Accidentally Paid the Wrong Person? Lessons From a R862k Banking App Error

“There’s no such thing as a free lunch” (Economist Milton Friedman)

In these days of online banking and electronic payment, it’s not uncommon to find out to your horror that you have made a payment to someone in error, either to the wrong recipient or in an incorrect amount. If that happens to you and the recipient refuses to pay you back, what can you do about it? The other side of the coin of course is whether the recipient of an unexplained and unexpected bank account credit can safely go ahead and spend the windfall (the answer in a nutshell is very strong “no” – if there are indeed any free lunches in the world, this is unlikely to be one of them!). A recent High Court judgment sets out the requirements for a claim based on “unjustified enrichment”.

A banking app duplicates payments of R861,940

• A couple were the happy beneficiaries of a malfunction in their bank’s “remote banking” app.
• In effect they received duplicate transfers into their two accounts totalling R861,940
• The bank duly sued them for return of the money on the basis that they had been “unjustifiably enriched” at its expense.
• Initially the couple denied that any duplication had taken place, but at trial they dropped their denial, claiming instead to have repaid the bank in cash.
• The husband’s story was that he had paid a bank employee, since deceased, who had put the cash into a safe “in case a claim was made”. He was unable to say how much money had been handed over, he could not give dates, and no receipts were requested or given. Nevertheless his evidence was accepted by the trial court and the bank’s claim failed.
• However on appeal to a “full bench” (a “full court” of three High Court judges, sometimes more), the husband’s version was rejected as “inherently improbable”, and the couple was ordered to repay the bank together with interest and legal costs.

What must you prove?

The requirements for an unjustified enrichment claim are –

1. The recipient has in fact been enriched by receiving the money (it needn’t be money, it could for example be an asset of some sort)
2. You have been “impoverished” by the transfer
3. The recipient’s enrichment was at your expense
4. The enrichment was legally unjustified.

Once the couple admitted receiving the money without a legal basis, held the Court, the onus shifted to them to prove that there was no enrichment. So their failure to prove repayment was the end of their case. Don’t despair if the facts of your case don’t tie in fully with the above requirements – our law may have other remedies for you. Ask your lawyer for help.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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