Case name:
Steyn and Others NNO v Blockpave (Pty) Ltd 2011 (3) SA 528 (FB).

Area of law: 
Trusts / Company Law / Civil procedure: Trustees required to act together on behalf of a trust.

Facts/summary:
The Applicants, Steyn and others, were the Trustees of the Dries Steyn Trust, which instituted proceedings against the Respondent company, Blockpave (Pty) Ltd, claiming arrear rental. The Respondent raised several points in limine, the main one being that the Trust had not properly instituted the proceedings against it. This was because only two of the three Trustees attended the meeting at which a decision to institute the proceedings was taken. The third Trustee, who was being marginalised, did not attend the meeting, nor had she been informed of it. The High Court upheld two points in limine, one to the effect that no proper resolution had been taken by the entire complement of the Trust body to launch the proceedings, while the other was to the effect that there had not been a proper Power of Attorney given to the Attorneys to act on behalf of the Trust.

The Honourable Mr Justice Rampai held that the Trust required the full and complete participation of all its Trustees to function legally. In the instant case, the Trust was suffering from incapacity on account of the frequent, albeit irregular, marginalisation of the third Trustee by her co-Trustees in the running of its affairs. The fact that she was accustomed to being excluded did not, and could not, regularise a wrong practice that was intrinsic and systematic. Internally Trustees could disagree. A matter on the agenda could be debated and put to a vote if the Trustees were not unanimous, in which case a decision of the majority would prevail. However, externally Trustees could not disagree. The internal split decision became the resolution of the Trust in its dealings with the world at large. A majority of the Trustees in office could form a quorum internally at a Trust meeting, but they could not externally bind the Trust by acting together. It was not the majority vote, but the resolution by the entire complement that bound a Trust estate.

Importance/value:
This is an important and extremely fundamental principle to take into consideration when acting for or against a Trust. Failure to comply with this requirement will in all probability lead to the matter being dismissed and could potentially result in, inter alia, the claim prescribing.

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