The High Court in Johannesburg has dismissed an application by Nedbank for a firm of attorneys to be joined as defendants in a claim brought by a couple who lost R2.94 million to email fraud.
The couple, Ian and Annelie Ross, bought a property and appointed Ross and Jacobs Attorneys as the conveyancers. On 8 February 2019, they received an email purporting to originate from RJ Attorneys, in which they were instructed to pay the purchase price into an account held at Nedbank.
On 11 and 12 February, they made payments totalling R2.94m in the account. Unbeknown to the couple, the email was fraudulent, and the account did not belong to RJ Attorneys.
According to the Rosses’ particulars of claim, they discovered the fraud on 12 February and reported the payments to Nedbank. The bank informed them that the fraudulent account would be frozen, and no transactions from or against the account would be allowed. Despite this, they said the bank allowed amounts totalling R2.94m to be withdrawn against or debited from fraudulent account.
The Rosses brought a delictual claim for damages based on Nedbank’s alleged negligent breach of a duty of care owed to them – not to allow withdrawals from the account after it became aware of the fraudulent transactions.
Nedbank brought a special plea for RJ Attorneys to be joined as the second defendant in the Rosses’ action. By agreement between the parties, the High Court adjudicated the special plea separately from the merits of the claim.
In its plea, Nedbank stated that the fraudster may have somehow gained knowledge of the communication between the Rosses and RJ Attorneys and thereby generated the fraudulent email.
“The alleged fraudster would have gained knowledge of the communication between the plaintiffs and RJ Attorneys due to the negligence on the part of either the plaintiffs or RJ Attorneys. Consequently, by virtue of their appointment as conveyancers and the legal duty flowing therefrom, RJ Attorneys have a legal interest in the action and should accordingly be joined as second defendant in the action.”
The bank said it intended to plead contributory negligence on the part of the Rosses or RJ Attorneys if it was found to have been negligent and caused the couple’s loss.
No obligation to join the law firm
In her judgment, Judge Avrille Maier-Frawley said although the Rosses could also have brought a claim for damages against RJ Attorneys, based on a negligent breach of a legal duty arising from their appointment as the conveyancers, the couple sought relief only against Nedbank, as they were entitled in law to do.
Although there may be claim against RJ Attorneys in law, which, if pursued, could possibly render the law firm a joint wrongdoer, the Rosses were not obliged to have joined RJ Attorneys to the action.
Nedbank’s indication that it intended to plead contributory negligence on the part of RJ Attorneys was not a basis for asserting that the law firm was a necessary party, Judge Maier-Frawley said.
Even if RJ Attorneys were joined as a defendant, in the absence of the Rosses’ having brought a claim against RJ Attorneys, Nedbank would not be able to use its special plea to pursue a claim for a contribution from the law firm.
Nedbank submitted it was possible that a judgment in the dispute as it was currently framed would entitle RJ Attorneys to approach the courts again on the same subject matter. This could potentially result in a conflicting judgment with the judgment the trial court may deliver.
But, Judge Maier-Frawley said, the Rosses have not alleged that RJ Attorneys were under a legal duty to prevent them from suffering economic loss.
If the Rosses’ claim was successful, a judgment will be granted against Nedbank based on a finding of liability. Because no liability finding could be made against RJ Attorneys in favour of the Rosses on the dispute as it was framed, RJ Attorneys would not be able to institute an action against Nedbank for payment of a contribution in relation to the Rosses’ claim, because RJ Attorneys could not be found liable for the plaintiffs’ loss in these proceedings. This was because the issue pertaining to liability on the part of RJ Attorneys was not part of the particulars of claim and was therefore not before the court, Judge Maier-Frawley said.
The court dismissed Nedbank’s special plea with costs.
