By Dintoe Kgole and Clement Marumoagae
At times, it happens that people deposit money into the wrong bank accounts. It is often difficult for those who make these deposits to receive back their money. This article reflects on whether the law makes provision for those who mistakenly deposit money into wrong bank accounts to receive back their money.
Generally, a bank account holder has no real right of ownership over the money deposited into his or her bank account. However, he or she acquires a personal right to payment of that money against the bank arising from the bank-customer relationship. The bank has an obligation, as owner of the funds credited to the customer’s account, to honour the account holder’s payment instructions. In Reserve Bank v Leathern NO and others [2021] 4 All SA 368 (SCA), it was pointed out that once ownership passes to the bank, the bank immediately incurs the obligation to account to its customer. In FirstRand Bank Limited v Spar Group Limited [2021] JOL 49920 (SCA), the court stated that the bank’s ownership of deposits made into an account by a customer is of systemic importance to the banking system.
While the bank owns what is paid into its customer’s bank account, it does not have leeway to disclose information relating to the account holder when requested to do so by a third party. A bank has a contractual obligation to preserve the confidentiality of its clients. The duty of confidentiality is one of the essential aspects of the relationship between the bank and its client. In Stevens and Others v Investec Bank Ltd and Others (2012/32900) [2012] ZAGPJHC 226 (25 October 2012), it was held that privacy in financial and banking affairs is often an important aspect of successful business enterprise in a competitive economy.
The duty of confidentiality has been codified in the Protection of Personal Information Act 4 of 2013. This Act basically promotes the protection of personal information by public and private bodies and provides the legal framework for the processing of personal information. Usually, this is the basis upon which banks refuse to provide information regarding their account holders to third parties who may have incorrectly deposited money into such accounts, making it difficult for third parties to claim their money from bank account holders. This, however, does not mean that those who erroneously deposit money into wrong accounts are left without a remedy.
In Standard bank of SA Ltd v Oneanate Investments (Pty) Ltd
[1995] 4 All SA 128 (C), the court accepted that an erroneous credit can be corrected by the bank where the error, although recorded in the account, is not accompanied by a corresponding intention by the bank and its customer that the account should be credited. Such correction can be made for instance where, due to a clerical error, payment was credited to the wrong account or where incorrect digits were entered or a single payment is entered twice to the customer’s account. Indeed, where there is no intention from the bank’s customer and the bank to credit its customer’s bank account, it appears that it is possible for incorrect deposits to be corrected by the bank.
However, in relation to the money paid into the bank customer’s account, the bank does not have authority to correct the error by unilaterally reversing the transaction without its customer’s authority. In Nedbank v Pestana [2009] 2 All SA 58 (SCA), it was held that one of the ways in which the bank can reverse the transaction is where a wrong account was erroneously credited. Deposits can also be reversed when the resultant credit entry is treated as provisional or conditional subject to a holding period in terms of standard banking practice; or where the money came by way of fraud or theft.
While the bank has a duty to keep its customer’s details confidential and can refuse to provide such details, it also has a duty to inform its customer of the query regarding the money deposited incorrectly into such customer’s account. The bank’s customer is not entitled to a credit into its bank account relating to an amount mistakenly deposited therein. Most importantly, the bank is not required to pay its customer the money erroneously paid into its bank account on demand. In S v Graham 1975 (3) SA 569 (A), it was held that if such customer is aware of the mistake, he or she is not entitled to appropriate the money, if she does, that would amount to theft. Similarly, as it was held in Nissan South Africa (Pty) Ltd v Marnitz NO and others (Stand 186 Aeroport (Pty) Ltd intervening) [2006] 4 All SA 120 (SCA), if the bank customer withdraws the amount mistakenly deposited into its bank account, and not repay the money to the person who made the deposit, but to use it for his or her own benefit, well knowing that it is not due to him or her, he or she is equally guilty of theft. Therefore, in terms of South African law, it is possible for the bank to ‘repay’ the money that has been mistakenly deposited into the unintended account. Should you require legal assistance regarding money incorrectly deposited into another person’s bank account, feel free to contact us.
