Trust Law for the Everyday Man

Cameron (South African Law of Trust (2002) 117) et alia submits that for a valid trust to be created the founder must intend to create a trust, the founder’s intention must be expressed in a way as to create an obligation, the property subject to the trust must be defined with certainty, the trust object must be lawful. Therefore for a trust to exist, there must be intention to donate property to be controlled by a group of persons, in their individual capacities, for the benefit of someone else, the intention must be to achieve a lawful objective. Each trust therefore ought to have three parties; the founder, the trustees and the beneficiary. Our law does not bar either of the role players in a trust from wearing more than one hat.

The founder is the natural or legal person who establishes the trust, the trustees are persons who jointly hold, control and administer the trust property in trust for the benefit of another, while the beneficiary is the party who benefits from the creation and administration of a trust (Du Toit South African Trust Law; Principles and Practice (2007) 5-6). A trust may come into existence by way of a written agreement (trust deed), a will, a court order or by way of legislation.

The Trust Property Control Act 57 of 1988 is legislation which governs our trust law in conjunction with common law and case law. The act does not over regulate this area of the law and leaves enough room for the law to develop through the courts. This is important when dealing with an area of the law which is growing and developments are continuous. In simple terms: the act is the skeleton, partly reflecting the position of the common law, while the courts, through their decisions and interpretation of trust law continuously put flesh onto the skeleton, and common law is the foundation on which all develops.

Trustees

The definition of a trustee in section 1 of the Trust Property Control Act 57 of 1988 does not define what a trustee is, save to indicate that a trustee is someone who acts as such by virtue of an authorisation under section 6 and includes any person already appointed as a trustee at the commencement of the act. A trustee may be appointed by the founder through the trust instrument (section 6) and/or by the Master in terms of section 7 of the Trust Property Control Act. An appointed and authorised trustee assumes the office of a trusteeship, and accordingly holds an official position and acts in an official capacity (Du Toit 80).

Cameron et alia stated that for the full accession to the office of the trustee the person ought to have been appointed in a lawful manner, be properly qualified, accept the office of trustee and must have received authorization from the Master. When read in line with the Trust Property Control Act, the person does not become a trustee even if he may meet the other essentials of trusteeship if he has not received a letter of authority from the Master.

In Simplex (Pty) Ltd v Van Der Merwe 1996 (1) SA 111 (W) the court indicated that it was evident from the legislation that an act by a person without the required authority had no force, though not explicitly stated in the act. The judge proceeded to indicate that these actions by a person appointed as a trustee who acted without a letter of authority cannot be ratified. This view was however challenged in Kropman NNO v Nysschen 1999 (2) SA 567 (T) wherein the court disregarded the provisions of section 6 (1) of the Act and allowed for the ratification of an act which was otherwise invalid. However in Van de Merwe v Van De Merwe 2000 (2) SA 519 (C) went against the decision in Kropman and followed Simplex on the interpretation of section 6 (1) of the Act and the contract in question in the matter was found to be void and could not be ratified. Therefore according to these decisions the position followed is that if the appointed trustee has not been authorised he cannot bind the trust and further cannot act as a trustee of that trust.

by Gastavus Chabalala
gastavus@dyason.co.za