The appellants, trustees of the Seca Trust and the Tableau Trust, claimed repayment of R5 million allegedly invested with Stanlib Wealth Management Ltd (formerly Liberty Specialised Investments). Acting through an investment broker, Mr Wessel du Toit, the trusts issued two cheques of R2.5 million each in favour of Multivest Corporate Investments Trust, an investment vehicle of Stanlib. The investment was allegedly agreed orally with Stanlib’s representative, Mr Jaco Cloete, and was to earn interest with the capital repayable on demand. Although the funds were deposited into a Stanlib-related account, due to internal irregularities and misconduct by Cloete, the funds were wrongly allocated in Stanlib’s system to another entity, the Henco Trust, associated with a fraudulent pyramid scheme. When the trusts demanded repayment, Stanlib denied the existence of any contract with the trusts and denied Cloete’s authority to bind it.
The appeal was upheld with costs, including the costs of two counsel. The order of the full court granting absolution from the instance was set aside and replaced with an order dismissing Stanlib’s appeal with costs, thereby restoring the trial court’s judgment in favour of the appellants for repayment of the invested funds.
The case is significant for South African contract and agency law as it confirms that an oral contract to invest may be established through surrounding conduct and probabilities, even in complex financial arrangements. It clarifies that a principal may be bound by the actions of an employee who has implied authority or whose authority is represented through access to systems and past conduct. The judgment also underscores that internal administrative failures of financial institutions cannot be relied upon to defeat valid investor claims.