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2024
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[2024] ZAFSHC 170
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Fortein N.O. v Iprop Trading CC (A70/2023) [2024] ZAFSHC 170 (17 May 2024)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
redacted from this document in compliance with the law
and
SAFLII
Policy
FLYNOTES:
CIVIL
LAW – Duty of care –
Cybercrime
–
Business
email compromise – Auctioneer purchased property from
insolvent estate – Making payment to incorrect
account due
to intercepted email – Obligation on purchaser to ensure
that bank account details are correct and that
payment is made to
seller and not to unknown third party – Failure to do so and
payment made into incorrect account
– Incorrect payment does
not extinguish purchaser's obligation and liability to pay debt.
IN
THE HIGH COURT OF SOUTH AFRICA
FREE
STATE DIVISION, BLOEMFONTEIN
Reportable: YES/NO
Of Interest to other
Judges: YES/NO
Circulate to
Magistrates: YES/NO
Appeal number : A70/2023
In
the appeal between:
KARIN
FORTEIN
N.O.
Appellant
And
IPROP
TRADING
CC
Respondent
(Registration
Number: [...])
CORAM:
MBHELE,
DJP
et
VANZYL,
J
JUDGMENT
BY:
VANZYL, J
HEARD'ON:
23 NOVEMBER 2023
DELIVERED
ON:
17 MAY 2024
[1]This
is an appeal against an order made in the Magistrate's Court,
Bloemfontein,
in
an action wherein the
appellant
was
the plaintiff and the respondent was the defendant.
Background:
[2]
The appellant acted
in her capacity as trustee of an insolvent estate of PHR Bornman
("the insolvent estate") and the
respondent is an auction
house.
[3]
The first claim (“the
first claim") against the respondent was for payment in the
amount of R58 250.00 in terms of an
agreement concluded between the
parties
.
The respondent denied
that it failed to comply with the terms of the agreement and pleaded
that the amount of R58 250.00 was paid
into the bank account of which
the details were received via e-mail from the appellant.
[4]
In a claim in the
alternative to the first claim ("the alternative claim"),
the appellant averred that the respondent
or its employees, acting
within the scope of their employment with the respondent, had been
negligent in failing to take reasonable
care in ensuring that payment
was made into the correct bank account.
The respondent denied
same, pleading that the appellant had a legal duty to deal with money
of the insolvent estate without negligence
and was further obliged to
exercise the skill, adequate knowledge and diligence expected of an
insolvency trustee. She further
failed to have adequate risk
mitigation and avoidance measures in place to deal with cyber related
risks, despite having been warned
about cyber related risks that were
on the increase.
As
a result, the appellant suffered damages in the amount of R58 250.00.
[5]
In the second claim
the appellant sought delivery of 530 Norton metal
grinder
blades,
alternatively
payment
of
the
amount
of R26 500.00, from
the respondent.
The
respondent pleaded that it was in possession of the said grinder
blades in terms of a mandate thereto received from the appellant
and the appellant has
at no stage cancelled the respondent's
mandate
or requested
return of the blades.
[6]
The court a
quo
dismissed
both the first claim and the alternative claim.
[7]
With regard to the
second claim, the respondent was ordered to return the metal grinder
blades to the appellant, alternatively,
to pay the amount of R26
500.00 to the appellant within a reasonable time from date of the
order. This appeal is, however, not
directed at the second claim and
I will consequently
not
deal with it any further.
[8]
The court a
quo
ordered
that each party was to pay its own costs.
Notice
of appeal:
[9]
The grounds of appeal
as contained in
the
notice of appeal are
the
following:
"3.
The Honourable
Presiding Magistrate erred in
finding:
3.1
That there was no
contractual relationship between the parties, that needed to be
adjudicated;
3.1.1
Especially that the
Respondent; as Defendant in the Court a
quo,
did
perform in terms of the agreement between the parties;
3.2
In finding that
-the
personnel,
acting on behalf of the Respondent
(Defendant in the
Court a
quo),
was not
negligent in making payment into an incorrect account;
3.3
That a higher duty of
care rested on the Plaintiff and the Plaintiffs representatives, than
an ordinary person -
as
one of the Plaintiffs personnel is an admitted attorney -
although such person
did not act as an admitted attorney, in his dealings with the
Respondent;
3.4
In not finding that
the preponderance of probabilities, on the evidence led, favoured the
Appellant (Plaintiff in the Court a
quo)
and
not the Respondent (Defendant in the Court a
quo);
3.5
In not finding that
the Respondent (Defendant in the Court a
quo)
at least
had a duty of care, to have its own systems
verified as not being
'hacked' or contaminated by malware;
3.6
In that the Appellant
(Plaintiff in the Court a quo) being the creditor who should have
received the monies, should have approached
the South African Police
Service to open a criminal case;
3.7
In failing to find
that the Appellant proved her case on a preponderance of
probabilities.
4.
THE LEARNED
MAGISTRATE
OUGHT
TO HAVE FOUND THAT:
4.1
There was a
contractual agreement between the parties, the Respondent (Defendant
in the Court a
quo)
did not
perform in terms of such contractual agreement, in not making payment
to the Appellant (Plaintiff in the Court a quo);
4.2
The personnel of the
Respondent (Defendant
in
the Court a
quo)
was
negligent, in not confirming banking details, of the Plaintiff,
before making payment into an alleged fraudulent account;
4.3
Respondent (Defendant
in the Court a
quo)
had the
duty, as debtor, who made the payment
into
a fraudulent
account, to open a criminal case with the South African Police
Service;
4.4
No extra duty of care
rested on the Appellant in ensuring that payment was made into the
correct account, the Appellant
being the debtor in
the matter before Court
;
4.5
The Appellant was
substantially
successful
with Claim 2 against
the Respondent and should be awarded costs for the action.
Evidence
on behalf of the appellant:
Luke
Fortein:
[10]
Mr Fortein testified that although he is not in the employment of
Karen Fortein Incorporated, he has been assisting the appellant
as an
insolvent consultant. He only converted to practicing as an attorney
in March 2022.
[11]
The respondent
is an auctioneer.
[12]
He testified that the
respondent offered to purchase certain movable property from the
insolvent estate, the goods and the amount
as
specified
in
the
e-mails
attached
to
the
amended particulars
of claim ("the particulars of claim") as annexures "B1"
and "B2" respectively,
in the total amount of R58 250.00.
These e mails
were addressed between Marjoli Engelbrecht, the Financial Department
Manager of the respondent, and Mr Fortein,
with the appellant
included in the said e-mails.
[13]
On 9 October 2020 Mr
Fortein addressed an e-mail to Ms Engelbrecht
confirming
that the Master
consented to the sale
of the movables in the amount of R58 250.00 and further stated as
follows:
"Please
find attached a copy of the estate banking details for purposes of
payment of the purchase price.
Kindly
provide us a copy of the proof of payment once payment has been
made".
[14]
This e-mail
is attached
to the particulars
of claim as Annexure
"C1". According to Mr Fortein a document was attached to
the said e-mail containing the banking details
of the insolvent
estate at Standard Bank
of
South Africa, attached to the particulars of claim as annexure "C2".
The e-mail was sent by Mr
.
fortein
to Ms Engelbrecht and once again it was also marked for the attention
of the appellant.
[15]
It is
common cause between
the parties that the appellant did
not receive the
payment and when the respondent provided the appellant with the email
proof of payment, Annexure "13"
to the respondent's
amended
plea
("plea"),
it
was
evident
that
the
payment was made into a
different banking account
·at
a different bank
(First
National
Bank)
than the
details
which
were
(meant
to have been)
attached to the e-mail of Mr Fortein to Ms Engelbrecht
•
(Annexures
"C1" and "C2").
[16]
Mr Fortein was
referred to annexures "11" and "12" attached to
the respondent's plea and it was indicated on
behalf of the appellant
that those were the two e-mails with the banking details which Ms
Engelbrecht received for Mr Fortein and
not Annexures "C1"
and C2" to the particulars of claim. According to Mr Fortein
that was not the e-mail and banking
account details which he sent to
Ms Engelbrecht.
[17]
According to Mr
Fortein it was a term of the agreement that the respondent would pay
the money into the account elected by the appellant,
being the
Standard Bank account.
[18]
.
Mr
Fortein was never contacted by anyone on behalf of the respondent to
confirm the banking details of the insolvent estate.
[19]
The respondent,
according to Mr Fortein, did not comply with its obligations in terms
of the agreement, since it did not make payment
into the elected
Standard Bank account.
[20]
In cross-examination
Mr Fortein testified that he cannot deny if it is the respondent's
version that it did not receive annexures
"C1" and "C2"
attached to the particulars of claim but instead thereof
received
annexures "11"
and
"12"
attached to
the
respondent's plea. He, however,
persisted
with his version that
he did not send the e -
mails,
annexures "11" and "12" attached to the plea, to
Ms Engelbrecht.
[21]
When the email
received by Ms Engelbrecht,
Annexure "11"
and the e-mail which Mr Fortein sent, Annexure
"C1", were
compared
to
each other, it was evident that they were similar and both were
incorrectly
addressed
to "Marjolie",
whilst
Ms Engelbrecht's name is
spelled
"Marjoli"
Both
e-mails
also
reflected
the
same
e-mail
"signature"
of
Mr
Fortein.
The
only
difference
was
that
the appellant was
included in the email Annexure "C1", but not so with
Annexure "I1". Questions were also asked
about the spacing
of the e-mail, "11", as opposed to the spacing of the
e-mail "C1", which differ from one
another.
However, this line of
questioning was not really taken any further.
[22]
Mr Fortein conceded
that it was not stated in the e-mail he sent nor in the e-mail which
the respondent received that the respondent
should call the appellant
to confirm the banking details.
[23]
Mr Fortein testified
that he believes that the duty to have confirmed the banking details
was the responsibility of the respondent.
Mr Fortein further
testified that he was aware of cyber-crime,
but that it was not
his duty to have advised the respondent to confirm the banking
details telephonically
.
As representative of
the insolvent estate he fulfilled his duty to make sure that he
receives the money by having sent the correct
banking details to the
respondent.
[24]
Mr Fortein denied
that there was a duty on the appellant to have reported
this
matter
to
the
police,
because
the
appellant
was
not
the
one who
made
the payment,
so he would
not have been
able to give the
necessary information to the bank.
Jason
Jordaan:
[25]
Mr Jordaan testified as an
expert in the field of digital forensics and referred in his evidence
to his forensic affidavit.
[26]
He testified that he
investigated the computer system of the appellant and that he could
not find any evidence of e-mail filtering
or forwarding rules
associated with these types of business e-mail compromise frauds.
He, however,
confirmed that it is not to say that such evidence was not present at
the time when the e-mail
was
sent in October
2020,
since cyber
criminals
are able to remove
any evidence within minutes after the crime.
[27]
There was no evidence
that the e-mail and banking details which were received by the
respondent, annexures "11" and "12",
was sent by
the appellant or the appellant's representative.
There was also no
evidence that the appellant's e-mail account had been compromised in
any way.
[28]
He could not testify
as to whether the falsified e-mails, annexures "11" and
"12", had been received by the
respondent.
He did not have
access to the respondent's server and computer system.
[29]
In his opinion it
appears that the hacking did not take place on Mr Fortein's
side and in the
absence of any evidence to the contrary, he
would
draw
the
inference
that
the
hacking
may
have
taken
place
on
the
respondent's
side. However,
he
cannot
infer
that without having
examined respondenf s computer systems too.
[30]
He further testified
that he was not aware that the respondent, by notice, allowed the
appellant or her expert access to inspect
the respondent's computer
and e-mail servers during October 2021
.
The appellant
never made him aware of such a notice.
[31]
When
it
was
put
to
Mr
Jordaan
that
Ms
Engelbrecht
of
the respondent
is going
to testify
that
when
she
received
the
e-mail, she
specifically checked whether it was indeed received from Mr Fortein's
e-mail.
She
picked up that her name was spelled
wrongly, similarly to
previous emails she received from Mr Fortein. The e-mail "signature"
and address of Mr Fortein were
also the same as previously
.
That is why
she was satisfied that she can act upon those banking details and
make the payment.
Mr
Jordaan confirmed that he accepts that version, because usually the
fraudulent e-mail would look legitimate.
[32]
Mr Jordaan further
testified that.the level of this type of fraud is extremely
high in South Africa.
He has personal
knowledge
thereof
that the Law Society of South Africa has been highlighting this
problem and has actually issued a number of warning notices
or
directives as to this risk.
Karen
Fortein
:
[33]
Ms Fortein testified
that she was aware of the risk of cyber-crime, but that she does not
agree that it is necessary
to
request anybody to confirm banking details which she provides, before
they make a payment.
According
to her it was the respondent's duty to have ensured the correctness
of the banking details.
[34]
Ms Fortein testified
and confirmed that the money which should have been paid by the
respondent to the appellant was never received
by the appellant.
Evidence
on behalf of the respondent:
Marjoli
Engelbrecht:
[35]
Ms Engelbrecht is the
Financial Department Manager of the respondent.
[36]
She testified
that
.
when
she received the e-mail dated 9 October 2020, annexures "11"
and "12" to the plea, she
-
had
no reason to doubt that the e-mail was indeed from Mr Fortein, since
the e-mail address and 11signature" were the same
as previous
communications and what further satisfied her
·
in
this regard is that Mr Fortein spelled her name incorrectly
by adding an "e"
on the end, like he did in previous
e-mails which he sent
to her.
[37]
The account details
which was reflected on the e-mail, annexure “11” and “12"
to the plea, was that of a
First National Bank account.
The respondent made
the payment into that First National Bank
account and
afterwards she provided the proof of payment thereof, annexure "13"
to the plea, to Mr Fortein upon his request
thereto.
[38]
She confirms that
there was a request on behalf of the appellant to have access to the
respondent's computer system.
It,
however, never materialized.
[39]
She further testified
that the respondent offered to assist the appellant by going to the
bank, but that did not materialize either.
[40]
Ms Engelbrecht agreed
that the appellant had not received the payment which the respondent
made into the First National Bank account.
[41]
She testified that
she was not responsible for making the actual payments.
One
Nelis
van Tonder
"usually
confirmed and made the payment, so I did not make the payment'.
In her further
evidence she explained it differently by stating that when she has to
make a payment, when she receives an invoice,
she hands it over to Mr
van Tonder, who
confirms the payment and
"that
is when I will make the payment'.
[42]
With reference to the
strange spacing of annexure “11” to the plea, Ms
Engelbrecht testified that she did not notice
it when she received
the e-mail.
This
issue was, however, never cleared up during further cross-examination
or re-examination.
[43]
Ms Engelbrecht agreed
that it was the duty of the respondent to have opened a case at the
South African Police Service regarding
the incident.
[44]
Ms Engelbrecht had no
knowledge of cyber-crime and this incident was the first time she
became aware of risks caused by cyber
crime and since then she
has been confirming banking details before she makes a payment.
[45]
The respondent never
appointed an expert to conduct a forensic investigation of its
computer systems after the incident.
[46]
It was put to Ms
Engelbrecht during cross-examination that according to the appellant,
since the respondent was the one to make
the payment, she should have
acted like a reasonable
person
and have confirmed the banking details telephonically before she made
the payment.
Ms
Engelbrecht agreed and again testified that since the incident and
since she has become aware of cyber-crime, she has been doing
it like
that.
[47]
Ms Engelbrecht
admitted that it
would have been impossible
for
the appellant to
ensure that payment is correctly made.
[48]
Ms Engelbrecht also
confirmed that the payment the respondent made was not received by
the appellant since it was made into a fraudulent/incorrect
bank
account.
Findings
by the court a quo:
[49]
The court a
quo
stated as
follows at paragraph 6 of the judgment
"6.
In
this
matter
there
are
a
few
issues
which
are
common
cause
as
gleaned
from
the
evidence,
namely:
That
payment
was
made
by
the Defendant, that
the payment was into the incorrect account, that the e mail
received was different to the e-mail sent.
Neither party
approached the police
or the banks to open a case for investigation."
[50]
With regard to the
evidence presented,
the
court stated as follows at paragraph 8 of the judgment:
"8.
It should also be
mentioned that all the witnesses herein were clear in their evidence
and the facts
of the matter
regarding
claim 1
is clear. The
court did not see any
witness as being confused
regarding the facts
and no real dispute can be drawn regarding the facts presented before
court
"
[51]
In respect
of the first
claim,
the contractual
claim,
the court
a
quo
found
as follows at paragraph 9 of the judgment:
"9.
The Plaintiffs claim
regarding
claim
1 ('the monies')
is
shrouded
in
a claim that the monies was never paid but there was not sufficient
evidence brought to sustain this claim
.
The alternative in
claim 1 is that the Defendant
was
negligent
in
that they
did
not take reasonable
care
to ensure that the amount of R58 250.00 was paid
.
Most of the evidence
led by the Plaintiff and testimony of the parties rely on this
alternate claim and this deserves further scrutiny".
[52]
With
regard
to
the
alternative
claim,
the
court
a
quo
stated
as follows at
paragraph 20 of the judgment:
"20.
In the matter at
hand, bearing in mind the aforementioned precedent case
,
I did not
regard the versions
of
the witnesses
of
the two respective parties, regarding the facts of the matter, to be
particularly in dispute.
All
are
in
agreement
that
the
accounts
were
hacked,
that payment was made
but it was made into a fraudulent account provided by those who had
hacked the e-mails".
[53]
The court
a
quo
dealt,
inter
alia,
with
the following
authority
in its judgment:
"10.
The
plaintiff relied on
the case of
Galactic
Auto (Pty) Ltd v Venter (4052/2017) [2019] ZALMPPC 27
wherein
the Court decided in favour of the Plaintiff
and said:
the duty to make
sure payment
is made into the
correct account rests on the person making payment (Debtor)
.
There is also a great
deal of further precedent dealing with similar facts and the Court
also had to ensure a thorough reading of
all cases.
11.
The matters of
Fourie v Van der Spuy and De Jongh Inc and Others
65609/2019
ZAGPPH
449
as well as the matter of
Lochner
v Schaefer Incorporated and Others (3518/2016)
ZAECPEH
dealt in depth with cyber-crime issues. In both these
matters the defendants were Attorneys and the Court in both matters
intimated
that there is a duty on attorneys as professionals to be
extra vigilant regarding payments
out of trust accounts".
(My emphasis)
[54]
The court a
quo
continued
and stated the
following at paragraphs 16 and 17 of its judgment:
"16.
The courts herein
referred to the skill and diligence required of an average attorney.
The question herein
is thus, can the same diligence appiled, in
view
of
the
aforementioned case
law
be to the Defendant
who on the evidence provided is not legally qualified, has not been
exposed before to alleged Cyber-Crime of
this nature, be it directly
or through alerts that is received by attorneys.
In my view the
average person or reasonable man simply does not check each and
every payment
prior to making it.
On the other hand, it
should
be mentioned
that the Plaintiffs
consultant, Mr Luke Fortein, who is the husband of the Plaintiff, and
the one who had sent the e-mail containing
the bank details, is
an
admitted attorney and
thus own a duty of
care.
17.
The evidence of the
Defendant is that she had checked the e-mail address
and
wording
which was
similar
to previous
e-mails
received. In her
evidence she mentions that she checked the e-mail address which was
the same and she checked the signature of the
first witness which was
the same
as
well as the way in
which
he had wrongly spelled her name
.
She had no reason to
doubt the e-mail".
[55]
The
court
a
quo
then
concluded
as
follows
with
regard
to
the alternative claim
at paragraphs 23 and 24 of its judgment:
"23.
The
Plaintiff
owes
a
responsibility of
diligence
to
ensure the protection of third party's monies and in addition should
do whatever it can to mitigate any possible loss.
At the very least,
the police would have given direction as to the correct party to open
a case
.
They may have also,
as happened in the precedent cases such as this, have recovered some
of the lost funds
.
It is staggering that
to date no such case has been opened.
24.
I am therefore not convinced that the Plaintiff has proven on a
balance of probabilities that the Defendant was negligent herein
regarding claim
1".
Submissions.
case law and conclusions:
The
first
claim:
[56]
Mr
van
Rensburg,
on
behalf
of
the
appellant,
submitted
that
the court
a
quo
erred
and
that
the
appellant should
have
been successful
with the first claim,
since the agreement
is not in dispute and
the respondent simply did not perform in terms of the agreement
between the parties.
[57]
For purposes
of his aforesaid
argument,
Mr van Rensburg
relied on the
judgment of this Division in
Andre
Kock en Seun Vrystaat
(Pty) Ltd
v Willem
Stephanus Snyman N.O.
and
Another
(5180/2021)
[2022] ZAFSHC 161
(27 June 2022).
The facts in that
matter are in fact the same as the facts
in
casu,
except
for one aspect.
In
that matter the terms of the agreement were hundred percent common
cause between the parties.
After
the e-mail
which
was sent from the plaintiff to the defendant, containing the banking
details, was intercepted and replaced with a fraudulent
e mail
containing fraudulent banking details, the defendant paid the money
which it owed to the
plaintiff into the fraudulent
account. The court
made the following findings, which findings are also applicable to
the alternative claim in the present matter:
"[5]
Relying on
Mannesmann
Demag
(Pty)
Ltd
v
Romatex
Ltd
and Another
and
Galactic
Auto
(Pty)
Ltd
v
Venter
counsel for the
applicant, Mr. Van Aswegen argued that the fact that the Trust had
made the outstanding payment into a fraudulent
account does not
absolve it from paying the applicant.
The responsibility to seek
the applicant as a creditor was on the
Trust as the debtor
including to ensure that the payment was paid into the
correct
account.
Furthermore, the facts which gave rise to the
applicant's contractual right to payment were uncontroverted, the
Trust had failed
to raise a valid defence to the applicant's claim, a
referral of the application to hearing of oral evidence as proposed
by the
Trust was not necessary as the order is merely sought to
provide the Trust with an opportunity to gather evidence to prove
that
its email was not hacked whereas even if the Trust succeeds in
doing so that would not constitute a defence to the applicant's claim
[9]
I
disagreed
with
the
Trust's
contention
on this
aspect
as the Trust's
liability
to pay
the
applicant
would
have
only
been
discharged
by
payment
to
the
applicant.
Where
a
payment
is
effected
by
way
of
an
Electronic
Funds
Transfer
(EFT)
as
in
this
case,
the
responsibility
of
verifying
the
creditor's
banking details
before making the payment lies squarely on the debtor.
In this matter, the
Trust had merely assumed that the email it received was from the
.
applicant
and
then
went
on
to
make
a
payment
into
the
banking
account provided
in
the
said
email
without
having
taken
any
steps
to
verify
such information.
The Trust
could therefore
not rely
on that
payment
in defence
of the applicant's
claim. See paragraph
29 to 50 in
Galactic
Auto (Pty)
Ltd.
[10]
It was for these reasons above that I held that the applicant had
succeeded in making out the case for the payment it sought
from the
Trust." (My emphasis)
[58]
However, the
difference between the facts of that matter and the facts of the
present matter is that the term pertaining to payment
in terms of the
agreement is in dispute in the present matter.
In this regard the
appellant specifically averred as follows at paragraph 6 of the
particulars of claim:
"6.
It was a specific
term of the acceptance of the offer that payment of the purchase
amount
of R58 250.00 was
to be made
into
the
estate bank
account
with
account
details: Standard
Bank,
Account
No. Account
holder:
P[…]
B[…],
[…] and
Branch
code
:
[…],
as more specifically appears from Annexure "C2"
.
"
[59]
The said annexure
"C2" is the e-mail containing
the correct
banking details which
was attached to the original e-mail which Mr Fortein
sent,
but
which
was
intercepted.
In
its
plea
to
the
said paragraph 6, the
respondent pleaded as follows at paragraph 2 of the respondent's
plea:
"2.
Safe to deny that
Annexure "C1" and "C2" were received by the
Defendants
it is further denied
that
it
was
a specific term of the agreement to pay the amount in the estate bank
account as specifically appears on Annexure "C2".
Defendant annexed
hereto a copy of the e-mail received on 9 October 2020 as Annexure
"11" and a copy of the estate bank
details that was
attached thereto as Annexure "12".
It was therefore a
specific term of the agreement to make the payment into the estate
bank account with account
details:
Account Holder:
P[…]
B[…], First
National Bank, Account No. […], as more specifically appears
on Annexure "12"."
[60]
The term regarding
the payment and the account details into which the payment was to be
made, were therefore not common cause between
the parties.
From the evidence it
is clear that it is now no longer in dispute that the respondent did
not receive annexures "C1" and
"C2", but did
receive annexures "11" and "12" containing the
fraudulent banking details. The parties
could therefore not have
agreed on payment into the Standard Bank account if the respondent
did not even have knowledge of the
Standard Bank account and its
details.
[61]
The term pertaining
to payment as pleaded by the appellant, has consequently not been
proven on a balance of probabilities by the
appellant.
[62]
In my view the court
a
quo
was
consequently correct by having dismissed the first claim and the
appeal cannot be upheld in this regard.
The
alternative claim:
[63]
It is evident that
the aforesaid
Andre
Kock-judgment
supports the
appellant's case with regard to the alternative claim
.
[64]
Mr van Rensburg
submitted that the principles regarding payment by cheque are
comparable to the present circumstances.
In this regard he,
inter alia,
relied on
the judgment of
Erickson
Motors
(Welkom)
v Protea Motors. Warrenton and Another
1973(3) SA 685 (A) at
693 to the effect that in general, payment by cheque is
prima
facie
regarded
as immediate payment but subject to the condition that the cheque is
honoured.
If
the cheque is dishonoured, there has been no payment.
[65]
He
also relied on
the judgment in
Mannesmann
Demag (Pty) Ltd
v
Romatex Ltd and Another
1988 (4) SA 383
at
389 F where the following was stated:
"Until
that happens (the cheque is honoured), a real danger exists that the
cheque may be misappropriated or mislaid and that
someone other than
the
payee
may, by fraudulent means, convert it into cash or credit, for
instance, by forging an endorsement or by impersonating the
true
payee.
That
risk is the debtor's since
it
is the debtor's duty to seek out his creditor."
(My emphasis)
[66]
Mr van Rensburg also
relied on the judgment of
Galactic
Auto
(Pty)
Ltd
v
Venter
(4052/2017)
[2019]
ZALMPPHC
27
(14
June 2019).
I will return to this
judgment.
[67]
With regard to the
two judgments which the court a
quo
referred
to, being
Fourie
v Van der Spuy
and De
Jongh
and Others
65609/2019
ZAGPPH
449
(30
August
2019);
2020
(1)
SA
560 (GP) and
Lochner
v
Schaefer
Incorporated
and
Others
(3518/2016) ZAECPEHC
4 (24 January 2017) for its finding that a higher duty of care rested
on the appellant and her representative,
are, in my view,
distinguishable from the present matter
.
In the quoted cases
the attorneys were the defendants and they made payments into
incorrect accounts, which is the opposite to the
facts in the present
matter.
[68]
Mr Roux, on behalf of
the respondent,
inter
alia,
relied
on the judgment of
Hawarden
v Edward Nathan Sonnenbergs Inc
2023 (4) SA 152
(GJ).
The plaintiff was the buyer
in
a property
sale transaction and the defendant the conveyancer appointed by the
seller. The defendant emailed the plaintiff its banking
details for
the plaintiff to pay the purchase price to the defendant. The
plaintiff's email account was hacked by a third party
and the third
party intercepted the defendant's email and altered the banking
details. The plaintiff paid the purchase price into
the account
detailed and the moneys were misappropriated. The Plaintiff then
instituted proceedings against the defendant, claiming
damages in the
extent of the purchase price on the
basis
of what
plaintiff
asserted
was the defendant's
negligent omission to warn
it
of the danger
of "business
email
compromise",
such
as
occurred.
One
of
the
issues was whether the
defendant's omission
had
been negligent, with the court holding that the defendant was aware
of the danger and indeed created the risk by the means it
employed to
convey its banking
details, where inexpensive and easy steps could have been taken by it
to mitigate the danger.
The
Court
held
as follows at para [131] (where "ENS"
is a reference
to the defendant
"BEC"
is
a reference to business e-mail compromise):
"[131]
The interests
of the defendant, as well as the society, demand that a legal duty is
recognised in this case. ENS is best placed
to understand and prevent
BEC.
Individuals
in society
are generally
not as well placed to
respond to the ever evolving threat of cyber crime, which is
sophisticated and technical
in
nature.
As
stated in
Estate
Van der By/
v
Swanepoel,
'where
one of two innocent parties has to suffer a loss arising from the
misconduct of a third party it is for the public advantage
that the
loss should fall ...
on
that one of the two who could most easily have prevented the
happening or the recurrence of the mischief. All facts considered,
accordingly, I am persuaded that considerations of legal and public
policy require liability in this case. Accordingly, the plaintiff's
claim is upheld".
[69]
Mr Roux consequently
submitted that the court a
quo
correctly
dismissed the appellant's alternative claim.
[70]
During the hearing of
the appeal both parties referred us to the judgment of
Mosselbaai
Boeredienste (Pty) Ltd v 0KB
Motors CC
2023 JDR 2033 SCA
which was an application to the Supreme Court of Appeal for special
leave
to
appeal, which was granted and the matter
was referred
to
the
full court
of
this Division to decide the merits
of the
appeal.
The
judgment,
at paragraphs
[14] to [17] thereof,
contains
a very useful
exposition
of
the currently conflicting judgments applicable to the present appeal.
Counsel
also
referred us to some of those judgments during their
arguments. However,
the matter has since been on appeal and the full court of the Free
State Bench has delivered judgment on 7 March
2024 in which judgment
the respective conflicting judgments were comprehensively dealt with.
The factual
background was
very
similar to the
present
matters.
Although
estoppel
was raised in that
matter and counter-claim was also instituted, the principles the full
court dealt with, are in my view applicable
to the present appeal. I
consequently deem it apposite to refer to certain extracts from the
full court decision
in
Mosselbaai
Boeredienste
(Pty) Ltd
t/a Mosselbaai
Toyota v 0KB
Motors
CC t/a Bultfontein Toyota
(A43/2021)
[2024]
ZAFSHC 95
(7 March 2024)
"[15.3]
During cross-examination, Mrs Steyn, conceded that in hindsight, she
first should have contacted Mr Maritz telephonically
to confirm the
bank account details on the invoice received by her.
In
her own words she testified 'As ek terugdink dan sou ek hulle eers
gebel het om te bevestig
die
bankbesonderhede.'
However,
at the time of the
transaction, she did not do so as she did not have any reason to
doubt the correctness of the bank account details
on the
invoice.
She further
testified that she could have verified the bank account details
telephonically, which she did not, because it was not
the procedure
at the time, and therefore she accepted that it was a mistake on her
side not to verify the bank account details
telephonically
.
[18.6]
It was established that the invoice which was received by Mrs Steyn
was changed and payment had been made into an incorrect
account.
Neither Mrs Steyn nor any employee of the respondent telephonically
requested
him
to confirm
the
bank account
details
in the invoice which was received by the respondent
on 7 February
2018. Had they
telephonically requested him to verify the bank account details, he
would have realised that the
invoice received by
Mrs Steyn contains the incorrect account number and that the invoice
has been changed. This would have prevented
the respondent from
making the payment into the incorrect bank account.
[22]
However, in his heads of argument, Mr Pienaar, on behalf of the
appellant, submitted that the appeal in essence turns on the
following main issues (I am in agreement with this submission):
[22.1]
...
[22.2]
Whether the respondent had to ensure that payment is made into the
appellant's correct bank account and had to, before making
payment to
the appellant, confirm the correctness of the bank account details
depicted on the invoice which the respondent received
by electronic
mail.
[28.1]
It is common cause that the respondent did not take any steps to
verify or confirm the bank account details as contained
in the
incorrect invoice before making payment to the appellant.
[39]
The uncontested
evidence on behalf of the respondent, namely that the respondent
failed
to
verify
the
appellants
bank
account
details
before
the
payment
was
made,
resulted
in
the
incorrect
payment
being
made.
This
finding is supported by the
evidence
of
Mr Olivier, namely, that he was not
only
aware of the circular issued by Toyota South Africa referred to
supra,
he
also acted with the necessary caution, and only approved the invoice
for payment after he received confirmation from Mrs Steyn,
that the
appellant's bank account details were verified as correct.
[44]
The court held in
Galactic
Auto
that
"if the defendant had only verified the banking details he would
have prevented the loss. His failure to do so was at
his own peril".
The court found in favour of the plaintiff (the creditor) and relied
on the principles summarised in
Mannesmann
Demag (Pty) Ltd v Romatex
where
payment has been intercepted and misappropriated by a thief, namely:
...
[46]
In
Awarden
v Edward Nathan Sonnenbergs ("Hawarden'?
...
[48]
I agree with Mr
Pienaar's submission that
Hawarden
is
distinguishable from the facts in in this matter
....
[49]
In
Andre
Kock
en
Seun
Vrystaat
(Pfy)
Ltd
v
Snyman
N.
0.
("Andre
Kock") ...
[50]
In conclusion, and in finding in favour of the applicant, the court
held in
Andre Kock
that the respondent's liability to pay the
applicant would have only been discharged by payment to the
applicant; that where a payment
is effected by way of an electronic
funds transfer, the responsibility of verifying the creditor's
banking details before making
the payment lies squarely on the
debtor; and that the respondent had merely assumed that the
electronic mail received was from
the applicant and then went on to
make a payment into the banking account provided in the said
electronic mail without having taken
any steps to verify such
information.
[57]
I agree with Mr
Pienaar's submission that the principles and findings referred to
supra
in
Galactic
Auto, Fourie,
Andre Kock, Gerber
and
Hartog
are
correct
and
applicable
to
the facts in this matter.
.
.
.
Conclusion
[58]
Central to the
appellant's case is that a person who sends an electronic mail is
generally unaware of any fraudulent access to his
or her electronic
mail account and is unaware that the electronic mail which is
received by the recipient has been intercepted,
hacked and changed.
The golden
threat in the judgments referred to
supra
places
an obligation on the purchaser to ensure
that the bank
account details contained in the invoice is in fact correct/verified
and that payment
is
made
to the seller and not to an unknown third party
.
Failure to
do so, and where payment is made into an incorrect bank account,
such incorrect
payment does not extinguish the purchaser's obligation and
liability to pay
the debt.
(My
emphasis)
[61]
The evidence
established clearly that the interception of the electronic mail at
the appellant's electronic mail domain was not
the proximate cause of
the payment into the incorrect account. The proximate cause of the
payment into the incorrect bank account
was in fact the approval of
the payment by Mr Olivier after having been satisfied that the bank
account details have been verified.
The
bank
account
details
were
in
fact
never
verified,
and
consequently the
respondent acted at its own peril when the payment was
made into the
incorrect bank account.
(My
emphasis)
[62]
I
am
in agreement
with
the
appellant's
submissions
that
the
court a
quo
erred in
not dismissing the respondent's
plea of estoppel and
its conditional
counter
claim and not
granting
judgment
in favour
of the appellant."
[71]
I respectfully agree
with the aforesaid judgment of the full
court.
[72]
In the circumstances
the appellant's
alternative claim should have succeeded in the
court a
quo.
[73]
The
appeal
against
the order
by the court
a
quo
in respect
of the alternative
claim is consequently to be upheld.
Costs:
[74]
In ordering that each
party
is
to bear its own costs, the court
a
quo
held as
follows:
"Costs
is in the discretion of the court and in this matter there was a
distinct lack of communication
between the parties
which could have avoided the
need
for a lengthy litigation or at least the trial. Parties owe a duty of
diligence to avoid unnecessary costs
.
I am therefore
not inclined to grant either parties costs
herein also bearing
in mind the limited
success
of
each party. My order is therefore that each party will bear their own
costs."
[75]
Considering the
substantive success of the appellant as the
plaintiff in the
court a
quo
as a
result of this appeal, I'm
of
the view that we can, and should, interfere with the order as to
costs issued by the court a
quo.
[75]
In my view there is
now no reason why costs should not follow the success of the
appellant as the plaintiff in the court a
quo.
[76]
In view of the
substantive success of the appellant in the appeal, there is no
reason why the respondent
should
not be ordered to pay the costs of the appeal.
[77]
The appeal against
the order of costs is therefor to be upheld.
[78]
In his heads of
argument Mr Van Rensburg requested that the costs order should
include
"elevated
costs
of
counsel, to include day
fees,
preparation
time by counsel, time spend [sic] drafting heads
of argument
-
as
provided
for in Magistrate
Court
Rule 34(8) [sic)"
.
I presume
Mr Van Rensburg intended to refer to Rule 33(8), which reads as
follows:
"33(8)
The court may on request made at or immediately after the giving of
judgment in any contested action or application
in which -
(a)
is involved any
difficult question of law or of fact; or
(b)
the plaintiff
makes
two
or
more
claims
which
are
not
alternative claims;
or
(c)
the claim or defence
is
frivolous
or vexatious; or
(d)
costs have been
reasonably incurred and in respect of which costs there is no
specific provision in these rules,
award
costs on any scale higher than that on which the costs of the action
would
otherwise
be taxable:
Provided
that the court may
give direction
as
to the manner of taxation of such costs as may be necessary.
[79]
Such an order can be
granted on appeal. See
Maggabi
v
Mafundityala
and Another
1979
(4) SA 106
(E)
[80]
In
Jones
and Buckle: Civil Practice of the Magistrates'
Courts
in
South
Africa,
D.E.
van
Loggerenberg,
Jutastat,
at
RS
26, 2020 Rule-p33-10
the following principles are stated when conspiring an order in terms
of Rule 33(8)(a):
"The
question as to whether the point of law or fact is a difficult one is
for the court to decide in its discretion, to be
exercised judicially
upon a consideration of the facts of each case,
it
being in essence
a
matter
of fairness to both
sides
.
On
appeal the court will consider whether there were any special grounds
arising
out
of the nature
and
importance
of the case
or the
difficulty or urgency
of the case; if these
grounds
are
present,
the
court will not entertain an appeal as to the manner in which the
court a
quo
exercised
its discretion."
[81]
In the present matter
the case involved, in my view, a difficult question
of
law
in
respect
of
the
alternative
claim
.
This
is
also
evident from the number
of different
conflicting decisions,
which
the Supreme Court also took into consideration when it granted
special leave to appeal in the
Mosselbaai
Boeredienste-matter
.
[82]
In addition the
circumstances provided for in Rule 33(8)(b) and (d) are also present
in this matter
[83]
Consequently and in
the exercise of my discretion I consider the elevated costs order as
requested on behalf of the appellant, to
be fair.
[84]
This appeal initially
served before us on 9 October 2023. On the said date the appeal
record was incomplete in that Annexures
"11",
"12"
and "13" did not form part of the record. The hearing of
the appeal therefore had to be postponed and the
wasted costs stood
over for later adjudication.
[85]
Although Mr van
Rensburg conceded that the appellant
is
dominus litis,
he
submitted that the said documents are documents which the respondent
relied on as part of
its plea and therefore both parties had a duty to have seen to it
that the said Annexures form part of the
record. He consequently
submitted that each
party should pay its own costs in respect of the said wasted costs.
Mr Roux submitted that the appellant should
be held responsible for
the wasted costs.
[86]
I agree with the
submission of Mr Roux. Since the appellant is
dominus
litis,
the
responsibility to have seen to it that a complete record serves
before court, fell squarely within its obligations.
[87]
The appellant
is therefore
to pay the wasted
costs occasioned
by the postponement
of the appeal on 9
October 2023.
Order:
[88]
The following order
is consequently
made:
1.
The
appeal
against
the
dismissal
of
the
first
claim
by
the
court
a
quo,
is
dismissed.
2.
The
appeal
against
the
dismissal
of
the
alterative
claim
by
the court a
quo,
is upheld
and substituted with the following order:
'The
defendant is ordered to pay the amount of R58 250.00 to the
plaintiff, together with interest a
tempore morae".
3.
The
appeal
against
the
costs
order
made
by
the
court
a
quo
is upheld and
substituted with the following:
"The
defendant is
ordered to pay the costs of the action, such costs to be elevated in
terms of Magistrate's Court Rule 33(8) to include
costs of counsel,
including day fees, preparation time by counsel, time spent drafting
heads of argument."
4.
The respondent
is ordered to pay the
costs of the appeal.
5.
The
appellant
is
ordered
to
pay
the
wasted
costs
occasioned
by the postponement
of the appeal on 9
October 2023
.
C.VAN ZYL, J
I
concur:
N.M. MBEHELE, DJP
On
behalf
of
Appellant:
Adv. G.S.J.
van Rensburg
Instructed
by
:
Raynard
& Associates Inc.
BLOEMFONTEIN
E-mail:
angeloraynard@icloud.com
litigation@raylaw.co.za
On
behalf of Respondent:
Adv. A. Roux
Instructed
by
:
Steenkamp
& Jansen Inc.
BLOEMFONTEIN
E-mail:
litigasie@sdvc.co.za