Erroneous bank transfer: How to legally recover erroneously transferred funds

Following the progressive advancement in technology wherein funds are now transferred digitally without the need to visit a formal banking hall setting, incidence of erroneous transfer of funds are prevalent and inevitable. This article is an exposé on the steps to take when funds meant for an identified recipient are erroneously transferred to another, the recommended forum to seek a reversal order, and what the applicant must prove to be entitled to a reversal order.

Steps to take when funds are erroneously transferred:

1. Direct a formal report to the Bank

Immediately funds are transferred to an account erroneously, the first step to take is for the victim to report the erroneous transfer to the bank of the recipient of the funds, preferably in writing, highlighting all relevant facts as they relate to the transaction. It is advisable to attach any proof of the transaction to the letter. Upon receipt of such an application, the practice is for the recipient’s bank to place a Post No Debit (“PND”) on the account that received the funds to restrict its owner from withdrawing below the amount erroneously transferred to his account while the complaint is being investigated.

It is important to understand that if the recipient gets a hint of the Post No Debit (PND) placed on his account and consents to the reversal of the funds, the bank can return the transferred funds to the victim without a need for an order of Court. Where, however, the victim does not expressly consent to the reversal, only a Court order can be deployed to compel the bank to reverse the erroneously transferred funds.

It is pertinent to understand that the bank cannot unilaterally release the contact information of the recipient (such as phone number, email or contact address) as such will constitute breach of his right to privacy, but the bank may contact the recipient to confirm if the complaint made against his account is true.

2. Obtain an Order of Court for a reversal

Here the victim of an erroneous transfer is required to engage the services of a qualified legal practitioner to file an application in Court seeking the Court’s order sanctioning the reversal. Such application is usually supported by an affidavit detailing all the facts related to the said transaction and attaching all relevant document (such as receipts and/or bank statement) to substantiate the facts contained in the affidavit. The Court will therefore review the said application and make the appropriate order.

Recommended forum to seek a reversal Order.

The appropriate forum to seek a reversal order depends on the funds involve and location of the transaction. Where the location of the transaction is Lagos State and the funds involved is less than N10,000,000 (Ten Million Naira Only), it is advisable to file the reversal application at the Magistrate Court. Where the location of the transaction is in Abuja and the funds involved does not exceed N5,000,000 (Five Million Naira Only) the recommended Court to file an application seeking reversal of the funds will be the District Court

Where however the funds involved exceeds N10,000,000 (Ten Million Naira Only) and N5,000,000 (Five Million Naira Only) in Lagos and Abuja respectively, the applicant must file the said application at the High Court of either state. It is important to understand that whether or not the funds exceed N10,000,000 (Ten Million Naira Only), and N5,000,000 (Five Million Naira Only) in Lagos or Abuja respectively, the applicant can proceed to file the application at the State High Court. The Magistrate/District Court is only recommended in cases of lesser funds as highlighted above because of the convenience it offers and the likelihood that the application will be heard and granted expeditiously.

It is important to add that proper service of the application seeking reversal on the bank and the recipient of the erroneously transferred funds is fundamental to the success of the case of the Applicant. See Okoye & Anor V. Centre Point Merchant Bank Ltd . If service is not properly effected, the action may be struck out, or any order made at the instance of the Applicant may be set aside on appeal. When the recipient’s address is unknown, an order of substituted service may be necessary. The recipient may be served through his Bank

What the Applicant must prove to be entitled to a reversal order.

An applicant seeking an order of Court for the reversal of the funds erroneously transferred must demonstrate the following:
1. Proof of the debit of the alleged sum. This is typically done by exhibiting the Applicant’s bank statement on the affidavit in support of the application. Please see UBN Nig. Plc. v. Emole wherein the Court held that for a person to prove that his account has been debited, he must tender debit notes covering the sum or his statement of account.

2. Evidence that the payment was made in error; demonstrating that the payer had no legitimate business dealings with the recipient regarding the payment.

3. Disclosure of the recipient’s particulars and bank account details, including names, bank, account number, and branch (if applicable), often provided through bank statements or debit notifications.

4. Documentation of the complaint to the bank and the service of a demand notice, illustrating attempts to resolve the issue before litigation.
When the Court order is successfully obtained, the victim of the erroneously transferred funds is obligated to serve the recipient’s bank with the said order. The bank at this point is mandated to ensure the immediate reversal of the funds. Failure by the bank to effect the reversal at this point is deemed as a contempt of the order of the Court.

Conclusion

While it is understandable that erroneous transfer of funds could place the victim in a difficult position, it is important to be advised that the use of the Nigerian Police Force as an easy fix to recover such funds must be particularly avoided. The Nigerian judicial jurisprudence is replete with a plethora of cases wherein both appellate Courts have frowned at the use of the Nigerian Police as a recovery agent.

Significantly, victims of erroneous transfer of funds can expose themselves to an action in Court for the breach of the recipient’s fundamental right should they elect to deploy the easy way out to recover their funds.

While using the police as a recovery agent appear like an easy fix, it comes with its attendant consequences. It is therefore advisable to adhere to the above highlighted steps to recover funds erroneously transferred to avert consequences that could be inimical to the interest of the victim of an erroneous transfer.