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Court case about liability for cyber crime

Edward Nathan Sonnenberg Inc v Hawarden [2024] ZASCA 90

FISA published a summary of a Johannesburg High Court judgement of January 2023 in which a firm of attorneys was held liable for the loss of R5.5m which a purchaser of fixed property paid into an account, the details of which was fraudulently altered in the email from the attorneys to the purchaser.  The alteration was the result of the email account of the purchaser being hacked by cyber criminals.  Click here for the FISA summary of the High Court judgement.

The attorneys went on appeal to the Supreme Court of Appeal (SCA).  The appellants argued that they had no duty towards the purchaser (H) as H was not their client and that it was H’s email account that was hacked.

The SCA (Dawood AJA with Ponnan, Dambuza and Goosen JJA and Tlaletsi AJA concurring) held that a prerequisite for delictual liability in South African law is the element of wrongfulness.  When a person takes action which leads to prejudice or damage to another, wrongfulness is assumed unless a ground of justification is present.  However, wrongfulness is not assumed in the case where there is an alleged omission.  It is then incumbent upon the plaintiff to prove the existence of a legal duty of care to take action, which will lead to a finding of wrongfulness if the person under such duty did not act in accordance with the duty.  The court found that the appellants had no duty of care towards H as H was not their client.  The accepted evidence was that after H received the altered email she went to her bank where she effected the electronic transfer with the assistance of an employee of her bank.  The court held that she had the bank’s employee at her disposal and could have asked for assistance to verify the (altered) banking details.  The court held further that to hold that the payee had a duty of care towards the person making the payment would open the door for indeterminate liability.  As there was no wrongfulness no delictual liability could be found against the appellants.

The SCA overturned the decision of the Johannesburg High Court and the appeal was allowed with costs, including the costs of two counsel where employed.

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