THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 1270/2021
In the matter between:
SHEPSTONE & WYLIE ATTORNEYS APPELLANT
and
ABRAHAM JOHANNES DE WITT N O FIRST RESPONDENT
RAYMOND ERNST VOLKER N O SECOND RESPONDENT
SEBASTIAN SYLVO VOLKER N O THIRD RESPONDENT
THOMAS PASCAL VOLKER N O FOURTH RESPONDENT
Neutral Citation: Shepstone & Wylie Attorneys v Abraham Johannes de Witt N O
& Others (1270/2021) [2023] ZASCA 74 (26 May 2023)
Coram: ZONDI, MOCUMIE, MBATHA, WEINER JJA and KATHREE-
SETILOANE AJA
Heard: 16 February 2023
Delivered: 26 May 2023
Summary: Deed of suretyship signed by majority of trustees in absence of authority
from the trust deed – trustees required to act jointly and unanimously by the trust deed
– if not, suretyship invalid and unenforceable.
2
____________________________________________________________________
ORDER
___________________________________________________________________
On appeal from : KwaZulu-Natal Division of the High Court , Pietermaritzburg (E
Bezuidenhout AJ, sitting as court of first instance):
The appeal is dismissed with costs, including the costs of two counsel.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Mbatha JA (Zondi and Mocumie JJA concurring)
Introduction
[1] This appeal is against the judgment and order of the KwaZulu-Natal Division of
the High Court, Pietermaritzburg, (E Bezuidenhout AJ) (the high court). The high court
dismissed the appellant’s claim to hold the Penvaan Property Trust IT 5932/1994 (the
Trust) liable in terms of a deed of suretyship signed on 25 May 2013 . The deed of
suretyship was signed in favour of Shepstone & Wylie Attorneys (the appellant) for the
personal indebtedness of Mrs Mignon Renate Volker (Mrs Volker), in respect of legal
fees incurred in her divorce action. The appeal serves before us with leave of this
Court.
Background facts
[2] At the time of the litigation the trustees for the time being of the Trust were Mr
Thomas Wilhelm Volker (Mr Volker), Mrs Volker and Mr Ab raham Johannes de Witt
(Mr De Witt). During 2012, Mrs Volker requested the appellant to represent her in a
divorce action against her husband, Mr Volker. The Trust owns property from which
various companies, in which it is a sole shareholder, were trading. It survived on an
income generated by these companies. Firstrand Bank Limited (Firstrand) liquidated
these companies. Mrs Volker had no independent source of income. She depended
on income received from the companies concerned and stayed on a farm belonging
to the Trust.
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[3] During 2013, Firstrand brought an application in the high court for the
sequestration of the Trust. On 16 May 2013, Mrs Volker and Mr De Witt , in their
capacities as trustees of the Trust requested the appellant to represent the Trust in
the litigation with Firstrand. They signed a power of attorney authorising the appellant
to represent the Trust in the litigation with Firstrand and to engage the services of
senior counsel on their behalf. The appellant agreed to represent the Trust. Due to the
impecunious state of Mrs Volker, the appellant requested security for its fees and
disbursements in the divorce action. This culminated in the signing of the deed of
suretyship in favour of the appellant, in terms of which the Trust bound itself as surety
and co -principal debtor, jointly and severally i n favour of the appellant for the due
payment of any and all amounts which are now or which at any time in the future may
become, due by the debtor to the creditor in respect of any indebtedness or obligation
of the debtor to the creditor arising from any cause whatsoever, including but not
limited to any and all legal costs or disbursements due by the debtor to the creditor on
an attorney and own client basis.
[4] On 16 May 2013, Mrs Volker gave notice of a meeting of the trustees to be held
on 23 May 2013 in Tweedie for the purposes of tabling and considering the following
resolutions that: (a) the Trust resolves to oppose the sequestra tion proceedings
instituted by Firstrand; (b) the Trust ratifies the signature of the power of attorney
signed by Mrs Volker and Mr De Witt on 16 May 201 3; and (c) the Trust resolves to
sign the deed of suretyship in favour of the appellant for Mrs Volker’s legal fees and
disbursements. Mr Volker’s response to the invitation to attend the meeting was that,
in principle he had no problem with the trustees ’ meeting as long as it would be a
‘productive meeting’. He conveyed that he would, however, be unavailable during that
week due to the urgent meetings previously arranged with the liquidators. He also
pointed out that the trust meetings should be held at P envaan, Vryheid as he could
not afford to travel eight hours to Tweedie for a one hour meeting . Mrs Volker
responded by rescheduling the meeting to 25 May 2013 to be held closer to Mr Volker
in Vryheid. I point out that all the exchanges that took place via email communications
were copied to Ms Estelle de Wet, the attorney representing the appellant in these
proceedings.
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[5] On 25 May 2013, t he meeting proceeded in the absence of Mr Volker. Mrs
Volker and Mr De Witt passed the relevant resolutions and thereafter proceeded to
sign the deed of suretyship in favour of the appellant.
Proceedings before the high court
[6] The fees due and payable to the appellant for the legal services rendered on
behalf of Mrs Volker, remained unsatisfied. This led to the application by the appellant,
to seek judgment against the Trust. The appellant relied on the deed of suretyship to
claim the payment of all amounts that were due. The Trust opposed the application
and one of the grounds of opposition was that the deed of suretyship on which the
appellant sued was not signed by all the three trustees and was for that reason invalid.
[7] The Trust contended that contrary to the provisions of the trust deed, the
trustees did not act jointly and unanimously in signing the deed of suretyship.
Furthermore, it contended that the suretyship was not for the benefit of the Trust or
beneficiaries of the Trust, but for the personal benefit of Mrs Volker (although she was
also a beneficiary of the Trust).
[8] The high court upheld the Trust’s defence. It found that the resolutions relating
to the opposition of the sequestration of the Trust were clearly for the benefit of the
Trust, but the same could not be said to apply to the deed of suretyship signed for the
personal legal costs of Mrs Volker. Mr Volker had not tabled his views on the subject
of the meeting and could not be said to have acted jointly with the other two trustees.
The trust deed, reasoned the high court, required that they act unanimously on an
external subject like the signing of the suretyship agreement. It accordingly concluded
that the resolution taken at the meeting of 25 March 2013 to bind the Trust, was invalid
and of no force and effect, as was the deed of suretyship.
[9] The issue before us is whether the high court was correct in upholding the
Trust’s defence and finding that the resolution taken to sign th e deed of suretyship
was invalid and of no force and effect.
The trust deed (as amended)
[10] The salient provisions of the amended trust deed are as follows:
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‘“2. The beneficiaries” mean THOMAS WILHELM VOLKER , RENATA MIGNON VOLKER
(born SCHROEDER) and the lawful descendants of THOMAS WILHELM VOLKER.
. . .
4. TRUSTEES
There shall at all times be not less than three trustees of the Trust. The first Trustees shall be
Thomas Wilhelm Volker, Renata Mignon Volker (born SCHROEDER) and MANFRED
LOTHAR SCHUTTE who accept their appointment as such.
. . .
POWER OF TRUSTEES
11.1. Any Trustee shall have the power to deal with the trust property and trust income for the
benefit and purpose of the Trust in their discretion for which purpose they are granted all
necessary powers and authority including (but without limit ation) the powers stated in the
appendix. The powers conferred upon the Trustees shall be complete and absolute and
exercisable in the discretion of the Trustees;
11.2. The Trustees shall have the power to ratify, adopt or reject, in their discretion, contracts
made on behalf or for the benefit of the Trust, either before or after its formation.
. . .
MEETINGS OF TRUSTEES
13.1. The Trustees may meet together for the despatch of business, adjourn and otherwise
regulate their meetings as they think fit. Any Trustee shall be entitled on reasonable written
notice to the other Trustees to summon a meeting of the Trustees. All Trustees for the time
being in the Republic of South Africa shall be given reasonable notice of any meeting of the
Trustees.
13.2. . . . [T]he quorum necessary at any such meeting shall be two Trustees. (as amended
on 31 January 2000).
13.3. A Trustee may be represented at a meeting of Trustees by a proxy appointed as such
in writing.
13.4. A written resolution signed by all Trustees for the time being or their respective alternates
or proxies shall be as effective as a resolution taken at a meeting of Trustees.
EXECUTION OF DOCUMENTS
14. All negotiable instruments, contracts, deeds and other documents which require to be
signed on behalf of the Trust shall be signed in such manner as the Trustees shall from time
to time determine, provided however that all such negotiable instruments, contracts, deeds
and other documents shall be signed by at least two Trustees.
. . .
DISAGREEMENT BETWEEN TRUSTEES
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16.1. At and for each meeting of Trustees, the Trustees present, in person or by proxy, shall
elect a Chairperson; provided for a s long as THOMAS WILHELM VOLKER is a Trustee, he
shall be Chairperson.
16.2 In the event of any disagreements arising between the Trustees at any time the view of
the majority shall prevail. Should there be an equality of votes, the Chairperson shall have a
second or casting vote.
. . .
DISTRIBUTION OF INCOME AND TRUST PROPERTY
23.1. The Trustees shall use, pay or apply the whole or portion of the net income of the Trust,
in such proportions and at such time or times as they in their sole discretion determine, for the
welfare of all or any one or more of the beneficiaries;
23.2. As used in 23.1 above and 24 below, “welfare” shall, besides the ordinary meaning of
the word, also mean the benefit, comfort, maintenance, education, advancement and pleasure
of the beneficiaries and shall include in general all those matters and purposes which the
Trustees in their discretion may c onsider to be in the interests or for the advantage of the
beneficiaries.
24. The Trustees shall pay, use or app ly the whole or portion of the t rust property in such
proportions and at such time or times as they in their sole discretion determine, for the welfare
of all or any one or more of the beneficiaries.’
[11] In addition, the ‘Appendix to the Penvaan Property Trust’ (the appendix)
granted the following powers to the trustees:
‘POWER TO THE TRUSTEES;
Without prejudice to the generality of any of the provisions of the accompanying deed
constituting the above Trust the trustees shall have the following powers which shall be
exercisable in their sole and absolute discretion for the purposes and benefit of the Trust,
namely:
. . .
8. To mortgage, pledge, hypothecate or otherwise encumber any property forming part of the
trust property.
. . .
11. To defend, oppose, compromise or submit to arbitration all accounts, debts, claims,
demands, disputes, legal proceedings and matters which may subsist or arise between the
Trust and any person.
. . .
16. To guarantee the obligations of any beneficiary and/or any company of which the Trust
and/or beneficiary is a shareholder and to bind the Trust as collateral security for any such
7
obligation undertaken by the Trust, to mortgage, pledge or hypothecate any asset forming part
of the trust property.
. . .
18. To engage the services of professional practitioners and tradesmen for the performance
of work and rendering of services necessary or incidental to the affairs of the Trust.
. . .
25. To contract on behalf of the Trust and to ratify, adopt or reject contracts made on behalf
or for the benefit of the Trust, either before or after its formation.
26. Provided the Trustees unanimously agree, to c onduct business on behalf of and for the
benefit of the Trust, and to employ trust property in such business.’
[12] The appellant challenges the order granted by the high court on various
grounds, most importantly, that the deed of suretyship was valid and enforceable. It
relies on clauses 13.1, in terms of which a trustee was entitled on reasonable written
notice to the other trustees to summon a meeting ; 13.2 which requires the presence
of two trustees to constitute a quorum; and 14 , which requires deeds and other
documents to be signed by at least two trustees, to submit that the m eeting was
properly constituted. The appellant argued that r easonable notice was given to the
trustees considering that the Firstrand application was to b e heard in court the
following week. The appellant further contends that the t wo trustees who were in
attendance constituted the required quorum in terms of clause 13.2 of the trust deed.
Hence, the resolution was passed by the majority, who subsequently signed the deed
of suretyship in favour of the appellant in accordance with clause 14 of the trust deed.
[13] The appellant asserts that once proper notice of the meeting was given to all
the trustees, the requirement that trustees were to act jointly was satisfied. For this
assertion, it relied on Van der Merwe N O and Others v Hydraberg Hydraulics CC and
Others (Van der Merwe) 2010 (5) SA 555 (WCC) para 16, where the court stated:
‘A majority decision is competent only if adopted by a majority of the trustees present at a
quorate meeting of trustees. Whether such a “meeting” would need to be one at which the
trustees attending were physically present together, or whether the “meeting” could be held in
some alternative form, is a question which it is not necessary to decide. It is evident, however,
that in order to qualify as “a meeting”, all the trustees in office would have to receive notice
thereof so as to be able to participate in it if they so wished.’
It is common cause that Mr Volker received the notice for the meeting but did not
attend.
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[14] The appellant furthermore submits that the high court misdirected itself in
relying on clause 26 of the appendix to the trust deed for the finding that the trustees
had to act unanimously in executing the trust deed. It contends that clause 11 of the
trust deed defines, as a general principle, what powers the trustees, acting in
accordance with the trust deed have, in dealing with property belonging to the Trust.
According to the appellant, clause 26 of the appendix merely defines what the trustees
may and may not do with trust property.
[15] Furthermore, the appellant relies on clause 16.2 read with 13.2 of the main
provisions in support of its contention that only two trustees are required to constitute
a meeting, and view of the majority shall prevail. In that regard, it is argued that once
proper notice of the meeting was given to the third trustee, that constituted a quorum
and the requirement that the trustees were to act jointly was satisfied.
[16] The appellant further submits that the finding by the high court, that a
unanimous decision was required was erroneous, as it was in conflict with cla use 16,
of the main provisions which expressly provides for decisions of the majority to prevail.
It is argued that this finding was also in conflict with the decisions in Van der Merwe,
supra and Le Grange and Another v The Louis and Andre Le Grange Family Trust No
1562/95/PMB and Others (Le Grange) [2017] ZAKZPHC 2. These decisions found that
the requirement to act jointly will be satisfied where proper notice of a meeting was
given and a decision made at the ensuing meeting is taken by the trustees who chose
to attend.
[17] The trustees countered the appellant’s submissions by contending that the trust
deed is not a majority decision. They seek support for this contention in clause 26 of
the appendix, which requires decisions and resolutions to be taken unanimously by
the trustees, acting jointly in resolving to sign instruments such as the deed of
suretyship on behalf of the Trust. They therefore, argue that the resolution to sign the
deed of suretyship is void and not binding, since Mr Volker did not abstain from voting
at the meeting no r did he express his views in respect of the resolution taken at the
meeting of 25 March 2013, in any manner including by way of a proxy.
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[18] Furthermore, the trustees contend that the high court correctly found that Mrs
Volker and Mr De Witt had no power to sign the deed of suretyship as it was not for
the benefit of the Trust or for the ‘welfare’ of a beneficiary.
The legal principles
[19] The Trust Property Control Act 57 of 1988 (the Act) regulates inter vivos trusts.
In Lupacchini N O and Another v Minister of Safety and Security [2010] ZASCA 108;
2010 (6) SA 457 (SCA) para 1, this Court described a trust as follows:
‘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 Honore’s South African Law of Trusts 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 . . .”.’
[20] The principles governing trusts are well established. It is trite that for purposes
of administrati on of the trust, trustees are deemed to be the co-owners of the
immovable property and other assets. Equally trite, is the principle that trustees must
act jointly in taking decisions and resolutions for the benefit of the Trust and
beneficiaries thereof, unless a specific majority clause provides otherwise. Trustees
are legally bound to comply with the terms of the trust deed. In line with their fiduciary
duties, trustees must be legally authorised to act through competent resolutions.
[21] In Thorpe and Others v Trittenwein and Another 2007 (2) SA 172 (SCA); [2006]
4 All SA 129 (SCA ), this Court endorsed the principle that unless the trust deed
provides otherwise the trustees must act jointly if the Trust is to be bound by their acts.
At paragraph 14, this Court expressed itself as follows:
‘The answer, I think, is that even if one regards the decision of the co-trustees to enter into the
agreement of sale as no more than a matter of internal trust administration, the point remains
that in the a bsence of a joint decision of the co -trustee (or the majority if that is all the trust
deed requires), the assent of a single trustee will not bind the trust.’
Most importantly, the court stated the following:
‘A trustee who was not a party to the decision making process and who therefore has not
authorized the contract would be free to contest the validity of the transaction.’
[22] In Steyn and Others N N O v Blockpave (Pty) Ltd 2011 (3) SA 528 (FB)
(Blockpave), the court succinctly drew the distinction b etween internal and external
10
business with outsiders. The court held that although trustees may disagree internally
on a matter, they are prohibited from disagreeing externally. Internal matters may be
debated and put to a vote, thereafter the voice of the majority will prevail. However, in
so far as the Trust is required to deal with external business all trustees are required
to participate in the decision-making.
[23] In Coetzee v Peet Smith Trust en Andere 2003 (5) SA 674 (T) , the court also
held that unless the trust deed contained provisions to the contrary, there was legally
no reason to follow a different rule. In the case of trusts, joint and unanimous conduct
in the alienation, handling and management of trust assets was a prerequisite.
Analysis
[24] It remains to be considered whether the trustees acted jointly and in accordance
with the trust deed in authorising the signing of the deed of suretyship. This requires
the Court to interpret the salient provisions of the trust deed and the appendix thereto.
It is undisputed that the meeting was convened by Mrs Volker on an urgent basis .
However, the exchange of emails between the trustees and the represe ntative of the
appellant indicates that Mr Volker was not available to attend the meeting nor did he
participate in the meeting by way of a proxy. The emails are also silent on his views
about the resolutions to be discussed at the meeting. One of them suggested that Mr
Volker was not keen on opposing the sequestration of the Trust. This is not conclusive
as the resolutions were yet to be debated at the meeting. Mr Volker could have been
persuaded to go with the views of the other trustee s. Clause 13.1 prov ides that the
trustees may meet together for the despatch of business, adjourn and otherwise
regulate their meetings as they think fit. Any trustee shall be entitled on reasonable
written notice to the other trustee to summon a meeting of the trustees. All trustees for
the time being in the Republic of South Africa shall be given reasonable notice of any
meeting of the trustees. In terms of clause 13.2 , as amended in January 2000, the
quorum necessary for the meeting was two trustees. Clause 13.3 provides t hat the
absent trustee may be represented by a proxy appointed as such in writing. The absent
trustee, Mr Volker, was not represented by a proxy. In this case the decision was taken
by two trustees, Mrs Volker and Mr De Witt, who signed the deed of suretyship in
favour of the appellant, in the absence of Mr Volker. This was contrary to the provisions
of clause 13.4 of the trust deed, which provides that a written resolution signed by all
11
trustees for the time being or their respective alternates or proxies shall be as effective
as a resolution taken at a meeting of trustees.
[25] As held by this Court in Le Grange , the trustees, when dealing with trust
property, are required to act jointly. Even when the trust deed provides for a majority
decision, the resolutions must be signed by all the trustees. A majority of the trustees
may take a valid internal decision, but a valid resolut ion that binds a trust externally
must be signed by all trustees, including the absent or the dissenting trustee. It is a
fundamental rule of trust law, which this Court restated in Nieuwoudt N O and Another
v Vrystaat Mielies (Edms) Bpk [2004] 1 All SA 396 (SCA), that in the absence of a
contrary provision in the trust deed, the trustees must act jointly if the Trust estate is
to be bound by their acts. The rule derives from the nature of the trustees’ joint
ownership of the trust property. Since co -owners must act jointly, trustees must also
act jointly.
[26] It therefore follows that where a trust deed requires that the tr ustees must act
jointly if the Trust is to be bound, a majority decision will not bind the Trust where one
of the trustees, such as in this case, did not participate in the decision-making. This is
imperative particularly when the trustees are required to take a decision involving the
assets of the Trust. In the case where the majority decision prevails, all trustees are
still required to sign the resolution. In Land and Agricultural Development Bank of SA
v Parker and Others (Parker) 2005 (2) SA 77 (SCA); [2004] 4 All SA 261 (SCA) , this
Court held that when dealing with third parties, even if the Trust instrument stipulates
that the decision can be made by the majority of trustees, all trustees are required to
participate in the decision making and each has to sign the resolution. The court in
Blockpave restated the aforementioned principles in Parker. It went on to state that a
trust operates on resolutions and not on votes. This is significant as the Trust does not
explicitly provide that external decisions may be taken by a majority vote.
[27] Similarly, in Van der Merwe, the court also endorsed the principle that trustees
have to act jointly and that the minority is obliged to act jointly with other trustees in
executing the resolution adopted by the majority. A majority decision prevails only
where there has been participation by a ll trustees where the trust deed expressly
provides for it. In this case, on every possible interpretation of what happened on 25
March 2013, there is no room to conclude that Mr Volker participated in the decision-
12
making. It is a misnomer for the appellant to infer participation in the meeting only on
the basis that Mr Volker received reasonable notice thereof. The high court was
therefore correct to conclude that the trustees did not act jointly.
[28] The appellant’s reliance on clause 16 of the main provisions is misplaced. It is
difficult to follow the rationale for relying on clause 16, as it refers to disagreements at
the meeting. There were no disagreements at the me eting. Honorѐ’s South African
Law of Trusts , as pointed out by the high court , authorit atively confirms that all
important decisions are to be taken unanimously. The reliance in Le Grange on Van
der Merwe , which held that the decisions of the majority of t rustees present at a
meeting shall prevail, was misplaced (see para 15 of Van der Merwe). The decision in
Blockpave paras 37-38 endorses the trite principle that a trust operates in two different
spheres, that is internally and externally. Internally, trustees may disagree and if the
trustees are not unanimous, a matter may be put to a vote. The majority vote prevails
and the dissenting trustee has to subject himself to the democratic vote of the majority.
Externally, trustees cannot disagree. In the external sphere the Trust functions by
virtue of its resolutions, which have to be supported by the full complement of the Trust
body. External decisions are those relating to the trust property with the outside world
and internal decisions may relate to the use of income for the welfare of the
beneficiaries of the Trust.
[29] The high court also correctly found that the powers envisaged in the trust deed
were to be read t ogether with the powers set out in the appendix thereto. This is
apparent from the wording of the first paragraph of the appendix which state ‘[w]ithout
prejudice to the generality of any of the provisions of the accompanying Deed
constituting the above Trust, the trustees shall have the following powers which shall
be exercisable in their sole and absolute discretion for the purposes and benefit of the
Trust’. Amongst others, clause 8 of the appendix gives powers to the trustees ‘[t]o
mortgage, pledge, hypothecate or otherwise encumber an y property forming part of
the trust property’; clause 16 ‘[t]o guarantee the obligations of any beneficiary and/or
any company of which the Trust and/or beneficiary is a shareholder and to bind the
Trust as collateral s ecurity for any such obligation undertaken by the Trust, to
mortgage, pledge or hypothecate any asset forming part of the t rust property’, and
clause 25 ‘[t]o contract on behalf of the Trust and to ratify, adopt or reject contracts
made on behalf or for th e benefit of the Trust, either before or after its formation ’.
13
However, to safeguard the interests of the Trust and its beneficiaries, clause 26 places
a caveat on the exercise of those powers, where it states that: ‘[p]rovided the trustees
unanimously agree, to conduct business on behalf of and for the benefit of the Trust,
and to employ trust property in such business’.
[30] Clause 26 of the appendix specifically requires that the trustees act
unanimously for the purposes of conducting business for and on behalf of the Trust.
The trust deed does not envisage that a suretyship should be concluded on behalf of
a trustee or a beneficiary for their personal debts. The preamble to the appendix is
specific in stating that the powers must be exercised for the purpose and benefit of the
Trust. Similarly, clause 11 of the trust deed refers to the exercise of the powers for the
benefit and purpose of the Trust in their discretion for which purpose they are granted
all the necessary powers and authority , including (but without limitation) the powers
stated in the appendix. The powers conferred upon the trustees shall be complete and
absolute and exercisable in the discretion of the trustees.
[31] The suretyship agreement was drawn in very wide and over reaching terms as
set out in paragraph 3 above. It states that should the debtor be
liquidated/sequestrated, wound up or placed under judicial management provisionally
or finally, the surety undertakes not to prove a claim against the debtor for any amount
the surety may be called upon to pay under the suretyship until all amounts due and
payable by the debtor to the creditor, have been paid in full. This indicates that t he
terms of the suretyship were crafted to give a hundred percent protection to the
appellant, which can surely not be for the benefit of the Trust.
[32] I hasten to add that this is not a lost cause for the appellant. On 1 December
2011, a court order was granted by consent against Mr Volker and Others in favour of
Mrs Volker under case number 9759/2011. The order provided that one of the
companies, Penvaan Estates (Pty) Ltd (Penvaan Estates) , was to pay Mrs Volker
reasonable legal fees incurred in the pending divorce proceedings between her and
Mr Volker. Penvaan Estates was further directed to advance to the appellant, on behalf
of Mrs Volker various sums of money commencing from 30 November 2011 and 30
January 2012 respectively, for Mrs Volker’s costs in the pending divorce action.
According to the trustees Penvaan Estates was finally l iquidated during April 2013,
without the appellant taking steps to enforce the terms of the court order. The trustees
14
allege that the appellant only lodged the claim against the insolvent company when it
realised that its suretyship was invalid and not bin ding. The appellant’s claim for Mrs
Volker’s legal fees may still be considered by the liquidators of the insolvent Penvaan
Estates.
The Order
[33] Accordingly, the appeal is dismissed with costs , including the costs of two
counsel.
_______________________
Y T MBATHA
JUDGE OF APPEAL
15
Kathree-Setiloane AJA (Weiner JA concurring)
[34] I have read the judgment prepared by my sister, Mbatha JA. I agree with the
order but arrive at that decision on the limited basis set out below. I also agree with
the summation of the facts in the first judgment and do not repeat them here.
[35] The question for determination in the appeal is whether the deed of suretyship
signed by Mrs Volker and Mr de Witt (in their capacity as tr ustees) in favour of the
appellant was duly authorised by the Trust and was legally binding on it. The trust
deed does not explicitly provide that the decisions of the trustees may be taken by
majority vote. It is settled law, in this regard, that in the a bsence of a provision in a
trust deed that provides that decisions may be taken by majority vote, the tr ustees
must act jointly if the Trust is to be bound by their acts.1
[36] The appellant’s reliance on the decision of Van der Merwe is, therefore,
misplaced as the trust deed in that case contained a ‘majority vote’ clause and not a
‘unanimity’ clause. Binns Ward J observed as follows:
‘It is evident from these provisions that unanimity amongst trustees is not required in order for
decisions to be made effectively, in respect of transactions concerning the administration of
the Trust and the dealing with its assets, in terms of the powers conferred on the trustees in
terms of clause 6 of the trust deed. It is sufficient if the relevant decision enjoys the support of
the majority. A majority decision is competent only if adopted by a majority of the trustees
present at a quorate meeting of the trustees.’2
The appellant’s reliance on Le Grange 3 is similarly unwise as that case is
distinguishable from the current one, in that the trust deed there contained a provision
that required all resolutions of the trustees to be supported by majority vote.4
1 Nieuwoudt and Another NNO v Vrystaat Mielies (Edms) Bpk [2004] 1 All SA 396 (SCA); 2004 (3) SA
486 (SCA) par a 16; Land and Agricultural Bank of South Africa v Parker and Others 2005 (2) SA 77
(SCA); [2004] 4 All SA 261 (SCA) para 16; Van der Merwe NO and Others v Hydraberg Hydraulics CC
and Others; Van der Merwe and Others v Bosman and Others 2010 (5) SA 555 (W CC) para 16 (Van
der Merwe).
2 Van der Merwe para 16.
3 Le Grange and Another v The Louis and Andre Le Grange Family Trust No 1562/95/PMB and Others
[2017] ZAKZPHC 2.
4 Ibid para 6.
16
[37] The trust deed in the present case is similar to the one in Coetzee v Peet Smith
Trust en Andere (Coetzee)5 where the court held that:
‘Unless the trust deed or will contained provisions to the contrary, there was legally no reason
to follow a different rule in the case of Trusts. Joint unanimous conduct in the alienation,
handling, and management of Trust assets was a pre-requisite’.
However, unlike in Coetzee, in this case the requirement for ‘unanimity’ in the trust
deed is express. Clause 26 of the appendix expressly states: ‘Provided the Trustees
unanimously agree, to conduct business on behalf of and for the benefit of the T rust,
and to employ trust property in such business’.
[38] The appendix which is entitled ‘Powers of the Trustees’ gives additional powers
to the trustees.6 These powers are set out in clauses 1 to 26 of the appen dix. They
include the power to: ‘mortgage, pledge, hypothecate or otherwise encumber any
property forming part of the trust property’ (clause 8); ‘guarantee the obligations of any
beneficiary and/or any company of which the Trust and/or beneficiary is a shareholder
and to bind the Trust as collateral security for any such obligation undertaken by the
Trust, to mortgage, pledge or hypothecate any asset forming part of the trust property’
(clause 16); and to ‘contract on behalf of the Trust and to ratify, ad opt or reject
contracts made on behalf or for the benefit of the Trust, either before or after its
formation’ (clause 25).
[39] The provisions of the trust deed including those in the appendix (which are part
of the trust deed) must be interpreted in the context of the trust deed as a whole. The
principles articulated in Natal Joint Municipal Pension Fund v Endumeni Municipality,7
for the interpretation of legislation and other documents, apply.
5 2003 (5) SA 674 (TPD) at 679A/B-B/C and C-C/D.
6 The relevant provisions of the appendix are referenced in the main judgment, as are the main
provisions of the trust deed.
7 In Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262
(SCA); 2012 (4) SA 593 (SCA) at para 18, this Court held that:
‘. . . Interpretation is the process of attributing meaning to the words used in a document, be it legislation,
some other statutory instrument, or contract, having regard to the context provided by reading the
particular provision or provisions in the light of the document as a whole and the circumstances
attendant upon its coming into existence. Whatever the nature of the document, consideration must be
given to the language used in the light of the ordinary rules of grammar and syntax; the context in which
the provision appears; the apparent purpose to which it is directed and the material known to those
responsible for its production. Where more than one meaning is possible each possibility must be
weighed in the light of all these factors. The process is objective, not subjective. A sensible meaning is
to be preferred to one that leads to insensible or unbusinesslike results or undermines the apparent
purpose of the document.’
17
[40] The preamble to the appendix provides that: ‘Without prejudice to the generality
of any of the provisions of the accompanying Deed constituting the above Trust the
trustees shall have the following powers which shall be exercisable in their sole and
absolute discretion for the purposes and benefit of the Trust’. It is clear from its
preamble that the powers afforded to the trustees in clauses 1 to 26 of the appendix
must be exercised for the purpose and benefit of the Trust. This is a peremptory
requirement for the exercise of these powers by the trustees.
[41] Clause 26 of the appendix contains a proviso that ‘the trustees unanimously
agree, to conduct business on behalf of and for the benefit of the Trust, and to employ
trust property in such business’. The use of the word ‘provided’ in clause 26 of the
appendix makes this plain. The word ‘provided’ must be given its ordinary grammatical
meaning which is ‘on condition that’. 8 The proviso in clause 26 is a textual indicator
that all the powers of the trustees, set out in clauses 1 to 25 of the appendix, must be
exercised unanimously by the trustees.
[42] Clause 11.1 of the main provisions of the trust deed provides that: ‘Any trustee
shall have the power to deal with the trust Property and t rust income for the benefit
and purpose of the Trust in their discretion for which purpose they are granted all
necessary powers and authority including (but without limitation) the powers stated in
the Appendix . . .’. The reference in clause 11.1 to the word ‘appendi x’ indicates that
clause 26 is also a pre -condition for the exercise of the wide powers afforded to
trustees in that clause. Properly construed, this means that all powers of the trustees
must be exercised unanimously and jointly. It is specifically becaus e clause 26 of the
appendix demands ‘unanimity’, that there is no reference to ‘majority vote’ in the trust
deed.
[43] The use of the words ‘conducts business’ in clause 26 of the appendix relates
to the powers afforded to the trustees in clauses 1 to 25 of the appendix. In other
words, the powers afforded to the trustees in clauses 1 to 25 cumulatively constitute
the business of the Trust. The exercise of these powers by the trustees, on behalf of
the Trust must, therefore, be unanimous and for the benefi t of the Trust for it to bind
8 Cambridge Dictionary.
18
the Trust. If any one of these two requirements is not present in the exercise of these
powers, it will not bind the Trust.
[44] The appellant contends that clause 26 of the appendix must be construed as
applying only to ins tances where the trustees wish to conduct business on behalf of
the Trust and to employ trust property in such business. To adopt this construction,
would be to ignore the word ‘provided’ in clause 26 of the appendix. It is the use of this
word that create s the nexus between clause 26 and the antecedent clauses of the
appendix, namely clauses 1 to 25. This interpretation of clause 26 would not only lead
to a sensible and business-like result, but it also gives effect to the object of the trust
deed which is to protect the interests of the trust and its beneficiaries.
[45] It follows that the business of the Trust would include the exercise of the power
to guarantee the obligations of a beneficiary which is envisaged in clause 16 of the
appendix. Accordingly, the decision to conclude a deed of suretyship on behalf of the
Trust, as we have in this case, has to be a unanimous decision of all the trustees and
it must be for the benefit of the Trust. However, as we know, the resolution taken by
Mrs Volker and Mr de Witt to sign the deed of suretyship, in favour of the appellant,
was not unanimous as Mr Volker did not participate in that decision. In the
circumstances, neither the resolution taken by Mrs Volker and Mr de Witt authorising
them to conclude the deed of suretyship, nor the deed itself is valid and enforceable
against the Trust. In view of this conclusion, there is no need to deal with the question
of whether the deed of suretyship was concluded for the benefit of the Trust.
[46] For these reasons, the appeal is dismissed with costs , including the costs of
two counsel.
_______________________
F KATHREE-SETILOANE
ACTING JUDGE OF APPEAL
19
APPEARANCES
For appellant: S R MULLINS SC
Instructed by: Shepstone & Wylie Attorneys, Umhlanga Rocks
Webbers Attorneys, Bloemfontein
For respondents: M G Roberts SC with E Roberts
Instructed by: Moolman & Pienaar Inc, Pietermaritzburg
Pieter Skein Attorneys, Bloemfontein.