On 26 May 2023, the Supreme Court of Appeal delivered judgment in a matter between Shepstone & Wylie attorneys and Abraham de Witt and others, the trustees of the Penvaan Property Trust. 

The reasoning of this judgment has radically altered the legal interpretation of Trust Deeds. All businesses that obtain sureties or other guarantees from trusts as part of their usual business must take note of this SCA decision! 

Effectively, this judgment states that:

1. Even where a Trust Deed specifically provides for a decision of the majority of the trustees to bind the Trust, the actual resolution needs to be signed by ALL of the trustees in office;

2. Where a Trust Deed provides for decisions of trustees to be made jointly, there must be participation in the decision by ALL of the trustees;

3. Even where a Trust Deed provides for trustee decisions to be taken at properly constituted meetings, there must still be a written resolution which may need to be unanimous if there is provision for unanimous round robin to be taken; 

4. Where a Trust Deed mentions at any point within a list of a trustee powers that one of the powers requires unanimous consent, then all of those powers requires unanimous consent of the trustees.

In our view, the grammatical interpretation that the SCA has given to these clauses in this Trust Deed is not supported by the legal rules of grammatical interpretation, however it is now part of our law.  

For a detailed analysis of the judgment, please attend our seminar on Thursday 1 June 2023 at Shepstone & Wylie’s offices at 8am – 9.30am.   

Read the full judgement at: https://www.wylie.co.za/LegalNotices