Property Buyers Beware - It Is Property Buyer's Duty to Verify Bank Account Before Making A Payment
Cyber fraud and the property buyer’s duty to verify a bank account before making a payment.
The High Court (in Gripper & Co v Ganedhi Trading Enterprises CC) has once again ruled that when a payment is sent to the wrong bank account because of fraud, the person who sent the money is responsible for the loss, not the person who was supposed to receive it. This is a crucial lesson for anyone buying a property.
What Happened?
A company called Ganedhi Trading was supposed to pay Gripper & Co, a law firm, about R866,000. They had worked together before and knew Gripper's correct bank details. However, a fraudster sent Ganedhi an email pretending to be from Gripper's managing director. The email had a tiny spelling mistake in the domain name ("griper.co.za" instead of "gripper.co.za"), and it gave Ganedhi new, fraudulent bank account details.
Ganedhi did not notice the difference and paid the money into the fake account. When Gripper & Co did not receive the money, they sued Ganedhi for non-payment.
What Did the Court Say?
Ganedhi Trading argued that Gripper & Co should be responsible for the loss because they believed Gripper's IT systems were not secure, which allowed the fraud to happen.
The court, however, disagreed. It said that it is always the responsibility of the person making the payment to ensure the money goes to the correct place. The court highlighted that a simple check, like making a quick phone call to the law firm to verify the bank details, would have prevented the loss entirely.
Since Ganedhi Trading failed to do this, the court ordered them to pay the full amount to Gripper & Co again, plus interest. This decision confirms a consistent legal principle: the risk of cyber fraud lies with the person who is paying the money.
The Takeaway for Property Buyers
This case is a serious warning for anyone buying or selling a property. Cyber fraud is a real risk, and fraudsters often target property transactions because large sums of money are involved. Always be suspicious of emails that ask you to change bank details.
To protect yourself, remember this key rule: ALWAYS verify bank account details directly with the law firm or conveyancer via a trusted method, like a phone call to a number you know is correct, before making a payment. Don't rely on the details provided in an email. This one simple step can save you from losing hundreds of thousands of Rands.