'EMAIL FRAUD AND NEDBANK’S FAILED ATTEMPT TO JOIN LAW FIRM IN DAMAGES CLAIM’

Fraudsters are continuously adapting the ways in which they dupe and scam members of the public into parting with their hard-earned cash. Growing awareness of these methods has led fraudsters to target other practices which were previously considered safe. Whilst email fraud is nothing new, recent times have seen a significant increase in email fraud being committed against the purchasers of immovable property.

In a recently reported case, the purchasers of a property were instructed via email to make payment of the purchase price into a particular Nedbank account. Unbeknownst to them the account did not belong to the conveyancers and the funds were subsequently withdrawn by the fraudsters. The purchasers sued Nedbank for damages due to the release of the funds

BACKGROUND

The Plaintiffs concluded a Sale Agreement in terms of which they purchased an immovable property from a third party.

RJ Attorneys were appointed as the conveyancers to attend to the transfer of the property.

On 8 February 2019 the Plaintiffs received an email purporting to be from RJ Attorneys in terms of which they were instructed to make payment of the purchase price into the Nedbank account as reflected in the email.

Unbeknown to the Plaintiffs, the email was fraudulent in that it did not originate from RJ Attorneys and the account reflected therein did not belong to, nor was it operated by, RJ Attorneys.

On 11 and 12 February 2019 the Plaintiffs deposited R 2 800 000,00 and R 140 000,00 respectively into the aforesaid account.

The fraud was discovered on 12 February 2019 and the payments that were electronically made into the fraudulent account were reported to Nedbank on the same day.

Nedbank informed the Plaintiffs that the fraudulent account would be suspended and that no transactions from or against the account would be allowed.

Notwithstanding the aforesaid, amounts totalling R 2 940 000,00 were withdrawn/debited against the account.

The Plaintiffs instituted legal action against Nedbank for recovery of the funds pleading that they had suffered damages in the sum of R 2 940 000,00 due to Nedbank’s negligence / failure in allowing the funds to be withdrawn/debited against the account.

NEDBANK’S SPECIAL PLEA

Nedbank defended the action and filed a special plea in which it pleaded, inter alia, that:

• The appointment of RJ Attorneys as conveyancers gave rise to a legal duty between RJ Attorneys and the Plaintiffs in terms of which RJ Attorneys had to take all reasonable steps to ensure that email and other communication between itself and the Plaintiffs was secure, in that the integrity thereof was not compromised.
• By virtue of their appointment as conveyancers and the legal duty flowing therefrom, RJ Attorneys had a legal interest in the action and should accordingly have been joined as Second Defendant in the action.
• The Plaintiff’s and/or RJ Attorneys were negligent (contributory) in the event that it (Nedbank) is found to have been negligent and caused the Plaintiffs loss.

JUDGMENT

The Plaintiffs claim was premised upon an alleged negligent breach by Nedbank of a legal duty it owed to the Plaintiffs, which caused the Plaintiffs to suffer damages.

The Plaintiffs sought relief against Nedbank only, as they were legally entitled to do.

Whilst legally there might have been a claim against RJ Attorneys there was no obligation on the Plaintiff’s to have joined RJ Attorneys as a party to the action.

CONCLUSION

In order to curb the prevalence of fraud and minimize losses it is imperative that the contents of emails requesting payment by way of money are verified. This is of particular importance in relation to any banking/payment details.

In claims for damages based on similar facts it would not be a defence by the Defendant to allege that another party should have been joined to the action.