Standard Bank Financial Services Ltd v Taylam (Pty) Ltd 1979 (2) SA 383 (C)

Standard Bank Financial Services Ltd v Taylam (Pty) Ltd 1979 (2) SA 383 (C)

Issue: Whether a bank that has paid out money on behalf of its client without authorisation is entitled to recover the money from the client, even if the client has changed their position in reliance on the payment.

Facts:

Standard Bank Financial Services Ltd (Standard Bank) was the banker of Taylam (Pty) Ltd (Taylam). Taylam entered into a contract with a building firm for the construction of a shopping centre. Standard Bank agreed to provide Taylam with a loan to finance the construction of the shopping centre.

Under the terms of the loan agreement, Standard Bank was required to make payments to the building firm on behalf of Taylam upon presentation of architect's certificates. The architect's certificates were to certify that the building firm had completed certain stages of the construction work and that Taylam was therefore liable to make payment to the building firm.

On 17 January 1975, Standard Bank received an architect's certificate that certified that Taylam was liable to pay the building firm R17 789,22. Standard Bank paid the R17 789,22 to the building firm on behalf of Taylam.

However, Taylam disputed the architect's certificate and refused to reimburse Standard Bank for the R17 789,22. Taylam argued that the architect's certificate was incorrect and that Taylam was not liable to pay the building firm the R17 789,22.

Standard Bank then sued Taylam for the recovery of the R17 789,22. Taylam argued that Standard Bank was not entitled to recover the money because Standard Bank had paid the money to the building firm without Taylam's authorisation. Taylam also argued that Taylam had changed its position in reliance on the payment, as Taylam had used the money to pay for other expenses related to the construction of the shopping centre.

Held:

The Court held that Standard Bank was entitled to recover the R17 789,22 from Taylam. The Court reasoned that Standard Bank had made the payment to the building firm without Taylam's authorisation and that Taylam was therefore not liable to reimburse Standard Bank for the payment. The court also found that Taylam had not changed its position in reliance on the payment in such a way as to make it unfair to require Taylam to repay the money.

Key Facts:

• A bank made a payment on behalf of its client without authorisation.
• The client disputed the payment and refused to reimburse the bank.
• The bank sued the client for the recovery of the money.

Reasons:

• The Court held that the bank was entitled to recover the money from the client because the bank had made the payment without the client's authorisation and the client was not liable to reimburse the bank for the payment.
• The court also found that the client had not changed its position in reliance on the payment in such a way as to make it unfair to require the client to repay the money.

Conclusion:

The Court's decision in Standard Bank Financial Services Ltd v Taylam (Pty) Ltd 1979 (2) SA 383 (C) is a significant case in South African law. The Court's decision clarified the law relating to the rights of banks that have made payments on behalf of their clients without authorisation.