Acting on Behalf of a Trust – The Enforceability of Trustee Action Prior to Authorisation | Legal Articles

 

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Acting on Behalf of a Trust – The Enforceability of Trustee Action Prior to Authorisation

Letter of Authority Trust South Africa

The issuing of the Letter of Authority as Trustee by the Master of the High Court signals the assumption of office as Trustee to the designated party. It is at this point that the responsibilities, authority and duties as a Trustee begin to be binding and effective.

The above denotes that the authority of the Trustees begins upon written authority from the Master of the High Court, and not prior. Section 6 (1) of the Trust Property Control Act 57 of 1988 (the Act) provides that any Trustee who acts on behalf of a Trust must have prior written authorisation from the Master of the High Court.

Unlike companies, whose contracts may be ratified at a later stage, actions of unauthorised Trustees cannot be ratified at a later point and are therefore void and invalid.

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Trustee Duties and Powers

Being an office bearer comes with responsibilities and duties that attach to such office and therefore one may not engage in duties that are attached to an office or position that they have not yet assumed, without delegation or authorisation. This is strictly observed with regards to Trusts and any act by an unauthorised “Trustee” is without force or effect, and void.

This position does not change where the Trustee is waiting for the Letter of Authority as Trustee from the Master of the High Court and in the meanwhile concludes some contracts acting as the Trustee of the Trust, such contracts will be void and without effect.

Subsequently, any action of the Trustee (not as yet a Trustee in strict terms) who is yet to be authorised by the issuing of the Letter of Authority as Trustee by the Master of the High Court, is therefore invalid. Such actions cannot be ratified at a later stage by the Court, Master or the other Trustees.

It therefore becomes important and calls for any third party entering into a contract with a Trust to make sure that the Trustee acting on behalf of the Trust is authorised to do so by producing the Letter of Authority as Trustee, among other things i.e contract authorised by the Trust Deed, authority of other trustees (Resolution) etc.

In the case of Simplex (Pty) Ltd v Van der Merwe And Others NNO 1996 (1) SA 111 (W) the Court held that any act of the Trustees before the actual receipt of written authority to act as Trustee from the Master of the High Court, is void. Further, post-ratification by the Trustees, Master or even the Court is not possible.

A Will or the Trust Deed is lodged to the Master of the High Court together with certain documentation and in the event that the Master finds that all is in order, will then issue the Letter of Authority as Trustee.

Van Deventer & Van Deventer Incorporated – Estates, Wills, and Trust Attorneys South Africa

You can be a beneficiary or Trustee intending to enforce your rights, or maybe you want to register a Trust or even benefit from our clever and comprehensive guidance with regards to Trusts - we assist with many aspects of Trusts.

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