Fraudulent Emails and the Prudent Debtor

A recent court judgment has reaffirmed that a person or entity making payment to another, especially when transferring large sums of money must take necessary steps to ensure that the banking details received are correct before making payment.

In the matter of Gripper & Co (Pty) Ltd v Ganedhi Trading Enterprises CC, the parties had been conducting business for the past seven years. When having to make payment following a transaction in May 2021, the Respondent received an email, apparently from the Applicant to make payment to an Absa Bank account. The Respondent made the payment to the Absa account without verifying the banking details with the Applicant, and despite the fact that payments had for the last seven years been made to a Standard Bank account.

It subsequently became apparent that the emails had been intercepted and a fraudulent email had been received by the Respondent.

The Court stated that the Respondent ought to have made enquiries when it received an email with banking details to verify that such details were correct. This could have been done by a simple telephone call prior to making payment. Where the intercepted email emanated from was of little relevance, as the Court found that the Respondent failed to act as a prudent debtor ought to have done and held that payment was still due to the Applicant.

This judgment confirms that any person or entity making a payment to another, particularly where large sums are involved, must first verify that the banking details are correct before making such payment. A failure to do so could leave that person in the position of having to make a further payment to the creditor while possibly not being able to recoup the first erroneous payment.