A trustee’s authority to act on behalf of a trust

A trustee’s authority to act on behalf of a trust

The trustee who signs a sale agreement must be authorised to sign on behalf of all the trustees

Thorpe and Others V Trittenwein And Another 2007 (2) SA 172 SCA

THE FACTS
In this case a purchaser of immovable property applied to the court to have an agreement of sale declared valid and enforceable. The purchaser was a trust. The sale agreement was signed by one trustee whereas the trust had three trustees appointed to act on behalf of the trust in terms of the letters of Authority issued by the Master of the High Court.
The trustee who signed the agreement was not at the time of signing authorised to do so in writing. The trustee alleged he had oral authority from his fellow trustees at the time of signing and further that this oral authority was ratified in writing after the fact. The purchaser’s trust deed provided for three trustees and required all decisions to be taken by majority vote.
The seller argued that oral authority was not sufficient and that the agreement was void due to the non-compliance with Section 2(1) of the Alienation of Land Act.

THE ISSUE
The issue to be decided was whether the sale agreement was valid and enforceable despite the fact that the sale agreement was only signed by one trustee under circumstances where there were three trustees appointed to act for the trust.

A further issue was whether the trustee who signed the sale agreement had to be authorised  in writing and whether this authorisation had to exist at the time of the signing of the agreement or whether this written authorisation could be given after the signing.

THE LAW
Section 2(1) of the Alienation of Land Act reads as follows:
“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.”

WHAT THE COURT HELD
The court held that:

1. In the absence of a contrary provision in the trust deed, the trustees in this case had to act jointly.
2. The trustees could authorise one of them to sign the sale agreement on behalf of the trust.
3. The trustee who signed the sale agreement had to be authorised in writing by his fellow trustees before the signing of the agreement.
4. The sale agreement was thus not valid and enforceable.
5. Inasmuch as the sale agreement was void, it could not be ratified after the fact.

SUMMARY
The main point to be taken from this case is the importance of ensuring that in the case of a trust, the trustee who is signing the sale agreement must be authorised to sign the sale agreement either in terms of the provisions of the trust deed or by means of a trustee’s resolution. The authority must exist at the time of the signing of the sale agreement. If there is no authority as contemplated above, the sale agreement is void and not enforceable.

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