SUMMARY
| Global and Local Investments Advisors (Pty) Ltd (“the Appellant”), a financial services provider, was authorised to invest and manage money entrusted by Nickolaus Ludick Fouche (“the Respondent”). The Appellant’s role is to open accounts for its clients at Investec and then manage such accounts for a fee expressed as a percentage of the funds invested. On 23 November 2015, the Respondent gave a written mandate to the Appellant to act as his agent and invest money with Investec Bank on his behalf (“the Mandate”). The mandate specifically stipulated that all instructions by the Respondent would be sent by fax or by email with the Respondent’s signature. |
In or during August 2016, an unauthorised party illegally hacked the Respondent’s email account and sent 3 (Three) emails to the Appellant, using the Respondent’s authentic email credentials, instructing the Appellant to transfer specified amounts to accounts of third parties at First National Bank. The email correspondences aforesaid ended with “Thanks, Nick” and not 1 (One) had attachments to the email. In response, the Appellant authorised 3 (Three) separate payments in the sum of R804 000.00 from the Respondent’s account to the unknown third parties. Upon discovering this, the Respondent notified the Appellant of the fact that the emails had not been sent by him and claimed payment of the transferred amount from the Appellant on the basis that the Appellant’s actions were contrary to the Mandate. In its defence, the Appellant argued that it had acted within the scope of the Mandate being on instructions that emanated from the legitimate address of the Respondent and that the name “Nick” at the end of the emails satisfied the signature requirement in terms of section 13(3) of the Electronic Communications and Transactions Act 25 of 2002 (“the Act”), which provides as follows: |
Section 13(3) of the ECT Act reads as follows: ‘Where an electronic signature is required by the parties to an electronic transaction and the parties have not agreed on the type of electronic signature to be used, that requirement is met in relation to a data message if – (a) A method is used to identify the person as to indicate the person’s approval of the information communication; and |
(b) Having regard to all the relevant circumstances at the time the method was used, the method was as reliable as was appropriate for the purposes for which the information was communicated.’ |
The Respondent argued that the emails did not bear his signature, whether manuscript or electronic. The High Court found in favour of the Respondent. The Appellant appealed the matter and this Court had to determine whether the Appellant had indeed breached the Mandate.
HELD
| The Court held that context is an important factor to consider when construing the Mandate given that signatures serve an established purpose in the commercial and legal world. Signatures are used as a basis to determine authority and can be verified. In establishing what constitutes a signature the court turned to various sources including but not limited to the following: 1. The Concise English Oxford Dictionary defines signature as “to affix one’s name to a writing or instrument, for the purpose of authenticating or executing it, or to give effect as one’s act”. 2. In Van Vuuren v Van Vuuren (1854) 2 Searle 116 at 121, the Court held that to sign a document means to authenticate that which stands for or is intended to represent the name of the person who is to authenticate. |
3. In Da Silva v Janowsky 1982 (3) SA 205 (A) at 218F-219C [1982] All SA 43 (A) and Harpur NO v Givindamall and Another 1993 (4) SA 751 (A) the Court held that a signature does not refer merely to the written characters appearing on a document; it refers to the fact of signature in relation to the contents of the document on which it appears. |
| After considering the meaning of the word ‘signature’, it was held that the Court a quo could not be faulted for concluding that what was required was a signature in the ordinary course, namely in manuscript form, even if transmitted electronically, for purposes of authentication and verification. The instruction was not accompanied by such a signature and the High Court correctly held that the funds were transferred without proper instructions and contrary to the Mandate. Accordingly, the Court concluded that the emails were in fact fraudulent as they were not written nor sent by the person they purported to originate from and therefore they could not be binding on the Respondent and the Appeal was dismissed. |
VALUE
Section 13 (3) of the Electronic Communications and Transactions Act is not applicable where a mandate requires a ‘signature’ which in every day and commercial context serves an authentication and verification purpose.
Written by Jeannique Booysen and Lindokuhle Mashilo
