As a Trustee – Where Authority Begins and Ends | Legal Articles

 

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As a Trustee – Where Authority Begins and Ends

The assumption of a position or office comes with specific responsibilities and duties. The anticipation is that the bearer will perform the duties as required and expected, within set confines. These parameters are what define roles so as to achieve coordinated and oriented outcomes.

They may be functionaries of a company, office bearers in a religious organisation or even members of a sporting code, their roles derive specific responsibilities and duties from where it emanates from.

Trust Property Control Act of South Africa

In a Trust the authority of Trustees is not without reproach, as the Trust Property Control Act 57 of 1988 (the Act), instructions of the Master of the High Court and the Trust Deed provide confines in which this authority must be exercised and to what extent.

A Trustee may not enter, conclude, and bind the Trust without the agreement or consent of the other Trustees, they must act mutually. Decisions of the Trustees must be jointly taken as was held in the case of Niewoudt and Another NNO v Vrystaat Mielies (Edms) Bpk 2004 (3) SA 486 (SCA).

Consequently, it follows that contracting on behalf of a Trust must be authorised by all, the majority, or by one of the Trustees who has the full authorisation of the others, depending on the provisions of the Trust Deed. In the latter scenario, despite the delegation of authority by other Trustees to one Trustee in a certain transaction, their resolution to that effect will still be required, and in writing to fulfil the requirement that the Trustees act jointly.

Trustee Signing on Behalf of Trust

The Trust Deed provides for the responsibilities of the Trustees and therefore any act that is not authorised by the Trust Deed is consequently void, even if the Trustees were to ratify such act, it would still be invalid. As a practical example, if the Trust Deed prohibits Trustees from renting out a property in the Trust to third parties, even if the Trustees all agree and make a resolution to rent out the property to such third parties, such an act would still be void.

In Thorpe And Others v Trittenwein And Another 2007 (2) SA 172 the Court held that a void contract cannot be ratified by the other Trustees. A Trustee had concluded a purchase and sale agreement to buy land without the written authority of the other Trustees. The other Trustees then later sought to ratify the agreement, but the Court held that this was not possible. 

In Land and Agricultural Bank of South Africa v Parker and Others 2005 (2) SA 77 (SCA) the Court held that even in the absence of contrary provisions in the Trust Deed with regards to authorisation, Trustees must act together for an act to be binding on the Trust.

Third parties therefore who are contracting with a Trust must ensure that the following are in place to avoid having the contract declared as void;

  • Contract is authorised by the Trust Deed
  • The Trustee(s) concluding the contract is/are authorised
  • Prior written authorisation (resolution) of the other Trustees, if one Trustee is concluding the contract
  • Confirmation of the identity of the Trustees

The confirmation of the above aspects requires that when contracting with a Trust, third parties must ensure that the Trust Deed, the Trust’s Letters of Authority and the Resolution of the Trustees are in place and valid.  

Van Deventer & Van Deventer Incorporated – Attorneys in Cape Town and Johannesburg

At Van Deventer and Van Deventer Attorneys we assist with various aspects relating to Trusts from registration, enforcing of rights and general guidance. This is a sophisticated area of law but our astute Trust attorneys have extensive experience and know-how in place to assist you all the way. Kindly contact us for further assistance.

 

The information contained in this site is provided for informational purposes only, and should not be construed as legal advice on any subject matter. One should not act or refrain from acting on the basis of any content included in this site without seeking legal or other professional advice. The contents of this site contain general information and may not reflect current legal developments or address one’s peculiar situation. We disclaim all liability for actions one may take or fail to take based on any content on this site.

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