Law Firm is liable for paying incorrect party

Updated: Feb 25, 2021

In a recent case, Fourie v van der Spy and de Jongh Inc., a Pretoria based law firm have fallen victim to cybercrime whereby hackers send fraudulent emails to the company claiming to be a seller of a property of the transfer that was being handled by them. The law firm subsequently made a wrongful payment of R1 744 599 into the hacker’s account.

Because the onus was on the attorney and no verification process was followed, the court determined that the firm had to carry the loss and also pay the amount of R1744 599 to the seller, as he was not at fault.

In Risk Alert Feb 2017, practitioners were warned about the risks:

"Cyber related risks are on the increase and attorneys must: (i) ensure they have adequate risk mitigation/avoidance measures in place to deal with cyber-related risks"

The court further ruled that:

“It is irrelevant that emails similar to that of the Applicant were sent to her, the common law position pertaining to trust funds as set out above is clear. The duty of care, owed to a client and the mandate to pay as principal, point to the attorney as the one who, in this case, is liable.”

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