Standard Bank told to pay back the money
It paid out more than R2.1m from a deceased estate to a fake executor and tried to argue that it followed proper due diligence. The court didn't buy it.
Costs were awarded against the bank, not least because 'a customer has no duty to anticipate criminal activity'. Picture: Gallo Images/Foto24/Brendan Croft
Standard Bank has been instructed to pay back more than R2.1 million paid to a fake executor by the name of Johan Botha, who managed to convince the bank and the Western Cape High Court master that he was the authorised executor of the estate of Constance Arnot, who passed away in August 2021.
The case highlighted some astonishing vulnerabilities in a system meant to safeguard deceased estate assets.
It also reaffirms the legal principle that it is the bank, not the customer, who is liable in the event money is paid out to the wrong person, particularly where negligence is concerned.
In her final will from 2013, Arnot named her son-in-law James Turner as executor of her estate.
On 21 September, shortly after Arnot passed away, Turner submitted the will, death certificate, and his acceptance of trust as executor to the master's office at the court. He then asked the master to issue the required letters of executorship. It was a full year later, after complaints from Turner's attorneys, that the letters of executorship were issued.
What was not known to Turner at the time was that in February of 2022, the master had also issued letters of executorship to one Johan Botha.
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Documents supplied, payment made
Botha had meanwhile approached Standard Bank via email, claiming to be the executor of Arnot's estate.
The bank's officer in charge of deceased estates demanded certified documents, which Botha appeared to provide, including a copy of the will where he was named as the executor. This was given further credence by stamps on the will certifying it as a certified true copy of the original.
Thus satisfied, the bank proceeded to pay out funds from Arnot's account in April 2022 to Botha and another named recipient, Katherine Smuts.
Turner later found out that the funds had been paid out and immediately contacted the bank to find out to whom and why the funds had been paid out, and based on what documents.
A series of emails passed between Turner's attorneys and the bank, which refused to release the documents requested, claiming Botha was listed at the master's office as the executor of the estate.
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Bank's refusals … and suggestion
The bank also claimed it could not release the requested documents on the basis that they related to a third party, which would put it in violation of the Protection of Private Information (Popi) Act.
By October 2022, Turner's attorneys demanded that the bank pay the funds into the estate account.
The bank refused on the grounds that it had already made payment to Botha and suggested Turner take the matter up with Botha directly.
'Only the bank can claim the funds back from Botha, not the applicant,' reads the judgment.
'This is why the bank's response to the applicant to rather liaise with Botha regarding the funds, when the latter demanded payment of the funds, was cynical to say the least. This, despite its refusal to give any information regarding Botha.'
The bank claimed it followed proper procedures and verifications before transferring the funds to Botha.
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Matter taken to court
Frustrated and determined to uphold his duty as executor, Turner took Standard Bank to court in June 2023, seeking a declaratory order that the bank's closure of Arnot's accounts and payment to Botha were unlawful, demanding the return of R2.19 million plus interest, and the disclosure of documents justifying the bank's actions.
The case exposed a series of failures by Standard Bank, revealing how easily the alleged fraud had slipped through its processes.
Turner argued that his case did not rely on negligence or wrongdoing by Standard Bank, but on his entitlement, as the legitimate executor, to payment from the bank.
When Turner's attorneys received some of the documents supplied by the bank in its reply, they found a series of 'inconsistencies, deficiencies and abnormalities in the emails and documents emanating from Johan Botha'.
They also argued that the bank and its employees were extraordinarily negligent, with no rational or reasonable basis to be satisfied with the documents supplied by Botha.
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Superficial check
The bank's admin officer, Cindy Camp, did a superficial check – consulting the master's portal, which incorrectly reflected Botha as executor – without noticing that Botha's documents were not legitimate.
'Had Ms Camp called the telephone number shown on the portal page to confirm details she would have been in contact with the applicant, and the fraud may well have been exposed,' reads the judgment by Judge Nobahle Mangcu-Lockwood.
'Ms Camp would have had no reasonable or rational basis on which to regard Botha's scant details as adequately verified by checking it against the information shown on the Master's portal.'
Mangcu-Lockwood slammed the bank's male fides (bad faith) for trying to introduce a further affidavit while still refusing to provide information requested by Turner's team.
'Pointedly, no documents were provided to [Turner] which were provided to the bank by Botha for closure of the accounts and transfer of the funds to him, and that remains the position to date,' she said.
The judge rejected the bank's attempt to blame Turner for delays in securing his letters of executorship, citing case law that a customer has no duty to anticipate criminal activity.
The court ruling hinged on the bank's contractual obligation, not its negligence. Its closure of Arnot's bank accounts and the payment to Botha were unlawful, and the bank was ordered to pay over the R2.1 million deceased estate to Turner. Costs were awarded against the bank.
This article was republished from Moneyweb. Read the original here.
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