The 'Dual Purpose' of Section 6(1) of the Trust Property Control Act: A Possible Solution to the Problems Caused by the Authorisation Requirement

• Jurisdiction: South Africa
• Author: Bradley Smith
• Published date: 27 May 2019
• Citation: (2007) 18 Stell LR 53
• Date: 27 May 2019
• Pages: 53-74

THE ‘‘DUAL PURPOSE’’ OF SECTION 6(1) OF

THE TRUST PROPERTY CONTROL ACT:

A POSSIBLE SOLUTION TO THE PROBLEMS

CAUSED BY THE AUTHORISATION

REQUIREMENT

*

Bradley Smith

BCom LLB LLM

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

1 Introduction

Although a person becomes a trustee after having been validly

appointed (and having accepted such appointment) he or she may not,

according to section 6(1) of the Trust Property Control Act

1

perform any

act in his or her capacity as trustee until he or she has received a letter of

authority

2

from the Master of the High Court.

3

This letter is only issued once the Master is satisfied that all the

requirements of the Act have been complied with.

4

Section 6(2) provides

the sole criterion which such a (prospective) trustee must comply with: he

or she is required to furnish security to the Master’s satisfaction, unless

exempted by a court order or trust instrument from doing so.

5

* This contribution forms part of an LLM dissertation entitled The Authorization of Trustees in the South

African Law of Trusts (2006).

1

57 of 1988.

2

The first concrete development regarding the written authorisation of trustees (at least as far as the

testamentary trust was concerned) came about by way of Chapter III (ss 57-70) of the Administration

of Estates Act 64 of 1965. S 57 of this Act (at least in theory) introduced the concept of ‘‘letters of

administratorship’’ into the South African law of trusts. The importance of this requirement was borne

out by the fact that non-compliance with s 57 was an offence by virtue of s 102(g) of the Act. Chapter

III is, however, merely of academic interest today, as it was repealed without ever coming into

operation. The Trust Property Control Act 57 of 1988 came into operation on 31 March 1989. S 6(1) of

this ‘‘new’’ legislation raised the degree of control which could be exercised over trustees to a new level

by for the first time introducing the requirement of written authorisation into South African trust law.

3

Land and Agricultural Bank of South Africa v Parker 2005 2 SA 77 (SCA) par 34; Olivier Trust Law and

Practice (1990) 55; Du Toit South African Trust Law: Principles and Practice (2002) 61; Pace & Van der

Westhuizen Wills and Trusts (2005) Service Issue 9 B.6.2.3; Geach Handbook for Executors, Trustees

and Curators (1993) 279-280; De Waal & Schoeman-Malan Introduction to the Law of Succession 3ed

(2003) 163-164; Wunsh ‘‘The Trust Property Control Act’’ 1988 De Rebus 547 549.

4

Pace & Van der Westhuizen Wills and Trusts B.6.2.3.

5

S 6(2) reads as follows: ‘‘The Master does not grant authority to the trustee in terms of this section unless-

(a) he has furnished security to the satisfaction of the Master for the due and faithful performance of his

duties as trustee; or (b) he has been exempted from furnishing security by a court order or by the Master

under subsection (3)(a) or, subject to the provisions of subsection (3)(d), in terms of a trust instrument:

Provided that where the furnishing of security is required, the Master may, pending the furnishing of

security, authorize the trustee in writing to perform specified acts with regard to the trust property.’’ See

also Du Toit Principles and Practice 61; Honore

´& Cameron Honore

´’s South African Law of Trusts 5ed

(2002) 219; Pace & Van der Westhuizen Wills and Trusts B.6.2.3; Wood-Bodley ‘‘The Transactions of

Unauthorized Trustees: Section 6(1) of the Trust Property Control Act 1988’’ 2001 SALJ 374 375.

53

(2007) 18 Stell LR 53

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No criminal sanction is imposed if (prospective) trustees should fail to

comply with the requirements of section 6(1). Indeed, the Act does not

stipulate exactly what is to happen if such persons should fail to comply.

6

The only indication of the possible effect of non-compliance is that the

Master is empowered, by virtue of section 20(2)(e) of the Act, to remove

the trustee from office by reason of his or her failure to comply with a

duty imposed by or under the Act, or failure to comply with any lawful

request of the Master.

7

Such an unauthorised trustee could also incur

personal liability for damage to the property caused by virtue of his or

her actions.

8

The Master may allow representations from interested

parties before issuing a letter of authority, but this is not required (unless

circumstances dictate otherwise).

9

Being a corporation, section 6(4) of the

Act provides that authoris ation must, unless the trust i nstrument

provides otherwise, be given in the name of a nominee of such a

corporation (for whose actions the corporation is legally liable) and the

substitution of such nominee must be endorsed on the authorisation.

2 The validity of an act performed prior to authorisation – a

problematic and uncertain area of the South African law of

trusts

An important question which arises in the context of section 6(1) of the

Act pertains to the validity of an act performed prior to the issuing of the

letter of authorisation.

10

Strictly speaking, the wording of section 6(1)

seems to indicate une quivocally that autho risation is an absolut e

prerequisite for acting as a trustee:

‘‘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 this Act, shall act in that capacity only if

authorized thereto in writing by the Master.’’

11

According to Honore

´&Cameron,

12

the reasons for statutory

authorisation being such a strict requirement are, first, that enforcing

the requirement of security protects the interests of the beneficiaries, and,

second, that it ensures that outsiders are aware of the trustees’

appointment. However, conflicting recent cases have clouded this

6

Simplex v Van der Merwe and Others NNO 1996 1 SA 111 (W) 112H; Kropman and Others NNO v

Nysschen 1999 2 SA 567 (T) 576E; Wood-Bodley 2001 SALJ 375.

7

Wood-Bodley 2001 SALJ 374-375.

8

Simplex v Van der Merwe 1999 4 SA 71 (W) 75D-H; Honore

´& Cameron Law of Trusts 223; De Waal

‘‘Authorisation of Trustees in Terms of the Trust Property Control Act’’ 2000 THRHR 472 478; King

& Victor Law & Estate Planning Easiguide (2005/2006) 324.

9

Pace & Van der Westhuizen Wills and Trusts B.6.2.3; Du Toit Principles and Practice 61; Honore

´&

Cameron Law of Trusts 222; Deedat v The Master 1998 1 SA 544 (N) 548H-I.

10

In this regard, see De Waal 2000 THRHR 473; Du Toit Principles and Practice 62; Wood-Bodley 2001

SALJ 374.

11

Emphasis added.

12

Law of Trusts 5 ed 220.

54 STELL LR 2007 1

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