Beware email hijacking conveyancers

The liability of a conveyancer for failing to warn a buyer that e-mail is not a secure way of transferring information: In Hawarden v Edward Nathan Sonnenbergs Inc 2023 (4) SA 152 (GJ) the plaintiff was the buyer in a property sale transaction and the defendant the conveyancer appointed by the seller. The defendant e-mailed the plaintiff its bank details for the plaintiff to pay the purchase price to the defendant; the plaintiff’s e-mail account was hacked by a third party and the third party intercepted the defendant’s e-mail and altered the bank details. After the plaintiff paid the purchase price into the nominated account, the money was misappropriated. The plaintiff instituted proceedings against the defendant, claiming damages equal to the purchase price based on what the plaintiff agued was the defendant’s negligent failure to warn it of the danger of ‘business e-mail compromise’ of the kind that had occurred. The first issue was whether the omission was wrongful, that is, whether it would be reasonable to impose liability for the failure to warn.

The GP, per Mudau J, held that it would be. This was because of the determinacy of liability (confined as it was to the plaintiff and the quantum of the purchase price) and the plaintiff’s vulnerability (because of her commercial inexperience, ignorance of the risk of e-mail compromise and inability to contractually protect herself against the defendant, with whom she had no contractual link).

Mudau J then had to decide whether the defendant’s omission had been negligent. He found that the defendant had been aware of the danger and had indeed created the risk by the means it employed to convey its banking details despite the simple steps it could have been taken to mitigate the danger. Since the omission was a necessary precondition for the loss, which was in turn foreseeable, the defendant was liable to the plaintiff for damages equal to the purchase price.

Beware the Conveyancer

Regards,
Allen West
TONKIN CLACEY PRETORIA 
012 346 1278

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