The Supreme Court of Appeal (SCA) was recently called upon to consider the meaning of signatures and electronic signatures in the matter of Global & Local Investments Advisors (Pty) Ltd v Nickolaus Ludick Fouché.
Mr Fouché gave a written mandate to Global & Local Investments Advisors (Pty) Ltd (Global) to act as his agent and invest money with Investec Bank on his behalf. According to the written mandate 'All instructions must be sent by fax to 011 486 2915 or email to monique@globallocal.co.za with client’s signature'. Global opened CCM accounts for its clients at Investec and managed these accounts for a fee. In August 2016, Mr Fouché’s Gmail account was hacked by fraudsters and three emails were sent to Global instructing them to transfer specific amounts to accounts of named third parties. Two of the emails ended with the words ‘Regards, Nick’ whilst the third ended ‘Thanks, Nick’. A total of R804 000 was paid out from Mr Fouché’s CCM account to unknown third parties. When Mr Fouché became aware of this, he notified Global. Mr Fouché claimed payment of the amount transferred on the basis that Global had paid out contrary to the written mandate.
Global argued that it acted within the terms of the mandate on instructions that came from Mr Fouché’s legitimate email address and that the typed name ‘Nick’ at the end of each email satisfied the signature requirements, when considered in the light of s 13(3) of the Electronic Communications and Transactions Act 25 of 2002 (the ECTA). Mr Fouché contended that the instructions did not bear his signature, whether manuscript or electronic.
On appeal the SCA was concerned with the proper interpretation of the written mandate and whether Global acted in breach thereof.
The SCA indicated that in construing the mandate the context must be taken into account and noted that “in the commercial and legal world signatures serve established purposes. Signatures are used as a basis to determine authority and can be checked for authenticity”.
The SCA held that in order to be able to resort to s 13(3) of the ECTA, Global would have had to show that in terms of the mandate an electronic signature was required. As there was no mention of the word electronic in the mandate, the SCA could not fault the finding of the Court below and Global’s argument was rejected.
The SCA agreed with the finding of the court below, namely that:
What was required was a signature in the ordinary course namely in manuscript form, even if transmitted electronically, for verification and authentication purposes; and
Because the instruction was not accompanied by such a signature, the funds were transferred without proper instructions and contrary to the mandate.
The SCA concluded that because the emails were fraudulent in that they were not dispatched by a person with the authority to do so and were not accompanied with Mr Fouché’s manuscript signature, they could not be binding on him.
There are a variety of safeguards that can be implemented to avoid situations such as these. Should you require any assistance or advice in respect of these safeguards or any other issue concerning signatures, please contact our offices on 041 363 6044 or info@kaplans.co.za.
