Edward Nathan Sonnenberg Inc v Hawarden

Ms Hawarden purchased immovable property and was required to pay the balance of the purchase price. Edward Nathan Sonnenberg Inc (ENS) acted as conveyancers for the seller, not for Ms Hawarden. During August 2019, cyber criminals gained access to Ms Hawarden’s email account and intercepted email correspondence between her and ENS. Fraudulent emails containing altered banking details were sent to her, purporting to originate from ENS. Relying on these emails, and without independently verifying the banking details with ENS, Ms Hawarden transferred R5.5 million to the fraudsters’ account. The funds were irretrievably lost. Ms Hawarden sued ENS in delict for pure economic loss, alleging that ENS negligently failed to warn her adequately about business email compromise (BEC) fraud and failed to take reasonable steps to protect her against the risk.

The appeal was upheld with costs. The High Court order was set aside and replaced with an order dismissing Ms Hawarden’s claim with costs, including the costs of two counsel.

The case reaffirms the restrictive approach in South African law to claims for pure economic loss caused by omissions. It is significant for clarifying that attorneys and other creditors do not generally owe a legal duty to protect non-clients against business email compromise fraud where the plaintiff could reasonably have taken steps to protect themselves. The judgment emphasises vulnerability to risk and the danger of indeterminate liability in cyber-fraud cases.