Section 6(1) of the Trust Propery Control Act 57 of 1988 Revisited: Establishing Its Nature and Re-Emphasising the Validity of the 'Dual Purpose' Theory

• Jurisdiction: South Africa
• Citation: (2011) 22 Stell LR 314
• Pages: 314-329
• Date: 16 August 2019
• Author: Bradley Smith
• Published date: 16 August 2019

314

SECTION 6(1) OF THE TRUST PROPERTY

CONTROL ACT 57 OF 1988 REVISITED:

ESTABLISHING ITS NATURE AND RE-

EMPHASISING THE VALIDITY OF THE “DUAL

PURPOSE” THEORY

Bradley Smith

BCom LLB LLM LLD

Senior Lecturer, Department of Private Law, University of the Free State

1 Introduction

Section 6(1) of the Trust Property Control Act 57 of 1988 has been the

subject of prima ry consideration in at least seven reported cou rt cases1 since

the Act’s ince ption on 31 March 1989. Despite th is wealth of pre cedent, the

correct legal position pertaining to non-compliance with t his provision h as

become something of an enig ma for practitioners, parties to a trust and legal

academics alike. Accordi ng to this provision:

“Any person whose appointment as trustee in terms of a trust instrument, section 7 or a court order

comes into force after the commencement of [the Trust Property Control Act], shall act in that capacity

only if authorized thereto in writing by the Master.”

In this contribution the i nterpretation of section 6(1) according to an earlier

theory advocated by myself (the so-called “dual purpose” approach) will be

revisited. This will be done with a view to clarifying certain issues which remain

unresolved and evaluating recent criticism which have been levelled against

it. The conclusions so reached will then be applied to the recent judgment of

the Supreme Cour t of Appeal in Lupacchini v Minister of Safety and S ecurity2

(“Lupacchini”), thereby re-emphasising my contention that the current positive

law position is at odds with the cor rect interpretation of section 6(1).

2 The current legal position a nd the essence of the “dual

purpose” theory

The majorit y of decisions3 deal ing with the validity of acts performed by

trustee s prior to being author ised by the Master have followed the reasoning

1 See Simplex (Pty) Ltd v Van der Merwe a nd Others NNO 1996 1 SA 111 (W); Metequity Ltd v NWN

Propertie s Ltd 1998 2 SA 554 (T); Watt v Sea Plant Prod ucts Bpk 1998 4 Al l SA 109 (C); Kropman an d

Others NNO v Nysschen 1999 2 SA 567 (T); Van der Me rwe v Van der Mer we 2000 2 SA 519 (C); Kr iel

v Terblanche NO 2002 6 SA 132 (NC); a nd Lupacchini v Minister of Sa fety and Sec urity 2010 6 SA 457

(SCA) The last-mentione d case is discussed i n 5 below

2 2010 6 SA 457 (SCA)

3 See Van der Merwe v Van der Merwe 2000 2 SA 519 (C) 524B-525C; Watt v Sea Plant Products Bpk 1998

4 All SA 109 (C) 113F-G; Kriel v Terblanche NO 20 02 6 SA 132 (NC) para 211 Al so see Shea v Legator

McKenna Inc 2008 1 All SA 491 (D) 498-499; Lupacchini v Minister of Safety and Se curity 2010 6 SA 457

(SCA) para 18

(2011) 22 Stell LR 314

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of the judgment of the Witwatersrand Local Division (now the South Gauteng

High Court, Johanne sburg) in Simplex (Pty) Ltd v Va n der Merwe and Others

NNO4 (“Simplex”), the crux of which can be summar ised by t he following

extract from the judg ment of Goldblatt J as well as the comments that follow:

“It was submitted on behalf of the respondents [the trustees who had, prior to being authorised, signed

an agreement of sale with the applicant, who alleged that the lack of authorisation implied that the

agreement was null and void and that the respondents’ occupation of the property so “purchased”

was therefore unjustied] that the prohibition in s 6(1) was directory and not peremptory. I do not

agree with such submission. The language of the prohibition is, in my view, peremptory. The words

‘shall … only’ are clearly of a peremptory nature, indicating an unambiguous prohibition on acting as

trustee until authorised thereto in writing by the Master. It is a precondition to a trustee’s right to act

as such that he be authorised so to do in terms of s 6(1) of the Act.

I am further of the view that s 6(1) is not purely for the benet of the beneciaries of the trust [as

had been averred by the respondent trustees] but in the public interest to provide proper written proof

to outsiders of incumbency of the ofce of trustee. … The whole scheme of the Act is to provide a

manner in which the Master can supervise trustees in the proper administration of trusts properly and

s 6(1) is essential to such purpose. By placing a bar on trustees from acting as such until authorised

by the Master, the Act endeavours to ensure that trustees can only act as such if they comply with the

Act. This ensures that the trust deed is lodged with the Master and that security, if necessary, is lodged

with him before trustees start binding the trust’s property.”5

Goldblatt J proceeded to hold that despite the provision’s silence in this

regard, the ag reement was void on the basis of the “f undamental principle of

our law that a thing done contrary to the direct prohibition of the law is void and

of no effect.”6 Furt hermore, an agreement concluded prior to author isation

could not be ratied, eit her by the Ma ster or by t he trustees, after the lat ter

had been author ised as “there can be no ratication of an agreement which a

statutory prohibition has rendered ab init io void in the sense that it is to be

regarded as never having been concluded”.7 Similarly, a court did not have

an “overriding discret ion” to “validate acts which are exp ressly prohibited by

statute” because “[t]o do so would be to ar rogate to this Court the power to

override valid legislative acts.”8

In sum, Simplex therefore holds that non- compliance with se ction 6(1)

imposes bla nket invalidity on any juristic act concluded by an unauthorised

trustee. Drawing on this judgment, the court in Watt v Sea Plant Pro ducts B pk9

(“Watt” ) held that the provision (i) does not regulate the issue of locus standi ,

so that while a n unauthorised tru stee did not possess contract ual capacity he

or she could still sue or be sued on behalf of the trust;10 and (ii) implies that

only acts involving the acquisition of rights or incu rring of liability would

be void, with the result that acts essential to trust administrat ion could be

performed by unaut horised trustees.11 However, the latter court’s approach to

4 1996 1 SA 111 (W)

5 112H-113 B

6 Per Innes CJ in Schierhout v M inister of Just ice 1926 AD 99 109 quo ted by Goldblatt J in Simplex (P ty)

Ltd v Van der Merwe an d Others NNO 1996 1 SA 111 (W) 113D-E

7 Simplex (Pty) Ltd v Van der Mer we and Others NNO 1996 1 SA 111 (W) 113E-G

8 Per Kumleben JA in Neugarten v Sta ndard Bank of S outh Africa Lt d 1989 1 SA 797 (A) 808G-H quot ed

by Goldblatt J in Si mplex (Pty) Ltd v Van der Mer we and Others NNO 1996 1 SA 111 (W) 114I

9 1998 4 All SA 109 (C)

10 113F- 114D

11 112H -J

SECTION 6(1) OF THE TRUST PROPERTY CONTROL ACT 315

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