Funds transferred to wrong account – can you keep it?

May 18, 2020 | , , , , , , | News

We all dream of that day when millions of Rands are paid into your bank account by some mystery person, meaning you can retire young and extravagantly, or in the current financial crises, keep our business afloat.

Funds transferred to wrong account

In the case of NISSAN SOUTH AFRICA (PTY) LTD v MARNITZ NO AND OTHERS (STAND 186 AEROPORT (PTY) LTD INTERVENING) 2005 (1) SA 441 (SCA), an amount of R12,767,468.22 was paid into the wrong bank account due a clerical error by the bank, making this dream come true for Maple Freight CC (“Maple”).


Nissan South Africa (Pty) Ltd (“Nissan”) instructed its bank, FNB, to make certain payments to its creditors. One of the creditors that had to be paid an amount of R12,767,468.22, was TSW Manufacturing. However, due to a clerical error, the wrong banking details were furnished, resulting in the payment being made to a third party’s account namely, Maple.


At no point in time was any amount due to Maple by Nissan. Once Maple realised that the money was deposited to its account, it transferred R12,700,000 from his Standard Bank account to it FNB receipts account and soon thereafter transferred the money its payments account, where the funds were being utilising in conducting the day-to-day business of Maple.


Twenty days later, TSW made enquiries about the payment, at which point Nissan became aware of the erroneous payment and demanded that the funds be returned. Maple indicated that it was indicated that it was prepared to comply with the demand subject to it retaining the interest earned thereon and a lavish ‘administration fee’ of 4% of the amount concerned.


Nissan obtained a court order to freeze Maple’s account, which according to the sole member of Maple, Stanley, placed considerable strain on Maple, resulting in the necessity according to Stanley, to voluntarily liquidate Maple.


Twenty-three days after the funds were erroneously transferred, the credit balance in Maple’s account was R10 558 818,05. Stanley and Maple’s liquidators contended that this amount formed part of Maple’s insolvent estate and is therefore subject to a concursus creditorum. Only R9,750,000 could be traced back to the amount transferred from Nissan to Maple.


Nissan therefore applied to Court for an order

(a) Declaring that the amount of R9 750 000 and any interest that accrued thereon from 20 February 2003 did not form part of the insolvent estate of Maple Freight CC (in liquidation); and

(b) directing the first and second respondents to pay the amount to the appellant, alternatively, FNB.


Counsel for Nissan submitted that because there was no intention on its part to pay Maple, Maple had no entitlement as against Standard Bank to the funds transferred to Standard Bank. They contended, furthermore, that since Maple had no entitlement to the funds as against Standard Bank, it could not acquire a greater title as against FNB by transferring the funds to another account with that bank.


The first and second respondents, on the other hand, submitted that when Standard Bank unconditionally credited the funds received to Maple’s account, it became obliged to pay the amount so credited to Maple. They submitted that that was the position even if Maple acquired the funds by way of theft or fraud.


The Supreme Court of Appeal held that a bank which had unconditionally credited its customer’s account with an amount received was not liable to pay the amount to the customer on demand where the customer came by such money by way of fraud or theft. If stolen money were paid into a bank account to the credit of the thief, the thief had as little entitlement to the credit as he had to the money itself.


It further held that payment was a bilateral juristic act which required there to be a meeting of two minds, there was no meeting of the minds in this scenario, therefore Maple had not become entitled to the funds erroneously credited to its account.


Accordingly, the SCA upheld the appeal and held that the order of the Court a quo had to be replaced with an order declaring that the funds did not form part of the insolvent estate of Maple (in liquidation) and directing the release the funds to Nissan.


From the R12 767 468,22 transferred, Nissan only received R9,750,000 back. Nissan therefore lost R3,017,468.22 in this whole situation.


The lesson we should all learn from this case is that one should always ensure that the correct banking details are provided when payments are being made, whether the payments are big or small, and if you are on the receiving end, it does not mean your dreams have come true…

*Disclaimer: This advisory should not be interpreted as legal advice.

Author: Petra van Vuuren

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