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The art of law – a trust acts through trustees who take decisions by way of resolutions

The South African law of trusts is derived in the main from English law.

South Africa’s Trust Property Control Act 57 of 1988 regulates various aspects of trusts, but is far from being a comprehensive encyclopaedia of trust law, and is much less detailed than, for example, the Companies Act.

Most of our law of trusts is common law, that is to say, it is derived from judgments of the South African courts, and from those judgements of the English courts in respect of points of the English law of trusts which have been adopted by South African law. From this it follows that, until a court has pronounced on a particular issue, the law on that point remains uncertain.

Are resolutions of trustees valid and binding on the trust if not recorded in writing?

The decision of the Johannesburg High Court in Robin NO v Serame [2015] ZAGPJHC 261, handed down on 16 November 2015, laid down important and fundamental principles that, it seems, have not hitherto been explicitly articulated by the High Court.

It was held in this case that the Trust Property Control Act does not require resolutions by the trustees of a trust to be in writing. Consequently – unless the trust deed states otherwise – decisions of trustees are valid even though they have not been recorded in written resolutions. Moreover, unless the trust deed prohibits trustees from delegating their duties, or requires that agreements be signed by a particular trustee, the law does not require that agreements entered into on behalf of the trust must be signed by all the trustees.

From this it follows that, in principle, unless the trust deed provides otherwise, a trust may be legally bound to a contract even though there is no written resolution of the trustees approving the contract or authorising the trustee who has signed a written contract to do so on behalf of the trust.

Commercial wisdom and responsible trust management

To this it may be added that it would usually be unwise for trustees to conduct the trust’s affairs without written resolutions on important decisions, even if this is permitted by the trust deed, for it may then become a matter of dispute whether a particular resolution was in fact agreed to by the trustees. It may consequently be uncertain whether or not the trust is bound to the transaction.

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