Case Name: Shepstone and Wylie Attorneys v De Witt N.O. and Others
Citation: [2025] ZACC 14
Date: 1 August 2025
This case is reportable due to its significant implications for trust law, particularly regarding the authority of trustees to bind a trust through suretyship agreements. The judgment clarifies the interpretation of trust deeds, specifically the distinction between unanimous-decision trusts and majority-decision trusts, which is crucial for legal practitioners and trustees alike.
The Constitutional Court addressed whether a trust could be bound by a suretyship agreement signed by two of its three trustees in the absence of the third. The court found that the trust deed required unanimous consent for such decisions, thus validating the suretyship agreement.
The key legal issues included: - The authority of trustees to bind a trust through a suretyship agreement. - The interpretation of quorum and decision-making provisions in the trust deed. - The distinction between unanimous and majority decision-making in trust law.
The court held that the deed of suretyship was validly executed by the two trustees present at the meeting, as the trust deed allowed for such action under the circumstances. The appeal was upheld, and the previous orders were set aside.
Shepstone and Wylie Attorneys sought to hold the Penvaan Property Trust liable for legal fees incurred by one of its beneficiaries, Mrs. V[...], under a suretyship agreement signed by two trustees. The third trustee, Mr. V[...], was absent from the meeting where the decision was made. The High Court initially ruled against the validity of the suretyship, leading to an appeal to the Supreme Court of Appeal, which was subsequently appealed to the Constitutional Court.
The court needed to determine whether the trust deed permitted two trustees to bind the trust in the absence of the third trustee and whether the suretyship agreement was valid under the trust's governing documents.
The court analyzed the provisions of the trust deed, particularly focusing on the quorum requirements and the necessity for unanimous decisions. It distinguished between internal and external decision-making processes, concluding that the trust deed allowed for decisions to be made at a quorate meeting, provided that reasonable notice was given to all trustees.
The court granted leave to appeal, upheld the appeal, and set aside the order of the Supreme Court of Appeal. It ruled that the special point in limine regarding the alleged invalidity of the deed of suretyship was dismissed with costs, and the respondents were ordered to pay the costs of the applicant in this Court.
The judgment established that: - A trust deed can provide for majority decision-making, but this must be explicitly stated. - Trustees must act jointly unless the trust deed specifies otherwise. - The requirement for unanimous consent in certain decisions is a protective measure for the trust and its beneficiaries.