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[2020] ZASCA 73
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Tshaka N O and Others v Standard Bank of South Africa Limited and Another (141/2019) [2020] ZASCA 73 (25 June 2020)
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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not
Reportable
Case
no: 141/2019
In the matter
between:
KGOMOTSO S.
TSHAKA
NO FIRST
APPELLANT
MARGARET M.
MONNAKGOTLA NO SECOND
APPELLANT
JABULANI B.
GUMBI
NO THIRD
APPELLANT
WENGLIAN MA
NO FOURTH
APPELLANT
and
STANDARD BANK
OF SOUTH AFRICA
LIMITED FIRST
RESPONDENT
BAKUBUNG
ECONOMIC DEVELOPMENT
UNIT SECOND
RESPONDENT
Neutral
citation:
Tshaka
N O & others v Standard Bank of South Africa Limited &
another
(Case
no 141/2019)
[2020] ZASCA 73
(25 June 2020)
Coram:
PONNAN,
MBHA, MOCUMIE, NICHOLLS JJA and MATOJANE AJA
Heard
:
15 May 2020
Delivered
:
This judgment was handed down electronically by circulation to the
parties' representatives by email, publication on the Supreme
Court
of Appeal website and release to SAFLII. The date and time for
hand-down is deemed to be delivered at 12H00 on 25 June 2020.
Summary:
Claim
by trust against bank for recovery of monies transferred out of bank
account – bank acting on instructions of authorised
signatories
– bank insisting on the written instruction of all trustees to
stop further transfers – such instruction
not forthcoming -
bank not liable.
ORDER
On
appeal from:
Gauteng
Division of the High Court, Johannesburg (Van der Nest J, sitting as
court of first instance):
The appeal is
dismissed with costs.
JUDGMENT
Mocumie
JA (Ponnan, Mbha and Nicholls JJA and Matojane AJA concurring)
[1]
This appeal arises over a dispute between the parties in respect of
the transfer of R9,5 million by officials in the employ
of the first
respondent, the Standard Bank of South Africa Limited (the Bank),
from the bank account of the Bakubung-Ba-Ratheo
Economic Development
Trust (the Trust) to the second respondent, the Bakubung Economic
Development Unit. Van der Nest AJ, sitting
in the South Gauteng High
Court Division, Johannesburg, dismissed the appellants’ claim.
The appeal is with leave of the
court a quo.
[2]
The appellants, are the four Trustees of the Trust. Three of the
four, Kgomotso Sedielapa Tshaka NO (the first appellant), Margaret
Mapaseka Monnakgotla NO (the second appellant) and Wenliang Ma NO
(the fourth appellant), were appointed by the Master of the North
Gauteng High Court, Pretoria in terms of s 6(1) of the Trust Property
Act 57 of 1988 on 12 August 2013. The fourth trustee, Jabulani
Ben
Gumbi NO (the third appellant), has been a trustee since the
establishment of the Trust. The Trust was established in 2006
by way
of donation from the Wesizwe Platinum Limited (the donor) in the sum
of R10 million, with the broad object of advancing
the
socio-economic development and upliftment of the Bakubung-Ba-Ratheo
community (the community). At inception there were five
trustees.
Aside from the third appellant, the remaining trustees were the Kgosi
of the community, Michael Henry Solomon, Lorna
Maloney and Choice
Franscinah Tshetlhe. In terms of the Trust Deed, Mr Solomon and Ms
Maloney were appointed by the donor, whilst
the third appellant and
Ms Tshetlhe were appointed by the Kgosi in consultation with the
Traditional Council of the community.
At a meeting of the Trust on 28
November 2011, the resignations of Mr Solomon and Ms Maloney were
tabled and accepted; and Mr Tshaka
and Mr Ma were appointed in their
stead.
[3] The Trust
Deed provided:
‘
11.
ACCOUNTING MATTERS, AUDIT AND BANKING AND OTHER ACCOUNTS
11.4
The banking account shall be opened in the name of the trustees for
the time being of the Bakubung Ba Ratheo Economic Development
Trust
into which account all payment of cash received by the parties shall
be deposited by 1(one) person authorised to trustees
and from which
account all payments due by the Trust shall be made by means of
cheques or electronic fund transfers drawn on such
banking account
and signed by 1(one) person authorised thereto by the trustees’
[4] In a
document dated 23 July 2007, entitled Resolution of Bakubung Ba
Rantheo Economic Development Trust it is stated:
‘
By
resolution of trustees of Bakubung-Ba Rantheo Economic Development
Trust as at LEDIG, Republic of South Africa.
The
trustees of Bakubung-Ba Rantheo Economic Development Trust hereby
authorize Nyasa Tengawarima and Choice Franscina Tshetlhe
in their
capacities as Trustees/authorised signatories, to open bank
account(s) for the Trust at Standard Bank of South Africa
Ltd, to
arrange and maintain electronic banking access as well as
transnational limits and to sign all relevant documentation
pertaining to the aforementioned.
The
authority will remain in force indefinitely or until advised
otherwise, by the trustees, by way of a further resolution.’
[5]
On 19 December 2007, the Trust made an application to the Bank to
open and operate a bank account for and in the name of the
Trust. The
application form lists Messrs Gumbi, Monnakgotla and Solomon as well
as Mmes Tshetlhe and Maloney as trustees and describes
Nyasa
Tengawarima as an ‘authorised signatory’ and Choice
Franscina Tshetlhe as ‘a further trustee and signatory’.
On 21 January 2008 the Bank approved the application and opened a
bank account for and in the name of the Trust under Money Market
cheque account number […]. A call account was linked to this
cheque account for the use of the Trust when necessary. The
call
account number is […]7.
[6] On 21 July
2011, Mr Gordon Millar of the Bank, described as the ‘account
executive’ in respect of the Trust received
a letter of
instruction, stating:
‘
Dear
Gordon: Please accept this letter as the written instruction from the
Trustees of the Bakubung Economic Development Trust (the
Trust) to
Standard Bank to immediately effect a transfer in the amount of
R5 500 000 from the Trust’s bank account
(Account No.
[…]3) to the account of Bakubung Economic Development Unit
(Account No. […]1).’
[7] This letter
of instruction was accompanied by a document entitled ‘Resolution
of the Bakubung Economic Development Trust
passed at a meeting held
at Ledig on 21 July 2011’ This resolution stated:
‘
1.
The Trustees have approved the following:
1.
.
. .
2.
The
allocation of R5, 5 00 000 (five million five hundred thousand
rand) for those projects.
3.
The
issuance of the written instruction by any authorised signatories for
the bank account of the Trust at Standard Bank to transfer
R5, 500
000 from the account of the Trust to the bank account of BEDU.
Signed
by: Nyasa Tengawarima-Trustee appointed by MH Solomon and Choice F
Tshetlhe.’
[8]
Pursuant to this letter, on 26 July Mr Millar approved and authorised
the transfer of R 5, 5 million to the account of the second
respondent. Nearly three months later, on 17 October, the third
appellant went to the Bank and met with Mr Millar. He informed
Mr Millar that he was a trustee of the Trust and that it had
come to his attention that R5, 5 million had been transferred
from the bank account of the Trust without a resolution or minutes of
a Trust meeting or a suitable and legal quorum of the Board.
Later
that day, Mr Millar received an email from the third appellant. A
number of issues were raised by the third appellant and
concluded
with the following instruction: ‘please stop any transfers from
the account . . . until we notify you as trustees’.
The next
day Mr Millar replied to each of the queries. His response, concluded
as follows: ‘Please urgently send us a written
request signed
by ALL trustees to this effect’.
[9]
A week later, on 24 October 2011, Mr Millar received a second
instruction from the Trust. It as well, emanated from Ms Tshetlhe
and
Ms Tengawarima and instructed Mr Millar to once again effect transfer
to the second respondent in the sum of R4 million. Not
having heard
anything from the third appellant in the meanwhile, Mr Millar
contacted Ms Tshetlhe, obtained approval and effected
transfer in
accordance with the instruction on 28 October 2011.
[10] On 16 July
2014 the appellants issued summons, which consisted of a main claim
against the Bank and a conditional claim against
the second
respondent seeking repayment of those amounts. The conditional claim,
which is yet to be determined, was stayed pending
determination of
the main claim. In support of the main claim, the appellants alleged:
‘
10.1
The first defendant will accept deposits lawfully made into the bank
account for and on behalf of the Trust and credit the
Trust with the
amounts so deposited as funds available to the Trust;
10.2
The first defendant will authorise and approve withdrawal of funds
from the bank account [of the Trust] only if–
10.2.1
it was expressly instructed to do so in terms of a written resolution
passed or adopted by the trustees of the Trust; and
10.2.2
a copy of such resolution was presented to the first defendant’s
authorised duly manager by two signatories authorised
by the trustees
to operate the bank account;
10.3
The first defendant undertook to exercise reasonable care to ensure
that it will not authorise or approve the withdrawal of
funds from
the bank account without the relevant resolution of the trustees
which was passed or adopted by the trustees in terms
of the relevant
provisions of the Trust’s Deed of Trust, a copy whereof was
made available to the defendant when it agreed
to open the bank
account for the Trust.
.
. .
10.5
The first defendant undertook to exercise reasonable care, to act in
good faith and to ensure that it would not act negligently
when
managing the Trust’s account, specifically when disbursing
funds from the plaintiff’s account.
10.6
Mr Millar acted negligently in that:
10.
6.1 he failed to realize, when he should or ought to have realised,
by the exercise of reasonable are, that annexure ‘POC3’
10.6.1.1
was not a resolution properly passed or adopted by the trustees of
the Trust;
10.6.1.2
was not signed by all or the majority of the trustees of the Trust;
10.6.1.3
was not a lawful instruction by the trustees to the first defendant
to authorize and approve withdrawal of funds from the
bank account’.
[11]
The only witness to testify on behalf of the Trust was the third
appellant. In his evidence in chief, before the high court,
the third
appellant maintained that the Bank acted outside its mandate and
negligently by authorising the two transfers without
the resolution
of the Board or approval by all the trustees.
[12]
The high court found that the Bank was not negligent in acting on the
instructions of the authorised signatories. It held that
the Bank had
‘made its position clear’ in advising the third
appellant, as one of the trustees at the time, when he
reported
allegations of fraud against the authorised signatories, exactly what
steps he together with other trustees had to take.
[13]
The first transfer of R5.5 million was effected on 26 July 2011. As
the third appellant conceded during the trial, at that
stage, the
appellants had not made any allegations of fraud against the two
signatories to the Bank, nor complained to it about
the alleged
fraud. The Bank was thus simply unaware that anything untoward had
occurred. Before us, counsel for the Bank submitted
that, this should
be the end of the matter. I agree with him, particularly because the
third appellant had conceded as much in
the high court.
[14] The second
transfer of R4 million, which was effected on 28 October 2011, came
about after allegations of fraud in respect
of the two signatories
were made to the Bank. In his evidence in chief, the third appellant
stated that on 17 October 2011,
he approached Mr Millar and
warned him about the illegality of the first transfer of R5.5 million
and that he had received information
that another transfer would be
made without the authorisation of all the trustees. He put it as
follows in his evidence in chief:
‘
I
told Mr Millar that the R5.5 m that he had approved was fraudulent
and I told [him] that there is another request for R4 m that
they
[Pologwane] and the second defendant are planning to [withdraw], R4 m
and I cautioned him to say he should not allow the transaction
to
take place, because as a trustee myself, I am making him aware that
that instruction is also fraudulent’.
[15]
It is common cause that the third appellant later that same day,
followed this up with an email. As Mr Millar’s response
to that
email on behalf of the Bank illustrates, the third appellant was
informed that he had to secure ‘a written request
signed by all
of the Trustees’. Without such new resolution, Mr Millar stated
that he was obliged to comply with the instructions
which came from
the Trust through the authorised signatories.
[16] Under cross
examination the third appellant, conceded that:
(16.1) Annexure
A to the plea of the Bank was the only application the Trust made to
it for the opening of an account. In other
words, the investment
account bearing number […]1, which is the subject of the claim
of the Trust was activated pursuant
to that application;
(16.2) The
completion and submission of the application was authorised by the
Trust in terms of the resolution dated 23 July 2007;
(16.3) The
resolution reflected that the Trust authorised Mr Tengawarima and Ms
Tshetlhe to be the authorised signatories on the
Trust bank account;
(16.4) There was
nothing in the resolution preceding the completion and submission of
the application that imposed an obligation
upon the Bank to look at
the Trust Deed before effecting a transfer;
(16.5) At the
time that the R5.5 million was transferred he had not reached out to
the bank and made any complaints in respect of
the account in issue
and;
(16.6)
Mr Tengawarima and Ms Tshetlhe were the authorised signatories in
respect of the account.
[17] The high
court found:
‘
[T]he
first defendant made its position clear that it adopted the position
that the two persons were still authorised signatories
on the
account, and that it urgently required written request from all
trustees to give effect to a stop instruction on all transfers
on the
account. No such instruction was forthcoming from either Mr Gumbi or
the remaining trustees’.
[18]
Furthermore, the high court found:
‘
At
this stage the first defendant had heard nothing further from Mr
Gumbi or any other trustees pursuant to the urgent request made
by Mr
Millar. The first defendant followed the same procedure as it did
when it made the first payment, and telephonically contacted
Ms Tshetlhe who according to its records, was both trustee and
an authorised signatory. The purpose was to check and confirm
that
the second payment request was indeed authorised. Contact was made
with Ms Tshetlhe and the letter of instruction was annotated
accordingly by both an employee of the first defendant and by Mr
Millar to indicate that contact had been made. Payment was then
made
in accordance with this instruction, on 28 October 2011. No
contact was made by Mr Gumbi.’
[19]
In those conclusions the high court cannot be faulted. In its
strictly technical sense, a trust is a legal institution
sui
generis
.
[1]
In
Lupacchini
NO and Another v Minister of Safety and Security,
[2]
this Court observed,
‘
A
trust that is established by a trust deed is not a legal person –
it is a legal relationship of a special kind that is described
by the
authors of
Honoré’s
South
African Law of Trusts
as “a legal institution in which a person, the trustee, subject
to public supervision, holds or administers property separately
from
his or her own, for the benefit of another person of persons or for
the furtherance of a charitable or other purpose”’.
[3]
As
pointed out in
Land
and Agricultural Bank of South Africa v Parker and Others
:
[4]
‘
[I]t
is only through the trustees, specified as in the trust instrument,
that the trust can act. Who the trustees are, their number,
how they
are appointed, and under what circumstances they have power to bind
the trust estate are matters defined in the trust
deed, which is the
trust’s constitutive charter.’
(Footnotes
omitted.)
[20]
Furthermore, this Court, in
Parker
,
stated:
[5]
‘
It
is a fundamental rule of trust law, which this Court recently
restated in
Nieuwoudt
and Another NNO v Vrystaat Mielies (Edms) Bpk
,
that in the absence of contrary provision in the trust deed the
trustees must act jointly if the trust estate is to be bound by
their
acts. The rule derives from the nature of the trustees’ joint
ownership of the trust property. Since co-owners must
act jointly,
trustees must also act jointly. Professor Tony Honoré’s
authoritative historical exposition has shown
that the joint action
requirement was already being enforced as early as 1848. It has thus
formed the basis of trust law in this
country for well over a century
and half.’
[21] It follows
that Mr Millar cannot be faulted in insisting that the third
appellant urgently send him a written request signed
by all the
Trustees, before the Bank could act on his concerns. However, from
the time the third appellant approached the Bank
on 17 October 2011
it took almost fifty days before there was any response. On 6
December 2011 the Trust wrote to the Bank informing
it of the
resolution adopted on 28 November 2011, in terms of which:
‘
4.
Mr Nyasa Tengawarima and Ms Choice Tshetlhe be removed as signatories
on account number […]1 of the trust with immediate
effect.
5.
Mr Jabulani Ben Gumbi I.D Number […]1 as (A) signatory and Ms
Kgomotso Tshaka ID Number […]7 or Mr Wenliang Ma
Passport
Number […]3 as (B) signatory be and are hereby added as the
new signatories needs to sign together…’
[22]
Counsel for the appellants could not provide any answer as to what
caused this delay in the light of the clear position adopted
by the
Bank. It follows that the Trust has simply failed to make out a case
against the Bank and the appeal must fail.
[23] In the
result, the following order is granted:
The appeal is
dismissed with costs.
_______________________
B C MOCUMIE
JUDGE OF APPEAL
.
Appearances
For
appellants: K
Tsatsawane SC
Instructed
by : Mkhabela
Huntley Attorneys Inc., Sandton
Mc
Intyre Van Der Post, Bloemfontein
For
respondent: J Babamia SC
Instructed
by:
Bowman Gilfillan Inc.
[1]
Braun
v Blann and Botha NNO & Another
[1984] ZASCA 19
;
1984
(2) SA 850
(A) at 859D-H;
Commissioner
for Inland Revenue v Friedman & Others NNO
[1992] ZASCA 190
;
1993 (1) SA 353
(A) at 370D-H.
[2]
Lupacchini
NO & Another v Minister of Safety and Security
[2010] ZASCA 108
;
2010 (6) SA 457
(SCA) para 1.
[3]
Griessel
NO and Others v De Kok and Another
[2019]
ZASCA 95
;
2019 (5) SA 396
(SCA) para 11.
[4]
Land
and Agricultural Bank of South Africa v Parker and Others
2005
(2) SA77 (SCA) para 10.
[5]
Ibid
para 15
.