Tshaka NO and Others v Standard Bank of South Africa Limited and Another

The appellants were trustees of the Bakubung-Ba-Ratheo Economic Development Trust, established to promote socio-economic development of a community. The Trust held a bank account with Standard Bank. In terms of a 2007 resolution, two trustees, Ms Tshetlhe and Mr Tengawarima, were authorised signatories on the Trust’s bank account. During July and October 2011, acting on written instructions and resolutions signed by these authorised signatories, the Bank transferred R5.5 million and later R4 million from the Trust’s account to the Bakubung Economic Development Unit. After the first transfer, one trustee (the third appellant) alleged the transfers were fraudulent and instructed the Bank to stop further payments. The Bank responded that it required a written instruction signed by all trustees to suspend transfers, which was not provided before the second transfer occurred. The trustees sued the Bank to recover the R9.5 million, alleging negligence and breach of mandate.

The appeal was dismissed with costs.

The case affirms that banks are entitled to rely on formally conferred mandates and authorised signatories when operating trust accounts. It reinforces the principle that trustees must act jointly to bind a trust and clarifies that a bank is not liable where it insists on proper joint instructions before suspending or altering an existing mandate.