine in the light of the facts of this case
whether or not the respondent
was negligent in the performance of her
mandate resulting in the loss sustained by the applicants.
[22]
An attorney will be liable to his/her client for damages suffered as
a result of his negligence
in the performance of his mandate. This
liability is based on the breach of contract between the parties. It
is a term of the mandate
that the attorney concerned will execute the
mandate by exercising his skill, adequate knowledge and diligence
expected of an average
practising attorney. He may be held liable
even when he committed an error of judgment on matters of discretion
if the attorney
failed to exercise the skill, knowledge and
diligence.
[2]
[23]
It has been held that expert evidence needs to be led which would
prove what a conveyancer in
the position of the respondent, faced
with a similar case under similar circumstances, would have done but
failed to so act with
the necessary care, skill and diligence which
would ordinarily be expected from a reasonable attorney.
[3]
However, this rule is not inflexible. It depends on the facts and
nature of the case.
[24]
In
Margalit
supra
[4]
the learned Judge of Appeal put it aptly as follows:
“
[24] Although
at times a court may need expert evidence on a particular
professional practice to determine whether a professional
person
acted negligently, that is not a fixed and inflexible rule and the
views of a professional, while often helpful, are not
necessarily
decisive. The nature of the conduct complained of may well be such
that a court, even without the benefit of professional
opinion, may
determine that the conduct complained of was of such a nature that it
clearly falls below the mark of what can be
regarded as reasonable.
This, in my view, is such a case (I should mention that the expert
evidence called by the parties in this
case, while extremely helpful
in explaining the mysteries of certain procedures in the deeds
office, did not deal pertinently with
all the issues relevant to the
second respondent's negligence).”
[25]
The applicants entrusted their affairs to the respondent. She was
furnished with the Standard
Bank account in the previous dealings
with her and in this matter. It was, therefore, encumbent upon the
respondent to verify the
sudden change of the bank account. The
account was furnished within a short space of time. On 14 December
2017 Jurgens furnished
his Standard Bank account and on 15 December
2017, the following day, another account different from the first one
was furnished
by the hackers.
[26]
The furnishing of different banking institution within such short
space of time should have raised
eyebrows to the respondent. First,
the statement which purported to be from Absa Bank did not have names
and addresses of the account
holder. Second, most of the transactions
in the statement were made in Gauteng in places such as Cresta,
Centurion, Randburg and
Fourways and cash deposits made in respect of
Sotho speaking people. Third, the sudden change of banking
institution was made a
day after the Standard Bank account was given.
A diligent, reasonable attorney would have taken steps to verify the
information
from Jurgens. The respondent failed to do so. It is no
defence to pass the buck to her secretary and state that the account
was
dictated to her by her secretary. She owed a duty to her clients
to act in their interests and safeguard their money. In my view,
a
reasonable attorney in her position would have exercised more care
under the circumstances outlined above. She failed to do so
and the
applicants suffered loss as a result of her negligence.
[27]
When the respondent entrusted the management of the applicants’
affairs to her secretary
she had a duty to ensure proper supervision
and control in order to safeguard her clients’ money. When a
client instructs
and an attorney accepts instructions to perform
certain services for that client, there arises an implied term in the
agreement
between attorney and client, that the attorney will perform
the services required in a professional, non-negligent manner. This
duty arises as a matter of law.
[28]
The amount claimed is not in dispute. It follows therefore that if I
find in favour of the applicants
the respondent must be ordered to
pay the amount claimed. There was a faint argument on behalf of the
respondent that the claim
should have been brought by an action. This
point was not pertinently raised in the papers, correctly so in my
view. The facts
of the case are common cause. The issue was whether
the respondent acted negligently when she paid the amount to a wrong
person.
The amount claimed is not disputed.
[29]
The applicants have claimed interest on the amount from the 20
th
of December 2017 to date of payment. In the circumstances of this
case I do not think it will be fair to the respondent to pay
interest
from that date. I am of the opinion that since she has only been
found to be liable by this Court justice will be served
if she is
ordered to pay interest from the date of the order.
[30]
In the premises the application should succeed. The usual rule is
that costs should follow the
event unless there are exceptional
circumstances justifying a departure from the rule. I can see none.
[31]
In the result the following order is made.
1.
The respondent is declared liable to the applicants for the payment
of R967 510.53
and is ordered to pay to the applicant the said
amount;
2.
The respondent is ordered to pay interest on the amount stated above
to be calculated
at the rate of 10.25% from the date of this
judgment to date of payment.
3.
The respondent is ordered to pay costs of this application.
B
R TOKOTA
JUDGE
OF THE HIGH COURT
Appearances:
For
the applicant:
B Dyke SC
instructed
by: Goldberg & devilliers Inc.
For
the respondent:
A C Barnet
Instructed
by:
Lynette @law
Date
of hearing: 13
June 2019.
Date
judgment delivered: 27 June 2019.
[1]
See
also Holtzhausen v Absa Bank Ltd
2008 (5) SA 630
(SCA) para.6
[2]
Bruce NO v Berman
1963 (3) SA 21
(T) at 23G; Mouton v Die
Mynwerkersunie
1977 (1) SA 119
(A) at142H; Thoroughbred
Breeders' Assoc v Price Waterhouse 2001 (4) SA 551 (SCA)
[3]
Steyn
NO v Ronald Bobroff & Partners
2013 (2) SA 311
(SCA)
para.27
[4]
Para 24.