Thorpe and Others v Trittenwein and Another (071/05) [2006] ZASCA 30; 2007 (2) SA 172 (SCA) ; [2006] 4 All SA 129 (SCA) (24 March 2006)

About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Supreme Court of Appeal
SAFLII
>>
Databases
>>
South Africa: Supreme Court of Appeal
>>
2006
>>
[2006] ZASCA 30
|

|

Thorpe and Others v Trittenwein and Another (071/05) [2006] ZASCA 30; 2007 (2) SA 172 (SCA) ; [2006] 4 All SA 129 (SCA) (24 March 2006)

Links to summary

Reportable
Case no: 71/05
In
the matter between:
B
E THORPE, S THORPE AND A E R DIXON
(In
their capacities as Trustees of the Brian
Edward
Thorpe Trust) 1
st
APPELLANTS
EASTGATE
RENTALS (PTY) LTD 2
nd
APPELLANT
and
J
A TRITTENWEIN 1
st
RESPONDENT
CONDERE
BELEGGINGS 63 CC 2
nd
RESPONDENT
________________________________________________________________
Coram : SCOTT, CAMERON, CONRADIE, LEWIS,
et
HEHER JJA
Date
of hearing : 6 March 2006
Date of delivery : 24 March 2006
Neutral
citation: This judgment may be cited as
Thorpe v Trittenwein
[2006] SCA 30 (RSA)
Summary: Agreement for sale of immovable property
signed by one of three co-trustees – in absence of authority in
trust deed, such
a trustee to be regarded as an ‘agent’ within
the meaning of
s 2(1)
of the
Alienation of Land Act 68 of 1981
________________________________________________________________
JUDGMENT
________________________________________________________________
SCOTT JA
/…
SCOTT
JA:
[1] The appellants applied in the High Court,
Johannesburg, for an order declaring the sale of certain immovable
property situated
in Bedfordview (‘the property’) to be valid and
enforceable together with certain ancillary relief which included an
order aimed
at enforcing the registration of transfer of the property
in their names. The matter came before A P Joubert AJ who dismissed
the
application with costs. The appeal is with the leave of the court
a quo.
[2] The sale which the appellants sought to have
declared valid came about in somewhat unusual circumstances. On 8
December 2000 Mr
Brian Edward Thorpe (‘Thorpe’) signed a written
offer to purchase the property in the name of the Brian Edward Thorpe
Trust (‘the
trust’). Although in the form of an offer, the
document was intended to constitute a written agreement of sale once
the offer had
been accepted. It bears the heading ‘Agreement of
Sale’ and makes provision for the signature of the offeree, who is
described
as the ‘seller’, to signify his acceptance. A feature
of the document is its provision for both a ‘Purchaser 1’ and a
‘Purchaser
2’. The name of the trust has been inserted in the
space left for the identification of purchaser 1 but the space for
the insertion
of the name of purchaser 2 has been left blank. The
purchase price is stated to be R2 520 000 of which purchaser 1 (the
trust) is
to pay R1 250 000 ‘for stand 1’ and purchaser 2 is to
pay R1 270 000 ‘for stand 2’. Each purchaser is to pay one half
of
the deposit of R252 000 within seven days of the acceptance of the
offer. In the event, the first respondent accepted the offer and
signed the document on the same day, ie 8 December 2000. I shall
refer to it as the ‘agreement of sale’.
[3] On 19 December 2000, a memorandum of agreement,
headed ‘Addendum A’ was signed by the first respondent (as
seller) and by
a Mr Neil John Fuller. The latter is stated therein to
act as a trustee for a close corporation or company to be formed or
as nominee
and is referred to as the ‘second purchaser’. In the
preamble the agreement of sale of 8 December 2000 is identified and
the
addendum is said to be attached to it. In the body of the
addendum the parties agree that the second purchaser ‘hereby
purchases
stand 2 [of the property] for a purchase price of R1 250
000’. A further, somewhat contradictory, clause provides that ‘in
the
event of the second purchaser not finding another second
purchaser within 90 days of signature of this addendum’ . . . it
will
‘terminate forthwith and no longer be of any force and/or
effect’. I mention in passing that Fuller is a member of Fuller
Estates
CC which carries on business under the style of ‘Re/Max
One’ whose printed logo appears on the agreement of sale of 8
December
2000.
[4] On 6 March 2001 a further document was signed by the
first respondent (as seller) and Fuller (as second purchaser) and
headed
‘Addendum B’. It amended the previous addendum in two
respects. First, it amended the purchase price payable by the second
purchaser
from R1 250 000 to R1 270 000 so as to reflect the amount
specified in the agreement sale. Second, it deleted the provision
which
permitted Fuller to find another second purchaser, failing
which the agreement contained in addendum A would fail and confirmed
unequivocally
that the second purchaser was Fuller ‘as trustee for
a close corporation or company to be formed or his nominee’.
[5] Clause 4 of the written agreement of 8 December 2000
rendered the sale conditional upon the seller (first respondent)
‘being
able to establish a township on the property’. The clause
provided further that the costs of a town planner and of establishing
a township were to be born by the purchasers. It also recorded that
the condition would be deemed to be fulfilled upon the town planner
giving notice to the purchasers that the application had been
approved. In terms of clause 1 the purchasers were to provide bank
guarantees to the seller’s nominee for the balance of the purchase
price within 15 days of the fulfillment of the condition. This
meant,
of course, that save for the deposits the first respondent was
obliged to wait for the township approval before being paid.
[6] A deposit of R126 000 was paid on behalf of the
trust shortly after Addendum A was signed. Fuller on the other hand
delayed paying
for almost a year. In November 2001 he advised the
first respondent that he had nominated Eastgate Rentals (Pty) Ltd
(the second
appellant) as second purchaser. In March 2002 the
latter’s deposit was finally paid. In the meantime, the town
planner who had
been appointed in late 2000 was experiencing
difficulty with the township application. A late objection resulted
in even further
delay in the fulfillment of the condition. The first
respondent was pressed for funds and was unable to pay the bond
instalments
on the property. Following an exchange of correspondence
the first respondent’s attorneys in a letter dated 10 October 2002
purported
to cancel the sale, but curiously only in so far as it
related to the second purchaser. Fuller ignored the cancellation and
proceeded
on the basis that the sale was binding, as did the first
appellant. At some stage the bondholder obtained judgment against the
first
respondent and took steps to have the property sold in
execution on 26 February 2003 by public auction. The second
respondent (Condere
Beleggings 63 CC) then stepped into the breach
and provided the funds to enable the first respondent to liquidate
his indebtedness
to the bondholder. On 5 March 2003 the first and
second respondents entered into a deed of sale in terms of which the
former sold
the property to the latter. In the meantime it appeared
that the town planner had received word from the local authority that
the
township application would be approved. This was conveyed to
Fuller on 2 May 2003.
[7] On 15 May 2003 the appellants launched their
application for the relief referred to in para 1 above. They
contended that the agreement
of sale together with its two addenda
constituted an indivisible and valid contract, that the purported
cancellation was ill conceived
and groundless and that they were
entitled to the relief claimed. The first respondent in his answering
affidavit raised a plethora
of defences. One of them was that the
three documents said to constitute the deed of sale did not comply
with the requirements of
s 2(1) of the Alienation of Land Act 68 of
1981 (‘the Act’). Most of the others were patently without merit.
Fortunately, it
is unnecessary to consider any of them. In response
to a point raised in the answering affidavit of the second respondent
(who was
not represented by the same attorney as the first
respondent) Thorpe stated in reply that he had been orally authorized
by the other
trustees of the trust to enter into the agreement of
sale. He also said that the oral authority had in any event been
subsequently
ratified in writing by the other trustees and he annexed
in this regard a copy of the minutes of a meeting of the three
trustees
held on 3 October 2003. In a further set of affidavits the
second respondent contended that the absence of the written authority
of Thorpe’s co-trustees rendered the agreement of sale invalid for
want of compliance with the provisions of s 2(1) of the Act
and that
the invalidity could not be cured by an
ex post facto
ratification. The court
a quo
upheld this defence and on this
ground alone dismissed the application with costs. This is the issue
to which I now turn.
[8] Section 2(1) of the Act reads –
‘
No alienation of land after the commencement of this
section shall, subject to the provisions of section 28, be of any
force or effect
unless it is contained in a deed of alienation signed
by the parties thereto or by their agents acting on their written
authority.’
The object of this provision, as in the case of its
predecessors, is undoubtedly to put the proof of such an ‘alienation’
of land
beyond doubt and thereby in the public interest to avoid
unnecessary litigation. See eg
Philmatt (Pty) Ltd v Mosselbank
Developments CC
1996 (2) SA 15
(A) at 25B-D and authorities there
cited. The need for the authority of an agent to be in writing is no
less necessary to achieve
this object than the need for the deed to
be in writing.
[9] As observed by Cameron JA in
Land and
Agricultural Bank of SA v Parker and others
2005 (2) SA 77
(SCA)
para 10 at 83H a trust is ‘an accumulation of assets and
liabilities’. Although forming a separate entity that entity,
like
a deceased estate, is not a legal
persona
. The assets and
liabilities constituting the trust vest in the trustees and it is
they who must administer them. They are therefore
not the agents of
the trust, nor for that matter of the beneficiaries (
Hoosen and
others NNO v Deedat and others
1999 (4) SA 425
(SCA) para 21). It
is moreover trite that unless the trust deed provides otherwise,
trustees must act jointly. In the absence of
a contrary provision in
the deed they may, however, authorize someone to act on their behalf
and that person may be one of the trustees.
(See
Nieuwoudt and
another NNO v Vrystaat Mielies (Edms) Bpk
2004 (3) SA 486
(SCA)
paras 16 and 23.)
[10] The trust deed in the present case (a copy of which
formed part of the record) makes provision for three trustees. In
terms of
clause 8.5 decisions of the trustees are to be taken on a
majority vote, subject to certain exceptions. Clause 20.2 provides
that
‘any of the trustees shall be entitled to delegate all or any
of his [or her] powers hereunder to any person approved by his [or
her] co-trustees’. There is nothing, however, to suggest that a
trustee may act on behalf of the other trustees without their
authority.
On the contrary, the deed clearly contemplates them acting
jointly.
[11] The other two trustees are, and always have been,
Sharon Thorpe and Allen Edwin Ross Dixon. From what has been said
above it
is apparent that neither signed any of the three documents
which the appellants contend constitute the deed of alienation
contemplated
in section 2(1) of the Act. It is also common cause that
while both were party to the decision to enter into the agreement of
sale
and therefore authorized Thorpe to do so, the authority of
neither was in writing.
[12] It is necessary to observe that the position of a
trustee is distinguishable from that of a partner. A partnership,
like a trust,
is not a legal
persona
. But there is a
fundamental difference between the two. In the absence of any
provision in the partnership agreement to the contrary,
each partner
has authority to perform acts in the furtherance of the business of
the partnership. That authority arises by implication
of law and the
partnership will accordingly be bound. For this reason a deed of
alienation of immovable property need be signed by
one partner only.
See
Muller en ‘n ander v Pienaar
1968 (3) SA 195
(A).
Different considerations similarly apply in the case of corporations,
tutors and curators. See eg
Potchefstroom Dairies v Standard Fresh
Milk Supply Co
1913 TPD 506
at 512-513 (cited with approval in
Muller v Pienaar
at 200H-201C). See also
Myflor Investments
(Pty) Ltd v Everett NO and others
2001 (2) SA 1083
(C) at
1095I-1096D. But none of these is applicable to trusts. On the other
hand, in the case of joint executors who, like trustees,
are obliged
to act jointly, it was held in
Tabethe and others v Mtetwa NO and
others
1978 (1) SA 80
(D) that an agreement of sale of immovable
property was invalid for want of compliance with s 1 of Act 71 of
1969 (a predecessor
of the present section) as it had been signed by
one of two co-executors only and without the written authority of the
non-signing
executrix.
[13] The approach adopted by the court
a quo
, and
embraced by the respondent in this court, was simply that Thorpe
signed the agreement of sale of 8 December 2000 both as trustee,
ie
as principal, and as the authorized agent of the other two trustees,
and because that authority was not in writing the agreement
was void
for non-compliance with s 2(1) of the Act. In this court counsel for
the appellant challenged the correctness of this approach.
He argued,
first, that the term ‘agents’ in the section had to be strictly
construed. Secondly, he argued that a distinction
had to be drawn
between the decision making process on the one hand and the function
of signing the agreement of sale on the other.
As far as the former
is concerned, he contended that the joint action requirement of trust
law required no more than that the co-trustees
jointly take the
decision to enter into the agreement. Thereafter, so it was argued,
the trustee signing the agreement did so, not
as an ‘agent’ of
the co-trustees in the strict sense contemplated by the section, but
as a ‘functionary’ of the trust.
[14] 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 absence of the joint decision of the co-trustees
(or
the majority if that is all the trust deed requires), the assent
of a single trustee to a contract (unlike in the case of a partner)
will not bind the trust. The reason is the rule that requires
co-trustees to act jointly. This much is well established and was
readily
conceded by counsel. A trustee who was not party to the
decision making process and who therefore has not authorized the
contract
would be free to contest the validity of the transaction. In
that event the other contracting party wishing to hold the trust
bound
would be obliged to prove the existence of that authority. The
discharge of such a burden of proof would ordinarily be no easy
matter.
[15] As previously indicated, the very object of s 2(1)
of the Act is, on grounds of public policy, to facilitate that proof
by requiring
the authority to be in writing and so avoid needless
litigation. Whether one regards Thorpe as having acted as a
functionary of the
trust and in that sense a principal or as both a
principal (as co-trustee) and agent of the other co-trustees, the
result in my view
must be the same. Given the object of the section,
it must be construed, I think, as being applicable on either basis.
In other words,
the reference in the section to ‘agents’ must be
understood as including a trustee who may in a sense be said to sign
as a principal
(ie as the trust) but whose power to bind the trust is
nonetheless dependent upon the authority of the co-trustees. To do
otherwise
would be to thwart the clear object of the section. It
follows that in my view the agreement of sale (as supplemented by the
addenda)
is void
ab initio
and of no force and effect.
[16] The appellants in replying affidavits sought to
rely in the alternative on a subsequent written ratification of
Thorpe’s conduct
in entering into the agreement. In this court
counsel abandoned the point. The concession was well made.
Ratification relates back
to the original transaction. There can be
no ratification of a contract which is void
ab initio.
See
Wilken v Kohler
1913 AD 135
at 143.
[17] It follows that the appeal must fail. The result
may seem somewhat technical, especially since Thorpe was the founder
of the
trust, is clearly the dominant trustee and is also, with
members of his family, a beneficiary of the trust. Counsel was at
pains
to point out that it was not – as is usual in this type of
case – the trustees who were seeking to escape the consequences of
the sale; it was the seller who was not in any way prejudiced by the
absence of the written authority of the other trustees. But
the trust
is typical of the modern business or family trust in which there is a
blurring of the separation between ownership and
enjoyment, a
separation which is the very core of the idea of a trust. (See
Land
and Agricultural Bank of SA v Parker
, supra, para 19 at 86E.)
Those who choose to conduct business through the medium of trusts of
this nature do so no doubt to gain
some advantage, whether it be in
estate planning or otherwise. But they cannot enjoy the advantage of
a trust when it suits them
and cry foul when it does not. If the
result is unfortunate, Thorpe has himself to blame.
[18] The appeal is dismissed with costs, including the
costs of two counsel.
__________
D
G SCOTT
JUDGE OF THE SUPREME COURT OF APPEAL
CONCUR
:
CAMERON
JA
CONRADIE
JA
LEWIS
JA
HEHER
JA