The Supreme Court of Appeal (“SCA”) recently handed down judgment in Tshaka NO and others v The Standard Bank of South Africa Limited and another in which it reminded account holders to take heed of requests from their bank.

In this matter, the SCA dismissed an application instituted by the trustees of Bakubung-Ba-Ratheo Economic Development Trust following an allegedly fraudulent transfer of ZAR9.5 million from its account held with the Standard Bank of South Africa Limited.


As was permitted under the trust deed, the trustees opened a bank account. The application forms completed by trustees at the time of opening the account with Standard Bank provided that Nyasa Tengawarima and Choice Franscina Tshetlhe were authorised signatories.

In July 2011, the Trust's account executive received a letter of instruction, together with a resolution authorising the bank to effect a transfer of ZAR5.5-million. The resolution was signed by the authorised signatories and after complying with its protocols, the bank acted on the instruction and effected the transfer. Nearly three months later, one of the trustees met with the Trust's account executive and advised him that the transfer of ZAR5.5-million was effected without the necessary approval by the Trust and accordingly requested that all transfers be stopped on the Trust's account.

The account executive requested the trustee to urgently send the bank a written request signed by all the trustees to this effect. Despite Standard Bank's request, the Trust did not timeously provide the bank with the written request. In the absence of the request signed by all the trustees and having not heard anything further from the trustees, the bank acted on a further instruction from the authorised signatories to transfer ZAR4-million from the Trust's account. In December 2011, Standard Bank received a request signed by all the trustees to place a stop instruction on the Trust's account.

The trustees alleged that Standard Bank failed to act in accordance with its mandate. In addition, they alleged that the bank failed to exercise reasonable care, to act in good faith and to ensure that it would not act negligently. It was argued on behalf of the trustees that the account executive was negligent in processing the transfers of ZAR5.5-million and ZAR4-million in circumstances where there were no supporting documents, as required in the trust deed. The High Court found that Standard Bank was not negligent because it had “made its position clear” when the Trust was advised of what steps needed to be taken. Further, the trustees conceded that Standard Bank was unaware of anything untoward in relation to the ZAR5.5-million transfer.

The SCA accepted that Standard Bank had requested a written request signed by all the trustees to place a stop instruction on all transfers form the Trust's account and without such a request, the bank was obliged to comply with instructions from the authorised signatories.

The High Court held that the bank was not negligent in acting on the instructions of the authorised signatories particularly because it had made its position clear when advising the trustee what steps needed to be taken after he had reported allegations of fraud. The trustees could not provide an explanation for the delay in providing the bank with the written request signed by all the trustees. In the circumstances, the Supreme Court of Appeal held that the conclusions of the High Court could not be faulted and dismissed the appeal.

This judgment highlights the importance of complying with requests from your bank in order to ensure the proper operation of your account.

Originally published 07 July, 2020

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