So when am I authorised to act as trustee?

A2BThe Trust Property Control Act 57 of 1988 defines a trustee as meaning “any person (including the founder of the trust) who acts as a trustee by virtue of an authorisation under Section 6.” 

In the matter of Lupacchini vs Minister of Safety and Security (16/2010) [2010], ZASCA 108   (17 September 2010), the position of a trustee acting without the authorisation of the Master was considered, where that “trustee” authorised legal proceedings.

A trust that is established by a trust deed is not a legal person – it is a legal relationship of a special kind that is described by the authors of Honoré’s South African Law of Trusts[1] as “a legal institution in which a person, the trustee, subject to public supervision, holds or administers property separately from his or her own, for the benefit of another person or persons or for the furtherance of a charitable or other purpose.” 

Although the trust property vests in each trustee individually they have to act jointly unless the deed of trust provides otherwise. Their individual interests do not waive the requirement that they have to act jointly.

The consequence of the validity of an act that has taken place in conflict with a statutory prohibition has been considered in numerous cases, and depends on a proper construction of the particular legislation and the intention of the legislature.

The whole scheme of the act is to provide a manner in which the Master can supervise trustees in the proper administration of trusts, and their knowledge of Article 6(1) is essential to such purpose, and by placing a bar on trustees from acting as such until authorised by the Master, the Act endeavours to ensure that trustees can only act as such if they comply with the Act.

In the Kropman NO vs Nysschen[2] it was held that a court has the discretion to retrospectively validate acts of a trustee that are performed without the requisite authority. This proposition was in later cases rejected persuasively.

“Locus standi in iudicio” on the other hand is something else and does not depend on the authority to act but depends on whether the litigant is regarded by the court as having a sufficiently close interest in the litigation.

Although section 6(1) suspends a trustee’s power to act in that capacity he or she could have a sufficiently well-defined and close interest in the administration of the trust to have locus standi.

The essence of the prohibitory phrase in section 6(1), “… shall act in that capacity only if authorised thereto …”, must be interpreted to mean that a trustee may not, prior to the Masters authorisation, acquire rights for, or contractually incur liabilities on behalf of, the trust and is not intended to regulate questions of locus standi in iudicio.’

Legal proceedings commenced by unauthorised trustees and commercial transactions binding the trust are invalid and void.

[1] 5th ed (2002) by Edwin Cameron with Marius de Waal, Basil Wunsh and Peter Solomon para 1.

[2] 1999 (2) SA 567 (T) at 576F.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.

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