Cybercriminals at the centre of two car dealerships’ storm

Published Feb 15, 2024


Cybercrime was once again the topic of a legal wrangle – this time between two car sale companies – with the one who bought two bakkies from the other, only to discover after delivery of the vehicles that cybercriminals had intercepted the electronic payment made for the vehicles.

None of the parties were prepared to take the financial loss and the seller initially turned to the regional court in Louis Trichardt to get its R290 000 back – the price at which it sold the two bakkies.

The lower court earlier ruled that Hyundai Louis Trichardt had to pay Northcliff Nissan the R290 000 for the vehicles. The magistrate reasoned that the two car dealerships had a contract in place and, cybercrime or not, Northcliff Nissan was due payment for the two bakkies.

Aggrieved with this judgment, Hyundai turned to the Limpopo High Court, sitting in Thohoyandou, to appeal the lower court’s verdict.

The court was told that in October 2018 Hyundai (the appellant) purchased two Nissan bakkies from Northcliff Nissan (the respondent) for the sum of R145 000.00 each. The respondent emailed the invoices for both vehicles to the appellant. The invoices provided details of the nominated bank account for payment of the purchase price for the bakkies.

On the same day, the appellant paid for one bakkie and emailed proof of payment to the respondent. That bakkie was then delivered to the appellant.

A few days later, the appellant made another payment and took delivery of the second bakkie. At that stage no one realised that cybercriminals were at work.

Approximately a week later, the respondent told the appellant that payment of the purchase price for the bakkies had not reflected in its bank account.

It then became clear to the parties that the emails were intercepted and the bank account details on the invoices were altered by a cyber fraudster. The parties realised that they were victims of business email compromise “BEC”, a cybercrime that has become popular in this technological age of electronic communication and payment.

The respondent, however, insisted on payment of the purchase price of the bakkies. The appellant’s standpoint is that he has paid for the bakkies. That led to the institution of the civil proceedings in the regional court.

The respondent's case was founded on a breach of contract and it argued that the appellant breached its contractual obligation by failing to make payment of the purchase price.

The appellant pleaded that it made payment of the purchase price by electronically transferring the purchase price to the account number nominated as per the invoices.

It said the respondent elected email and EFT as its chosen mode of communication and payment respectively and thus assumed the risk inherent in those stipulated methods.

The appellant's further pleaded that it was a term of the agreement that upon payment being received, the appellant would take delivery of the bakkies.

The evidence revealed that the invoices received by the appellant were not the invoices sent by the respondent's representative. Upon comparison, the last four digits of the account numbers on the invoices sent by the respondent’s representative were different from the last four digits on the proofs of payment and invoices received by the appellant.

The regional court earlier found that Hyundai (the appellant in this case) was negligent in paying the purchase price due to Northcliff Nissan into a bank account without verifying that such account was in fact that of the latter.

In the circumstances, the magistrate said, Hyundai should bear the consequences of its negligence and pay the amount claimed by the seller.

The regional court further found that the debtor cannot raise a defence that it discharged its obligations by making payment per information received without verifying the information..

The appellant now argued that the lower court erred in finding that it had an onus to verify the bank account before making payment and was negligent in not doing so.

It said the seller in any event had a duty to verify the information on the proof of payment and confirm that money reflected in its bank account before releasing the bakkies to the appellant.

Acting Judge IM Khosa said the two cases were clear – the one saying it did pay as per the invoice sent and the other saying no payment was received.

In finding in favour of the appellant, the judge said the regional court erred in finding that the buyer was negligent. The seller’s claim was founded in an argument that the buyer had breached the contract by not paying for the vehicles.

Judge Khosa said in order to succeed, the seller had to prove a breach of the terms of the contract relating to payment of the purchase price. Instead, the latter produced evidence of negligent failure to verify bank account details before it made an electronic payment.

The judge concluded that the seller failed to prove the breach of a term of the contract claim it pleaded. The appeal was thus upheld with costs.

Pretoria News

[email protected]