Trustworthy: Constitutional Court's definitive ruling on trustee signatures

The courts recently caused significant uncertainty and anxiety regarding trustee decision-making. Since 2023, they have fluctuated between requiring all trustees to approve and sign trustee resolutions for transactions with third parties and recognising that a trust deed can specify the number of trustees needed to authorise transactions.

In 2023, the Supreme Court of Appeal (SCA) confirmed the High Court’s view that a suretyship signed in favour of Shepstone & Wylie attorneys was invalid because not all trustees had properly approved it. The court over-emphasised the distinction between trustee decisions made internally and those affecting external parties, as per the Blockpave case of 2011. Needless to say, the poorly drafted trust deed was open to much interpretation. 

Practically, the new legal principle had significant implications for trusts that had already entered into transactions, as many of these could now be challenged as invalid based on the 2023 court decision, even though they had complied with the trust deeds and common law at the time of their creation. The South African Revenue Service (Sars) also requires trustees to submit all resolutions related to a tax year, along with the trust tax return, and might deem many transactions invalid as a result of this court decision.

This was an untenable position, which was thankfully corrected recently (in August 2025) by the Constitutional Court when it decided to hear the case, believing that the interests of justice required addressing the misstatement of trust law by the SCA. It held that if this remained uncorrected, lower courts would in future be bound by that misstatement. Although that was a relief, careful planning and execution of trust deeds will become essential to prevent misuse and to protect minority trustees.

What did the courts say?

The SCA majority stated that it is a well-established and recognised legal principle that, as co-owners of trust assets, “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.” However, the Constitutional Court recognised that, according to the Parker case of 2005 and the Nieuwoudt case of 2004, the principle was established that a trust deed can permit something other than joint action by trustees, and it can do so through a majority clause. It held that the SCA majority therefore interpreted the principle narrowly, without proper authority to do so. It was adamant that the SCA majority’s misstatement of the principles set out in the Parker and Nieuwoudt cases, and its reliance on the principle set out in the Blockpave case, had the potential of changing trust law if it was left uncorrected.

The court in the Blockpave case held that, while trustees can internally disagree on matters, externally they cannot disagree, and all trustees must participate in external matters. The Constitutional Court held that the Blockpave case is clearly wrong when it states that “externally trustees cannot disagree” and that in the external sphere a trust “functions by virtue of resolutions, which have to be supported by the full complement of the trust body”. The Constitutional Court was adamant and repeatedly stated that trust law allows for a trust deed to provide for majority or quorate decision-making. 

The Constitutional Court was also of the view that the SCA introduced an unjustified distinction between decisions of trustees regarding internal and external matters, and in doing so, imposed an incorrect restriction on the proposition that the requirement of joint action can be modified by a trust deed. 

The High Court relied on the Le Grange case of 2017, which referenced the decision in the Van der Merwe case of 2010, stating that if the majority of trustees reach a decision without the participation of all trustees, unless the trust deed states otherwise, a decision by the majority is not binding on the trust. It therefore held that the trustees had to act unanimously to approve the suretyship in favour of Shepstone & Wylie, as in the absence of any other clauses in the trust deed, the general principle prevailed — that decisions must be made unanimously and trustees must act jointly. 

Unfortunately, the trust deed borrowed wording for trustee meetings from company law at the time, which operates differently from trust law. The SCA held that, in terms of the trust deed, there was no disagreement between the trustees for the majority vote to apply, as one trustee did not attend the meeting and therefore could not disagree with his co-trustees. The Constitutional Court disagreed with this view and held that only the views of those who attend a meeting are relevant for decisions taken at such a meeting, and if trustees at a quorate meeting agree, the clause dealing with disagreements is irrelevant.

The SCA relied on the Parker case and held that if a trust deed requires trustees to act jointly to bind the trust, a majority decision will not bind the trust if a trustee did not participate in the decision-making, especially when decisions are taken that affect trust assets. The provision of reasonable notice of the meeting was not enough to meet the participation requirement. It agreed with the High Court’s finding that the trustees did not act jointly in deciding to execute the suretyship.

The SCA majority stated, relying on the Le Grange case, that “even when the Trust Deed provides for a majority decision, the resolution must be signed by all the trustees”. The Constitutional Court held that this conflicted with the principle expressed in the Nieuwoudt and Parker cases that a trust deed can allow for decision-making other than by joint action. It was of the view that the apparent reliance on the Le Grange case was incorrect, as Le Grange stated that resolutions signed by trustees are “usually” a manifestation of trustees’ joint decision. The Constitutional Court quoted the Le Grange case to hold that where (as on the facts of that case) the majority (being two trustees) had signed a resolution and the third abstained, it would be placing “form over substance” to insist on having the third trustee’s signature on the resolution. This quote appears to be taken out of context, as discussed below.

The Constitutional Court believed that the majority in the SCA seemingly failed to recognise the key distinction between unanimous-decision trusts and majority-decision trusts. The Constitutional Court held that when a majority-decision trust deed includes a standalone majority vote clause (as in the Van der Merwe and Le Grange cases), the trustees must act jointly but are not obliged to act unanimously. It also noted that where there is no standalone majority clause (as in the Parker case), the trustees must act both jointly and unanimously. 

The Constitutional Court also criticised the SCA for misinterpreting provisions that are routinely encountered in trust deeds, even if the wording differs slightly. 

Where does it leave trust decisions?

With the Constitutional Court being the highest court in South Africa to hear matters of general public importance (such as this case involving trustee decision-making), its decisions are final and binding, and no other court can overturn them. They are, therefore, here to stay.

The correction by the Constitutional Court of the SCA’s misstatement of trust law is welcomed—particularly in clarifying that a trust deed can allow for majority decision-making and that there should be no different treatment between internal and external matters. 

It, however, appears that if the Constitutional Court erred in its narrow quoting of the Le Grange case, it would be “form over substance” to require the dissenting trustee/s to sign a resolution with the majority. The context of that quote pertains to a trustee whose signature did not appear on a resolution, but whose emails and behaviour confirmed support for the decision. It did not refer to the obtaining of the signature of a dissenting trustee. It was well-phrased in the Van der Merwe case, which was cited in the Le Grange case, that even if majority decisions are allowed in a trust deed, it does not remove the requirement that the “minority is obliged to act jointly with the other trustees in executing the resolution adopted by the majority”. In other words, they should be invited to trustee meetings and allowed to participate in decision-making, and even if they do not agree, they will be bound by the majority decision and required to cooperate and sign the duly authorised resolution. 

The Le Grange case, relying on the Van der Merwe case, held that “the obligation to act jointly does not imply that the minority has to agree with the majority or that votes have to be unanimous for any decision to be binding on the trust… Dissenting trustees must subject themselves to the democratic vote of the majority. Trustees have to present a united front irrespective of internal descent. Such ‘unity of purpose and function’ must be manifest publicly, usually by a written resolution signed by all the trustees… Otherwise, any other unambiguous, accessible form of communicating decisions of the trust possible in the information age will do… Physical presence at meetings is not required at all times, but participation and input in the making of all decisions is essential. All that is required is that all trustees who are required to participate in the decision have an opportunity to do so, and they would be bound by the decision of the majority participating in such a decision.” 

As a result of the legal principle established by the Constitutional Court, which contradicts the Le Grange case, that a valid resolution may be signed by only the majority of trustees (as long as the trust deed allows for majority decision-making), and given the risks associated with trusteeship with the recent introduction of fines and penalties for non-compliance with laws and potential personal liability, trust deeds should be carefully drafted to ensure that trustees are allowed to be involved and participate in all trust matters.   

All these aspects must be carefully considered and documented in a trust deed, which should be meticulously drafted to avoid ambiguity and conflicting or impractical terms. Estate planners need to be aware of the risks associated with choosing specific trust deed clauses and should customise the deeds to mitigate the risk of trustees abusing their powers. Special consideration should be given to their unique circumstances, needs, and risks. It may be prudent to allow for well-drafted majority decisions for daily trust management, while reserving unanimous decision-making for significant actions such as trust deed amendments, trust terminations, or distributions exceeding certain thresholds. In light of the Constitutional Court’s extreme ruling that not all trustees’ signatures are required for majority decisions, it might be advisable to require the presence of all trustees to constitute a quorate meeting.

Trustees who fail to discharge their fiduciary duties, such as Mr Volker in the Shepstone & Wylie case, should be dealt with harshly. No trustee should have the power or be allowed to veto or invalidate transactions through their deliberate non-participation (as initially allowed by the High Court and the SCA). Luckily, that was corrected by the Constitutional Court.

Outsiders dealing with trusts should be cautious of resolutions that are not signed by all trustees, even if the trust deed allows for majority decision-making. Such resolutions may be invalid if some trustees can prove they were never invited to the meeting where the resolution was approved by the majority. It can be difficult to determine whether all conditions for a valid resolution were satisfied. Resolutions signed by all trustees provide significantly greater reassurance to third parties. 

Van der Spuy is a Chartered Accountant with a Masters degree in tax and a registered Fiduciary Practitioner of South Africa®, a Chartered Tax Adviser, a Trust and Estate Practitioner (TEP) and the founder of Trusteeze®, the provider of a digital trust solution.

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