Case note on GLOBAL AND LOCAL INVESTMENTS ADVISORS (PTY) LTD / NICKOLAUS LUDICK FOUCHÈ (71/2019)  ZASCA08 (18 MARCH 2020)
The Supreme Court of Appeal handed down judgment on 18 March 2020 in a dispute between Global and Local Investments Advisors (Pty) Ltd (“Global”) and a mining consultant, Mr Fouchè.
Mr Fouchè had given a written mandate to Global to act as his agent and invest money with Investec Bank on his behalf. The written mandate stipulated that all instructions must be sent by fax to a specified number and a specified email “with client’s signature”. The money was to be invested in a Corporate Cash Manager account in the name of Mr Fouchè at Investec and Global would invest and manage that account on Mr Fouchè’s behalf. In August 2016, Mr Fouchè’s gmail account was hacked by fraudsters and, by using his authentic email credentials, they sent 3 emails to Global requesting Global to transfer specified amounts into the accounts of a third parties at First National Bank. Two of the three emails ended with the words “Regards, Nick” while the third ended with “Thanks, Nick”. None of the emails had a form of any electronic signature and none of them had attachments. In accordance with three emails, Global paid a total R804 000 from Mr Fouchè’s investment account to third parties. Once Mr Fouchè became aware of this he notified Global that the emails had not been sent by him. Mr Fouchè claimed payment from Global on the basis that it had paid out contrary to its written mandate.
The issue before the court was to determine whether Global had breached its mandate in terms of which it was authorised to invest and manage money entrusted to it by Mr Fouchè by releasing funds in response to fraudulent emails ostensibly sent by Mr Fouchè.
Global relied on the fact that the emails came from Mr Fouchè’s legitimate email address and that the emails contained his typed written name at the foot of the emails to the extent that it satisfied the signature requirement in light of section 13(3) of the Electronic Communications and Transactions Act 25 of 2002 (“ECT Act”). Global argued that by using the word “Nick”, it would constitute Mr Fouchè’s electronic signature as he always ended his emails in that manner. Mr Fouchè argued that the instruction did not bear his signature, whether it be manuscript or electronic.
After consideration of the facts and relevant case law, the court held in order to resort to section 13(3) of the ECT Act, Global would have had to show that in terms of the mandate an electronic signature was required. In this instance, the word “electronic” was conspicuously absent from the mandate. Accordingly, the court held that the instruction ostensibly from Mr Fouchè was not accompanied by a signature and the funds were transferred without the proper instructions and contrary to the mandate.
Global had placed reliance on Spring Forest Trading 599 CC / Willberry (Pty) Ltd t/a Eco-Wash and Another 2015 (2) SA118 SCA which concerned the validity of cancellation of agreements by way of exchange of emails. The court distinguished the present matter from Spring Forest given in that instance, the person who actually wrote and sent the emails was not an issue. In the Spring Forest decision, there was no dispute regarding the reliability of the emails, accuracy of the information communicated or the identities of the persons who appended their names to the emails. In this instance however, given that the emails in issue were in fact fraudulent, they were not binding on Mr Fouchè. The appeal was accordingly dismissed with costs.