In a landmark judgment delivered by the Western Cape High Court recently, the court made it clear that banks cannot escape liability when they pay estate funds to the wrong person, even when that person presented themselves as the lawfully appointed executor of a deceased estate.
The case of Turner NO v Standard Bank of South Africa Limited and Another serves as a stark warning to financial institutions about their duty of care when handling the funds of deceased clients.
How a Fraudster Emptied the Bank Accounts
As Judge Mangcu-Lockwood stated in the opening of the judgment: “To begin at the end of the story, the bank paid the monies into the account of one Johan Botha, who is not the nominated executor in terms of the will, and who is unknown to the applicant.”
When Constance Pamela Catherine Arnot died on 1 August 2021, her estate included substantial funds in the total amount of R2,191,666.24 held at Standard Bank.
The precise sequence of events, as detailed in the judgment, reveals how the fraud unfolded:
- 21 September 2021: The attorneys for Mr Turner, the executor nominated in the deceased’s will, reported the estate to the Master’s Office, submitting all required documentation, including the will, death certificate, death notice, and Turner’s acceptance of trust as executor.
- 17 February 2022: The Master inexplicably issued letters of executorship to Johan Botha – a person completely unknown to Turner and not nominated in the will. This happened while Turner was still awaiting his own letters of executorship.
- 11 March 2022: Botha contacted Standard Bank’s deceased estate department via email, claiming to be the executor of Mrs Arnot’s estate.
- 14 – 24 March 2022: A series of email exchanges occurred between Botha and Standard Bank’s administration officer for deceased estates. Initially, Botha’s documents were rejected twice for not being properly certified. On 24 March, Botha submitted what appeared to be certified copies of letters of executorship, the deceased’s ID, and his own ID. The Bank states that Botha also produced a copy of a will naming him as executor, which bore stamps indicating it was “accepted and registered” by the Master’s Office on 28 September 2021.
- 3 March 2022: Botha had already opened an account with Standard Bank in anticipation of receiving the funds.
- 5 April 2022: Standard Bank transferred the entire balance from Mrs Arnot’s accounts to Botha’s newly opened account.
- 5 – 13 April 2022: Within just eight days, all funds were transferred out of accounts linked to Botha and one Katherine Smuts, leaving zero balances.
- 15 August 2022: The Master’s Office informed Turner’s attorneys about the letters of executorship issued to Botha, but noted they could not locate their copy of these letters.
- 2 September 2022: The Master finally issued the rightful letters of executorship to Turner, over a year after Mrs Arnot’s death.
- 18 August – 7 September 2022: Turner’s attorney made repeated requests to Standard Bank for information about who received the funds and what documentation was presented. The bank consistently refused to provide this information, citing third-party confidentiality and claiming that the Master’s portal still showed Botha as the executor.
- 7 September 2022: Standard Bank finally informed Turner’s attorneys that the accounts had been closed on 5 April 2022, and the funds transferred to Botha.
- 13 October 2022: Turner formally demanded payment of the funds into the bank account of the deceased’s estate. Standard Bank refused, saying they had already paid Botha and suggesting Turner should “liaise with Botha” to recover the funds.
The Bank’s Fatal Mistakes
The detailed chronology reveals several serious errors by Standard Bank:
- The bank accepted paperwork from Botha without proper verification of authenticity.
- Despite warning signs (multiple submission attempts, recently opened account), the Bank transferred almost R2.2 million with inadequate checks.
- The bank never contacted the executor named in the will they had on file.
- After discovering the problem, the bank withheld information that could help recover the funds, using privacy laws as justification.
Banking on a Weak Defence
Justice Mangcu-Lockwood rejected the bank’s arguments and made a clear ruling:
- When a customer deposits money with a bank, the bank becomes the owner of those funds.
- The customer has a personal right to demand payment of those funds.
- It is the bank’s responsibility, not the client’s, to guard against fraud.
The court found that Standard Bank failed to exercise proper care when accepting Botha as the executor. The bank couldn’t produce acceptable documentation proving they had verified Botha’s authority.
What This Means for the Different Role Players
This judgment has significant implications:
- For banks: Financial institutions must thoroughly verify executor appointments before releasing estate funds. The case shows that accepting apparently “certified” documents at face value is not enough.
- For executors: While the rightful executor prevailed, this case shows the importance of promptly securing your appointment and monitoring estate assets. Turner’s year-long wait for letters of executorship created an opportunity for fraud.
- For the Master’s Office: The case highlights weaknesses in the Master’s systems, as letters of executorship were issued to both the legitimate executor and an apparent fraudster.
- For the public: This ruling provides assurance that banks can be held accountable if they negligently release estate funds to the wrong person, even when the bank claims to have relied on seemingly official documents.
The Financial Outcome
The court ordered Standard Bank to repay the full amount (R2,191,666.24) plus interest to Turner as the rightful executor of the estate. The bank was also ordered to pay the legal costs of the case.
This judgment reinforces a basic principle: when banks accept deposits, they take on major responsibilities. If they pay those funds to the wrong person, even someone with apparently “official” paperwork, they remain liable to the rightful owner of those funds.
Reference list:
- Turner N.O v Standard Bank of South Africa Limited and Another (9121/2023) [2025] ZAWCHC 177 (3 April 2025)
- https://www.fisa.net.za
- https://www.moneyweb.co.za
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