The Kimberley High Court recently confirmed that an account holder who uses funds in a bank account that do not belong to them will be liable for the loss suffered.
In FirstRand Bank Limited v Lebogang Donald Moremedi, the Court ordered Mr Moremedi to pay FirstRand Bank ZAR935 949.83. In this matter:
- Moremedi, in his capacity as the treasurer of a trust (as signatory and managed the bank account of the trust), received a call from FNB regarding a money maximiser account, which offered better interest. Mr. Moremedi agreed on behalf of the Trust, to the opening of the money maximiser account.
Pursuant to this, ZAR962 449.83 was transferred from the trust's account to Mr Moremedi's personal cheque account.
- Moremedi used and disbursed the funds for purposes of his home renovations over a period of time.
- FirstRand contended that Mr Moremedi was neither in law nor in fact entitled to withdraw, use and disburse the said funds.
- The bank and the trust concluded a settlement agreement in terms of which the bank paid the trust ZAR962 449.83 and in turn the trust ceded its right against Mr Moremedi to the bank.
The Court had to determine whether Mr Moremedi had a sustainable defence to the bank's unjustified enrichment claim, pursuant to the cession from the Trust. At no stage did Mr Moremedi deny receiving the funds and according to FirstRand, Mr Moremedi admitted being liable on 16 occasions. Mr Moremedi contended that he thought that the bank had granted him a revolving credit facility.
The court found that Mr Moremedi had knowingly received and used money that was deposited into his bank account despite being aware that it did not rightfully belong to him. With no justification for the funds he used, the court ordered Mr Moremedi to repay the money due to FirstRand, together with interest and legal costs.
This judgment is a reminder of the trite principles set out in Nissan South Africa (Pty) Limited v Marnitz NO and others that:
- Payment is a bilateral juristic act requiring the meeting of two minds.
- Where money is mistakenly transferred to another party and the receiving party is aware of the mistake or knows that they are not entitled to the money, ownership does not pass to the recipient.
- If the recipient appropriates that money, such appropriation amounts to theft.
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