Spartan Caselaw

Pinnacle Micro Proprietary Ltd v Govender [2024] ZAKZDHC 23

CIVIL LAW – Duty of care – Cybercrime

Respondents contend applicant failed to take all necessary precautions to safeguard against risk of cybercrime occurring – Applicant not aware incorrect banking details had been sent to respondent – Respondent received banking details which it should have been suspicious about given its previous knowledge – Made payment thoughtlessly without verifying that changed banking details it had recently received were correct – Applicant successful.

Facts: The applicant is a supplier of information technology hardware. K2K (respondent) describes itself as being IT professionals. In similar fashion, Mr Govender describes himself as being an IT consultant. K2K required a computer server for a client and inquired about acquiring it from the applicant. K2K had a long trading relationship with the applicant covering several years. Immediately prior to the dispute over the server that has led to these two applications, K2K had ordered, and paid for without incident, another server from the applicant (the earlier server). Ultimately, K2K acquired the server that is the focal point of these two applications from the applicant. Under what circumstances this occurred is the basis of the dispute between the parties. The applicant claims that K2K paid it a deposit but did not pay it the full purchase price and the amount that is claimed by it in the two applications is the balance of the outstanding purchase price. There is a dispute as to when the sale of the server occurred. K2K and Mr Govender claim that it arose from events in October 2019 while the applicant contends that it occurred in November 2019.

Application: In the two applications that it has brought, the applicant seeks money judgments against both the respondents in the amount of R158,474.50. In the notice of motion in which judgment is sought against K2K, that relief is sought as part B. Part A is a demand for information and documents arising out of a cession by K2K of its book debts to the applicant. The identical relief framed in part B is sought against Mr Govender in the other application.

Discussion: The respondents contend that the applicant failed to take all necessary precautions to safeguard against the risk of a cybercrime occurring, ought to have warned them of the dangers of business email compromise, and ought to have communicated its banking details to K2K in a more secure manner. The facts demonstrate that K2K, and Mr Govender, are themselves involved in the sphere of information technology. Both acknowledge this fact in their respective email signature straps. Neither of them therefore may claim that they were babes in the wood, venturing for the first time into matters involving information technology. They are both involved in the same area of enterprise, yet they submit that they were entitled to be warned by the applicant of the commonly known dangers in that area of enterprise. It cannot be conceived that right thinking members of the community would require information technology practitioners to be warned about a commonly occurring crime within their own area of expertise. Given his area of expertise, he cannot but have been aware of the frequency of occurrence of cybercrime generally, as most ordinary citizens of this country are. In argument, Mr Govender candidly indicated from the bar that he knew of the phenomena, but never thought that it would happen to him. K2K was its client. It therefore did not owe him personally any duty of care. K2K is a private company with its own legal personality. Mr Govender was not K2K but was merely its representative. That being the case, it is not clear why the applicant personally owed him a duty of care. It did not. Nor did it owe K2K that duty of care. No attempt has been made to analyse where the email communications were intercepted. As to whether the applicant was required to take steps to ensure that cybercrime did not occur, it is not possible to make such a finding in the absence of evidence that access was gained through a stage of communication controlled by the applicant. There is, in any event, no evidence that it did not do so. There is simply a general allegation, unsupported by any facts, that it did not do so.

Findings: The fact that the fraudster managed to interpose himself into the communications does not mean that the applicant did not take any steps to prevent this from occurring. The Nedbank document that confirmed the banking details into which K2K was to make payment provides further evidence that K2K was not making payment to the applicant. The applicant’s name is “Pinnacle Micro Proprietary Limited”. The certificate of banking details allegedly provided by Nedbank reflects the account holder as being “Pinnacle (Pty) Ltd”. That is not the name of the applicant. If the entity with that name was paid, then the applicant was not paid. All the information supplied to Mr Govender regarding the bank account into which payment had to be made was supplied not by the applicant but by the fraudster. K2K received banking details about which it should have been suspicious, given its previous knowledge of the applicant’s banking affairs but made the payment demanded thoughtlessly without verifying that the changed banking details that it had recently received were correct. That verification could have been easily done by contacting the applicant telephonically or by contacting the bank concerned. The applicant was not aware that incorrect banking details had been sent to K2K, so there was nothing that it could have done. If parties are not vigilant and warning signs are not considered and if payment is made without verification, then there may be no way for the party making payment to avoid the catastrophic consequences of its own decision. The respondents’ version that the documentation relied upon by the applicant recorded the October transaction and not the November transaction cannot be correct, because it does not make logical or commercial sense. The payment of the deposit of R160,000 by K2K on 20 November 2019 is a mortal blow to the respondents’ version. The payment was clearly a deposit, and the balance was to be paid within 30 days. The November transaction explains how the indebtedness of K2K, and Mr Govender, to the applicant arose.

Order: The relief claimed in Part A of the application is granted and K2K Information Systems Proprietary Limited is directed within 20 days of the granting of the order to disclose the information to the applicant in writing. In terms of Part B, judgment is entered against K2K Information Systems for payment of the amount of R158,474.50. Judgment is entered against Mr Govender for payment of the amount of R158,474.50.

MOSSOP J

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Reddy v Cedar Lakes Homeowners Association NPC [2024] ZAGPJHC 468

PROPERTY – Community schemes – CSOS – Investigation by adjudicator

Due process of law and considering relevance of all evidence – Owner installing new garage door with mirror finish – Home owners association refusing approval and ordering removal of door – Adjudicator also ordering removal – Adjudicator ought to have taken evidence of inconsistent approval into account – This would have led him to conclude that the association acted inconsistently and unreasonably – Appeal upheld – Community Schemes Ombud Service Act 9 of 2011, ss 50(a) and (c).

Facts: The Trust is the owner of immovable property within the Cedar Lakes Estate, a residential estate in Fourways, Johannesburg. Improvements were made to the Trust’s property which included the installation of a new garage door with a mirror exterior finish. The Trust had not secured for approval prior to the installation. An application in respect of the garage door was considered and refused. The Estate’s rules include the Estate’s Memorandum of Incorporation and Architectural Rules. Its Architectural Rules in turn provide, with reference to garage doors, that it allows timber doors but requires that any other finish must first be approved by the Home Owners Association. Following the trustees’ dissatisfaction with the refusal and demand for replacement of the new garage door, the matter was referred to an adjudicator appointed in terms of the Community Schemes Ombud Service Act 9 of 2011.

Appeal: The trustees explained that they were requested to submit an application for change of the garage door, which they complied with. They contend that their application was denied and no reasoning has been provided as to why the application has been denied except that mirror/glass doors are not allowed. The Association’s refusal stated: “Please note that the garage door . . . is not approved.” The adjudicator found that when it comes to the removal of the garage door, there was no evidence before him to show that the Association acted unreasonably when applying their discretion. He ordered the trust to remove the garage door.

Discussion: The Trust’s ground of appeal is that the adjudicator failed to exercise his discretion reasonably, properly and fairly in light of the evidence produced by the Trust. First, the evidence included photographs of garage doors finished with materials other than timber, and in particular of a like-mirrored garage door within the Estate. Second, the trustees’ assertion that the Association, for example, allowed the like-mirrored garage door whilst it refused approval of the Trust’s mirrored door. Third, the absence of any reply from the Association to gainsay the asserted inconsistency of approval. Counsel for the Trust pointed out that the Association did not reply to the trustees’ response which stated that the Association allowed a materially similar mirrored garage door whilst the Trust did not receive the same approval. If indeed there was no merit in the trustees’ complaint of inconsistent application of allowing and approving, one would have expected a reply dealing with the particularity of the trustees’ assertions. It is contended that the Adjudicator did not exercise his inquisitorial or investigative powers in this regard.

Findings: Section 50(a) of the Act provides that “(t)he adjudicator must investigate an application to decide whether it would be appropriate to make an order, and in this process the adjudicator – (a) must observe the principles of due process of law; . . .” The corollary of this obligation on the Adjudicator is a right on the part of the Association to reply to the response presented by the trustees. Section 50(c) of the Act holds that an adjudicator “must consider the relevance of all evidence”. Use of the word “must” in the sub-section underscores the obligation. The sub-section adds that the adjudicator is “not obliged to apply the exclusionary rules of evidence as they are applied in civil courts,” which may broaden the spectrum of evidence which encompasses that which is to be considered by an adjudicator. The adjudicator ought thus to have taken the evidence of inconsistent approval that was placed before him into account when considering whether the Association acted unreasonably in taking its decision, which, if he had done so, should have led him to the conclusion that the Association acted inconsistently, and thus unreasonably, by ordering the removal of the garage door. The Adjudicator accordingly erred by upholding and ordering the removal of the garage door.

Order: The appeal is upheld. The Adjudicator’s order at paragraph 42a is set aside and replaced with the following: “The Cedar Lakes Homeowners Association NPC’s decision and order that the garage door at Erf [ . . . ] of the Estate be removed are hereby set aside.”

VAN VUUREN AJ (DLAMINI J concurring)

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CEA v MB [2024] ZAKZDHC 26

FAMILY – Divorce – Privacy – Applicant (wife) remaining in matrimonial home prior to divorce

Respondent (husband) accessed home and recorded sexual encounter of applicant with another woman from CCTV footage – Applicant’s rights to privacy seriously compromised – Respondent’s conduct worthy only of censure – Respondent behaved in disgraceful manner towards mother of his child and has lied repeatedly – Interdicted from publishing, disseminating, circulating, distributing and in any way disclosing the video recording – Costs on punitive scale – Constitution, s 14.

Facts: The applicant, a woman, was previously married to the respondent, a man. Before they divorced, they separated and the applicant remained in the erstwhile matrimonial home while the respondent moved to alternative accommodation. Prior to their separation, for security purposes, they had installed a network of closed-circuit television cameras within and without the matrimonial home. In June 2019, the respondent was permitted by the applicant’s domestic assistant to enter the erstwhile matrimonial home in the absence of the applicant. This occurred without the consent or knowledge of the applicant. The respondent, once in the house, went to the master bedroom and went through the CCTV footage recorded on the hard drive. He came across video footage of the applicant having a sexual encounter with another woman in the lounge. He used the camera on his cellphone to film the encounter displayed on the television set. He then told the applicant that he had in his possession a video lasting between 45 to 60 minutes depicting the encounter.

Application: The parties were thereafter divorced in October 2020, the divorce action having been settled. The applicant rebuilt her life, remarried and she and her new husband were blessed by the arrival of a baby. The incident concerning the video began to recede into obscurity. However, in April 2023 she heard that someone had seen the video, which made her doubt that he had destroyed it as she had previously been made to believe. She was also told that the respondent hosted a social gathering at his home. Most of those who attended were divorced men. From the general tenor of the conversation, it appeared that they had all seen the video. The applicant accordingly approached the court on an urgent basis to interdict and restrain the respondent.

Discussion: The respondent denied showing the video to any person, other than the applicant. As far as the short video clip of the encounter that he admitted to videoing was concerned, the respondent stated that he had deleted it. Given the fact that the respondent agreed to hand over his handset for examination, it is strange that he would sign out of certain programs and thus prohibit a full and proper investigation into whether he continues to possess the video. Had he truly destroyed the video, he would surely have permitted a complete investigation to occur that would vindicate his assertion in this regard. The overall defence proposed by the respondent makes for disturbing reading. While he states at one stage in his answering affidavit that he is not proud of this situation or the way that he has handled things, without specifying what troubles him about his own conduct, he still appears to adhere to the view that he has not done anything wrong. That he believed he was entitled to do what he did is gravely disturbing.

Findings: Section 14 of the Constitution provides for the right to privacy. The right to privacy forms part of the bundle of rights that constitute a person’s dignitas. There can be no doubt that the applicant’s rights to privacy have been seriously compromised by the respondent’s conduct. The respondent has not been an honest litigant. He has admitted some of his lies. The respondent’s assertion that he destroyed the video does not have the ring of truth to it. He seemed initially to see the video as something which might assist him in his case for the care and custody of their son. But once a settlement acceptable to the respondent had been achieved, it became a trophy that he could show to his friends and a tool that he could still employ to control the applicant in the future. The respondent’s conduct is worthy only of censure. His conduct in delaying the handing over of his handset and then prohibiting a full and thorough investigation of whether the video continues to exist casts grave doubt on his assertions that the video does not exist. His conduct towards the applicant has been designed to cause her embarrassment and to humiliate her and the consequences for the applicant may be catastrophic if he attempted to do the same in the future. The respondent has behaved in a disgraceful manner towards the mother of his child. He has lied repeatedly and has caused the events that compelled her to seek the assistance of this court. As a sign of censure for this conduct he must bear her costs on a punitive scale.

Order: The respondent is interdicted from publishing, disseminating, circulating, distributing and in any way disclosing to any third parties, whether directly or indirectly, the video recording, or any portion thereof, or stills thereof, in his possession which was taken in June 2019 and which depicts the applicant engaging in sexual relations with another woman. The respondent shall pay the applicant’s costs on the scale as between attorney and client.

MOSSOP J

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