This resulted in payment of the proceeds of the sale into a fraudulent account. In part 2, we focused on the case of Edward Nathan Sonnenberg Inc v Hawarden [2024] JOL 65083 (SCA), in which the Supreme Court of Appeal (SCA) considered the liability of a law firm in respect of a claim by an individual for pure economic loss caused by an alleged negligent omission, i.e. the failure to confirm banking details telephonically. In that case, the SCA upheld the first principle of the law of delict, that everyone has to bear the loss that they suffer. 

In the recent case of Intengo Imoto (Pty) Ltd t/a Northcliff Nissan v Zoutpansberg Motor Wholesalers CC t/a Hyundai Louis Trichardt [2025] JOL 69171 (SCA), the SCA had to consider the question of whether a purchaser, who pays the purchase price into a bank account other than the account of the seller, due to a fraudulent substitution of account details through business email compromise, has in fact discharged their obligation in terms of the agreement.

In this case, Intengo Imoto (Pty) Ltd (Intengo) and Zoutpansberg Motor Wholesalers CC (Zoutpansberg) concluded a partly written and partly oral agreement for the sale of two Nissan NP200 vehicles by Intengo to Zoutpansberg for an amount of R290,000. The written aspects of the contract were reflected in two invoices, one for each of the vehicles, and contained the particulars of the vehicles, the price, delivery address and the banking details of the seller, Intengo. The parties also agreed that the invoices would be dispatched by Intengo to Zoutpansberg via email, whereafter the Zoutpansberg would effect payment of the purchase price by way of an electronic funds transfer into the bank account specified in the invoice. Upon receipt of payment, Zoutpansberg would take delivery of the vehicles.

A representative of Intengo addressed email correspondence to Zoutpansberg, requesting invoicing details of Zoutpansberg. Zoutpansberg duly provided such details and Intengo issued invoices reflecting Intengo’s correct banking details. However, after transmission, Intengo’s email was intercepted and the banking details on the invoices were altered. Zoutpansberg proceeded to pay the full purchase price of both vehicles into the fraudster’s account, believing it had made payment to Intengo. Intengo, having received the respective proofs of payment, and unaware that payment had not in fact been received, released both vehicles. Intengo later discovered that the funds had not been credited into its account and instituted proceedings for payment of the purchase price.

The issue before the court was therefore whether a debtor’s payment into a fraudulent third-party account, mistakenly believed to be the creditor’s account, constitutes a valid payment discharging the debtor’s contractual obligation in terms of the agreement.

The matter was initially heard in the Regional Magistrates’ Court, which held that Zoutpansberg was liable for the outstanding purchase price. In line with the reasoning of the SCA in the aforementioned case of Edward Nathan Sonnenberg Inc, the court a quo upheld the first principle of the law of delict, that everyone has to bear the loss that they suffer. As Zoutpansberg had failed to verify Intengo’s banking details before making payment into the bank account contained in the fraudulent invoice, as Hawarden similarly had, it had to bear the loss suffered as a consequence of its negligent omission.

The High Court, however, overturned the decision of the court a quo, on the basis that Intengo bore the risk of any loss by choosing email, which had the potential for interception, as its mode of communication, together with an electronic funds transfer as its mode of payment.

In view of the finding of the High Court, Intengo petitioned the SCA. The SCA reasoned that payment by a debtor by way of an EFT is only effected when the funds are received in the creditor’s bank account. The debtor’s obligation is not discharged when payment is made into an account which the debtor believes to be the correct bank account. Payment into an unauthorised account, even where induced by fraud, does not amount to payment to the creditor.

The SCA also emphasised that where a debtor pleads payment as a defence, the onus rests on the debtor to prove actual payment to the creditor. In this regard, the court held that Zoutpansberg was unable to prove that Intengo’s account had been credited, and accordingly its defence failed.

The SCA therefore did not deviate from its long-standing position that debtors are responsible for taking reasonable steps to ensure that funds are transferred to the correct bank account. The responsibility lies with the debtor to ascertain the banking details and ensure that the funds are credited to the correct bank account. By extension, purchasers should be wary of holding financial institutions liable for losses suffered due to a fraudulent substitution of banking details through business email compromise, in circumstances where such loss could have been prevented by exercising caution and confirming the correct banking details before making payments.