Fundamentals of South African Trust Law 2019

Fundamentals of
South African Trust Law

Fundamentals of
South African Trust Law
François du Toit
BA LLB LLM LLD (University of Stellenbosch)
Senior Professor of Law
University of the Western Cape
Bradley Smith
BCom LLB LLM LLD (University of the Free State)
Professor of Law
University of the Free State
Anton van der Linde

BLC LLB LLM LLD (University of Pretoria)
Professor of Law
University of Pretoria
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© 2018
ISBN Print: 978 0 6390 0516 4
ISBN eBook: 978 0 6390 0517 1
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Editor: Angela Rowe

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Preface
The trust is a tool of great importance to South African legal and commercial practice. This
book’s predecessor, South African Trust Law: Principles and Practice (2002 and 2007), by
François du Toit, provided an in-depth exposition of South African trust law and was aimed,
first and foremost, at the experienced trust practitioner as well as the advanced trust law
scholar. However, the demand for a book that engages trust law at a more basic level
emerged in recent years. This was as a result of an increasing number of South African law
faculties including a trust law course in their undergraduate or postgraduate degree pro-
grammes and lecturers in these courses requiring a book that was well-suited to instruction at
university level. Moreover, many practitioners, in particular those in the financial planning
sector, did not pursue a tertiary legal qualification, and those who did might not have been
offered a trust law course as part of their undergraduate or postgraduate law degrees. These
practitioners nevertheless encounter and utilise the trust frequently, and it is imperative that
they possess a keen understanding of the rudiments of South African trust law in order to put
the trust to optimal use. Fundamentals of South African Trust Law meets the demand for a text
that explains the basic tenets of South African trust law in an uncomplicated, straightforward,
yet sufficiently detailed and comprehensive manner. This book can be used as a student text,
an introduction to trust law for the practitioner who does not possess a legal qualification, and
even as a resource for the experienced legal practitioner and advanced trust law scholar in
search of answers to contemporary trust law questions.
South African trust law is a relatively new and emerging legal discipline that has to engage
continuously with novel issues and new challenges. For this reason, South African courts and
legal commentators do not always concur on how contemporary trust law issues and chal-
lenges are best resolved. This natural and healthy tension between opposing standpoints is
reflected in the book’s engagement with trust law jurisprudence and scholarship by highlight-
ing dissonant judgments and conflicting academic commentary on trust law matters, where
appropriate.
Furthermore, we acknowledge the close relationship between trust law and tax law, how-
ever we decided not to include a chapter on trusts and taxation by reason of tax law’s rapidly-
changing nature. We nevertheless refer the reader on occasion to relevant books and articles
on the impact various tax laws have on the trust as well as the relevance of the trust in South
Africa’s broader taxation landscape.
We thank our families, friends and colleagues for their support and encouragement during
the writing of this book. A much-deserved thank you is also due to LexisNexis, and, in particu-
lar, to Sarah Power-Wilson, for their pivotal role in bringing this project to fruition.
v
Fundamentals of South African Trust Law
The book states the law as at 31 July 2018. Please note that footnotes have been omitted
from all verbatim quotations from decided cases, books and journal articles. We have at-
tempted to reflect the law as correctly and as accurately as possible, however, human nature
is such that a few errors may nevertheless have found their way into the text. We accept
these as our own.
François du Toit
Bradley Smith
Anton van der Linde
31 July 2018
vi
Contents
Page
Preface
Chapter 1 General Introduction

1.1 Introduction ........................................................................................................... 1
1.2 The essential features of the South African trust..................................................... 2
1.2.1 The separation of control from enjoyment ................................................. 2
1.2.2 The separation of estates ............................................................................ 3
1.2.3 Trusteeship as a fiduciary office ................................................................. 3
1.2.4 Real subrogation......................................................................................... 4
1.2.5 Joint action by co-trustees .......................................................................... 4
1.2.6 The absence of legal personality ................................................................. 5
1.3 The statutory definitions of a trust ......................................................................... 6
1.4 Trust descriptions ................................................................................................... 8
1.4.1 The ownership trust ................................................................................... 8
1.4.2 The bewind trust ......................................................................................... 8
1.4.3 The inter vivos trust .................................................................................... 8
1.4.4 The testamentary trust ............................................................................... 8
1.4.5 The vesting trust ......................................................................................... 8
1.4.6 The discretionary trust ............................................................................... 9
1.4.7 The family trust .......................................................................................... 9
1.4.8 The business trust ...................................................................................... 9
1.4.9 The private trust ......................................................................................... 10
1.4.10 The charitable trust .................................................................................... 10
1.4.11 The off-shore trust ...................................................................................... 10
1.5 The parties to a trust .............................................................................................. 10
1.5.1 The trust founder........................................................................................ 10
1.5.2 The trustee ................................................................................................. 11
1.5.3 The trust beneficiary .................................................................................. 11
1.6 Trust property ........................................................................................................ 12
1.7 Trust instruments ................................................................................................... 13
1.7.1 Written agreement ..................................................................................... 13
1.7.2 Testamentary writing ................................................................................. 14
1.7.3 Court order ................................................................................................. 14
1.7.4 Other trust instruments .............................................................................. 14
1.8 The South African trust in a legal-comparative context .......................................... 14
vii
Page
Chapter 2 The South African Trust in its Historical and Legal Contexts
2.1 Introduction ........................................................................................................... 17
2.2 The history of the trust ........................................................................................... 17
2.2.1 Theories on the origin of the trust .............................................................. 17
2.2.2 The trust in England ................................................................................... 19
2.3 The reception of the trust and the development of trust law in South Africa .......... 20
2.3.1 The English trust introduced to South Africa ............................................... 20
2.3.2 Judicial development .................................................................................. 22
2.3.3 Statutory development ............................................................................... 25
2.3.4 The contribution of legal scholars ............................................................... 25
2.4 The legal nature of the South African trust ............................................................. 26
2.4.3 The trust created by court order ................................................................. 30
2.5 Is the South African trust a true trust? .................................................................... 30
Chapter 3 The Trust, Public Policy and Constitutionalism

3.1 Introduction ........................................................................................................... 33
3.2 Personal autonomy, private ownership and the freedom of disposition ................. 34
3.3 The limitation of freedom of disposition ................................................................ 35
3.3.1 Public policy as a limit on freedom of disposition ...................................... 35
3.3.2 Public policy in South Africa’s constitutional order ..................................... 37
3.4 South African courts’ application of public policy and constitutionalism to trusts ... 37
3.4.1 The public/private divide ............................................................................ 39
3.4.1.1 The nature of the divide ............................................................... 39
3.4.1.2 Standpoints in favour of the divide ............................................... 40
3.4.1.3 Standpoints against the divide ...................................................... 42
3.4.2 Discriminatory charitable trusts.................................................................. 44
3.4.3 Discriminatory private trusts ...................................................................... 47
Chapter 4 The Creation of a Trust

4.1 Introduction ........................................................................................................... 51
4.2 The requirements for the creation of a valid trust .................................................. 51
4.2.1 An intention to create a trust ...................................................................... 51
4.2.1.1 The sham trust ............................................................................. 52
4.2.1.2 The alter ego trust ........................................................................ 54
4.2.2 The expression of the intention in a mode suited to create an obligation ... 55
4.2.3 A definition with reasonable certainty of the trust property ....................... 56
4.2.4 A definition with reasonable certainty of the trust object ........................... 56
4.2.5 Lawfulness of the trust object ..................................................................... 58
4.3 The requirements for trust administration to commence ....................................... 59
4.3.1 A trustee ..................................................................................................... 59
4.3.2 The transfer of trust property to a trustee or trust beneficiary .................... 60
4.4 The moment at which a trust comes into being ..................................................... 60
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Page
4.5 Is the creation of a trust a unilateral or multilateral act? ......................................... 61

Chapter 5 The Trust Instrument

5.1 Introduction ........................................................................................................... 63
5.2 The constitutive nature of the trust instrument ...................................................... 63
5.3 The lodgement of trust instruments and access to trust documents ....................... 64
5.4 The variation of trust provisions ............................................................................. 67
5.4.1 The judicial variation of trust provisions in terms of the common law........ 67
5.4.1.1 The variation of trust provisions ob causam necessariam............... 67
5.4.1.2 The variation of trust provisions that are illegal or contrary
to public policy ............................................................................. 68
5.4.1.3 The variation of trust provisions in terms of the cy près
doctrine ........................................................................................ 70
5.4.2 The variation of trust provisions by the parties to the trust......................... 70
5.4.2.1 The testamentary trust ................................................................. 70
5.4.2.1.1 Unilateral variation by the trustee .............................. 70
5.4.2.1.2 Variation by agreement between the trustee and
trust beneficiaries ....................................................... 71
5.4.2.1.3 Variation by agreement between the trust
beneficiaries ............................................................... 72
5.4.2.2 The inter vivos trust ...................................................................... 73
5.4.2.2.1 Unilateral variation by the founder ............................. 73
5.4.2.2.2 Unilateral variation by the trustee .............................. 74
5.4.2.2.3 Variation by agreement between the founder and
trustee ........................................................................ 75
5.4.2.2.4 Variation by agreement between the founder, trustee
and trust beneficiaries ................................................ 77
5.4.3 The judicial variation of trust provisions in terms of statute ....................... 79
5.4.3.1 Section 13 of the Trust Property Control Act ................................ 79
5.4.3.2 Sections 2 and 3 of the Immovable Property (Removal or
Modification of Restrictions) Act ................................................... 81
5.5 The termination of a trust ...................................................................................... 82
Chapter 6 The Trustee

6.1 Introduction ........................................................................................................... 83
6.2 The competence to be a trustee ............................................................................. 84
6.3 A trustee’s appointment ......................................................................................... 85
6.3.1 Methods of trustee appointment................................................................. 86
6.3.1.1 Appointment by the founder ........................................................ 86
6.3.1.2 Appointment by the serving trustees ............................................ 86
6.3.1.3 Appointment by the trust beneficiaries......................................... 86
6.3.1.4 Appointment by the Master .......................................................... 87
6.3.1.5 Appointment by the High Court.................................................... 89
6.3.2 The appointment of a foreign trustee ......................................................... 89
6.4 Acceptance of the appointment as a trustee ........................................................... 89
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Page
6.5 A trustee’s authorisation......................................................................................... 89
6.5.1 The Master’s letter of authority................................................................... 89
6.5.2 The authorisation of a corporate trustee ..................................................... 90
6.5.3 Acts performed by an unauthorised trustee ................................................ 91
6.5.3.1 Contracting by an unauthorised trustee ........................................ 91
6.5.3.2 Litigation by an unauthorised trustee ........................................... 95
6.5.3.3 Acts of an administrative nature ................................................... 96
6.6 The furnishing of security by a trustee ................................................................... 97
6.7 A trustee’s fiduciary duty ....................................................................................... 99
6.8 Co-trusteeship ........................................................................................................ 101
6.8.1 A prescribed minimum number of co-trustees ........................................... 103
6.8.2 Practicalities associated with the joint-action rule of co-trusteeship ............ 106
6.8.2.1 Trustee meetings and decision-making by co-trustees .................. 106
6.8.2.2 The dominant co-trustee .............................................................. 107
6.8.2.3 The passive co-trustee .................................................................. 107
6.8.2.4 Third parties transacting with co-trustees: the application
of the Turquand rule to trusts ........................................................ 108
6.9 Trust expenses and trustee remuneration .............................................................. 110
6.10 Litigation by or against a trustee ............................................................................ 111
6.11 Breach of trust by a trustee .................................................................................... 113
6.11.1 Breach of trust by co-trustees ..................................................................... 114
6.11.2 Exemption from liability for breach of trust ............................................... 115
6.12 The insolvency of a trust or a trustee ..................................................................... 116
6.12.1 The trust estate’s insolvency....................................................................... 116
6.12.2 The insolvency of a trustee’s private estate ................................................ 116
6.13 Loss of office by a trustee ....................................................................................... 117
6.13.1 The termination of a trust........................................................................... 117
6.13.2 A directive in the trust instrument .............................................................. 117
6.13.3 A trustee’s death ........................................................................................ 118
6.13.4 Resignation ................................................................................................ 118
6.13.5 Removal by the Master ............................................................................... 119
6.13.6 Removal by the High Court ........................................................................ 120
Chapter 7 Trust Administration

7.1 Introduction ........................................................................................................... 123
7.2 Public supervision and control of trustees and trust administration ....................... 124
7.2.1 The Master of the High Court...................................................................... 124
7.2.1.1 The Master’s jurisdiction............................................................... 124
7.2.1.2 The reporting of irregularities to the Master ................................. 125
7.2.1.3 The Master’s power to hold a trustee accountable ........................ 125
7.2.1.4 Judicial review of the Master’s actions .......................................... 126
7.2.2 The High Court ........................................................................................... 126
7.3 A trustee’s duties with regard to trust administration ............................................. 127
7.3.1 Duties imposed by the Trust Property Control Act...................................... 127
7.3.1.1 Lodging the trust instrument and any variations thereto .............. 127
7.3.1.2 Notifying the Master of the trustee’s address ................................ 127
7.3.1.3 Furnishing security to the Master ................................................. 127
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Page
7.3.1.4 Acting with care, diligence and skill.............................................. 127
7.3.1.5 Opening a trust account ............................................................... 127
7.3.1.6 Separating trust property from private property: registering
and identifying trust property ....................................................... 128
7.3.1.7 Rectifying irregularities in trust administration ............................. 129
7.3.1.8 Rendering an account to the Master ............................................. 129
7.3.1.9 Retaining custody of trust documents .......................................... 129
7.3.2 Common law duties ................................................................................... 130
7.3.2.1 Giving effect to the trust instrument ............................................. 130
7.3.2.2 Exercising independent judgement and discretion ....................... 130
7.3.2.3 Acting impartially ......................................................................... 131
7.3.2.4 Maintaining the trust’s accounting books ..................................... 133
7.3.2.5 Rendering an account to co-trustees and trust beneficiaries ......... 134
7.3.3 Failure by a trustee to account or to perform duties ................................... 134
7.4 A trustee’s powers with regard to trust administration ........................................... 134
7.4.1 The source, nature and extent of a trustee’s powers .................................. 134
7.4.2 The delegation of trustee powers ................................................................ 136
7.5 The investment of trust funds ................................................................................ 138
7.6 A trustee’s failure to administer a trust properly: the abuse of the trust form ......... 139
7.6.1 What constitutes abuse of the trust form? .................................................. 139
7.6.2 Piercing the trust veneer (or going behind the trust form) .......................... 141
7.6.2.1 Piercing the trust veneer with regard to contracts concluded
by trustees .................................................................................... 143
7.6.2.2 Piercing the trust veneer upon insolvency .................................... 145
7.6.2.3 Piercing the trust veneer upon divorce ......................................... 148
7.6.2.3.1 Marriages out of community of property and the
redistribution of assets ............................................... 150
7.6.2.3.2 Marriages out of community of property subject
to the accrual system ................................................. 153
7.6.2.3.3 Marriages in community of property .......................... 156
7.6.2.4 Legal standing to apply for the piercing of a trust’s veneer ........... 158
Chapter 8 The Trust Beneficiary

8.1 Introduction ........................................................................................................... 161
8.2 The appointment of a trust beneficiary .................................................................. 161
8.3 Adiation or repudiation by a trust beneficiary ........................................................ 165
8.3.1 A testamentary trust beneficiary ................................................................ 165
8.3.2 An inter vivos trust beneficiary ................................................................... 166
8.4 The nature and extent of a trust beneficiary’s rights .............................................. 167
8.4.1 A beneficiary’s personal right to proper trust administration...................... 167
8.4.2 A beneficiary’s personal right to receive trust income and/or capital .......... 168
8.4.2.1 Vested and contingent rights ........................................................ 168
8.4.2.2 The right to trust income .............................................................. 171
8.4.2.3 The right to trust capital ............................................................... 174
8.4.2.3.1 A capital beneficiary under an ownership trust .......... 174
8.4.2.3.2 A capital beneficiary under a bewind trust .................. 176
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Page
8.5 The devolution of trust benefits to trust beneficiaries ............................................. 176
8.5.1 Substitution ................................................................................................ 176
8.5.2 Accrual (the ius accrescendi) ....................................................................... 178
8.5.3 Acceleration of trust benefits ...................................................................... 180
8.6 The remedies of trust beneficiaries ........................................................................ 182
8.6.1 The classification of beneficiary remedies .................................................. 182
8.6.2 A trust beneficiary’s locus standi ................................................................. 182
8.6.3 Administrative remedies in terms of the Trust Property Control Act .......... 183
8.6.4 Substantive remedies in terms of the common law .................................... 184
8.6.4.1 Remedies against the trustee ........................................................ 184
8.6.4.1.1 Aquilian action for breach of trust .............................. 184
8.6.4.1.2 An action based on unjustified enrichment ................ 185
8.6.4.1.3 Other remedies against a trustee................................ 186
8.6.4.2 Remedies against third parties ..................................................... 186
8.7 Successive beneficiaries and long-term trust dispositions ....................................... 187
Chapter 9 The Trust in Practice

9.1 Introduction ........................................................................................................... 189
9.2 The testamentary ownership trust .......................................................................... 189
9.2.1 The advantages of a testamentary ownership trust over a testamentary
usufruct or fideicommissum ........................................................................ 189
9.2.2 Particular applications of the testamentary ownership trust ....................... 191
9.2.2.1 Preserving the trust capital and generating trust income .............. 191
9.2.2.2 Providing for parents’ simultaneous deaths .................................. 192
9.2.2.3 Caring for persons with limited capacity ...................................... 192
9.3 The inter vivos ownership trust ............................................................................... 193
9.3.1 Receiving bequests and maintenance awards ............................................ 193
9.3.2 Freezing or pegging an estate’s value ......................................................... 193
9.3.3 Caring for persons with limited capacity .................................................... 194
9.3.4 Providing a safeguard against insolvency and personal indebtedness ........ 194
9.3.5 Receiving damages awarded to a minor ..................................................... 195
9.3.6 Facilitating divorce settlements .................................................................. 196
9.4 The bewind trust ..................................................................................................... 197
9.5 The discretionary trust ........................................................................................... 198
9.6 The business trust .................................................................................................. 200
9.6.1 The nature and definition of a business trust .............................................. 200
9.6.2 The business trust in practice ..................................................................... 201
9.6.3 Legislation applicable to business trusts ..................................................... 202
9.6.3.1 The Companies Act ...................................................................... 203
9.6.3.2 The Close Corporations Act .......................................................... 203
9.6.3.3 The Consumer Protection Act ....................................................... 204
9.6.3.4 The National Credit Act ................................................................ 205
9.7 The charitable trust ................................................................................................ 205
9.8 Miscellaneous practical trust matters...................................................................... 206
9.8.1 The trust and land registration practice ...................................................... 206
9.8.2 Purchasing immovable property for a trust yet to be formed ..................... 207
9.8.3 The sale of a trust ....................................................................................... 208
9.8.4 The deregistration of a trust ....................................................................... 209
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Appendix: Trust Property Control Act 57 of 1988 ........................................................... 211
Bibliography.................................................................................................................... 223
Legislation Register ......................................................................................................... 231
Table of Cases ................................................................................................................. 237
Index .............................................................................................................................. 245
xiii
1
General Introduction
1.1 Introduction
1
The terms “trust” and “trustee” can be used in a wide sense as well as a strict sense. A trust
in the wide sense is a legal arrangement in terms of which a functionary controls and manag-
2
es property for or on behalf of someone else. Examples of trusts in the wide sense are cura-
torship, tutorship, executorship and agency. Curators who manage the affairs of those
suffering from some incapacity, tutors who take charge of their pupils’ affairs, executors who
wind up deceased estates in favour of heirs and/or legatees, and agents who act on behalf of
3
their principals are thus trustees in the wide sense. Trustees in the wide sense are, as a
general rule, not vested with the ownership of the property they administer for or on behalf of
4
another. A trust in the strict sense, on the other hand, refers to the trust as a legal institution
(Afrikaans: regsfiguur). A trust in the strict sense exists when a trust founder vests the control
of property in a trustee (in the strict sense) who then administers that property and its pro-
ceeds for the benefit of the trust’s beneficiaries or in the pursuance of some impersonal
5
object. A trustee (in the strict sense) controls trust property either as the owner of that prop-
6
erty or as a non-owning administrator.
A principal difference between trusts in the wide sense and the trust in the strict sense re-
lates to the legal rules governing these two categories of trusts. Some trusts in the wide sense,
7
for example, agency, are governed by the common law. Other trusts in the wide sense are
subject to statutory regulation. For example, the Administration of Estates Act governs cura-
torship, tutorship and executorship. The trust in the strict sense is governed by both the
8
common law and the Trust Property Control Act (hereinafter referred to as “the Act”). The
9
Act applies exclusively to the trust in the strict sense and the Act expressly excludes curators,
10
tutors and executors (as trustees in the wide sense) from its regulatory ambit. Determining
whether a trust is one in the wide sense or in the strict sense is thus important when the
appropriate regulatory rules are at issue. In Conze v Masterbond Participation Trust Managers
________________________
1 Goodricke & Son (Pty) Ltd v Registrar of Deeds, Natal 1974 (1) SA 404 (N) 408D; Conze v Masterbond
Participation Trust Managers (Pty) Ltd 1996 (3) SA 786 (C) 794D.
2 Zinn v Westminster Bank Ltd 1936 AD 89 at 96–97; Conze v Masterbond Participation Trust Managers (Pty)
Ltd 1996 (3) SA 786 (C) 794E.
3 Jamneck et al Law of Succession 190. See also Olivier et al Trustreg en Praktyk 1.2.2.4.
4 Conze v Masterbond Participation Trust Managers (Pty) Ltd 1996 (3) SA 786 (C) 794E.
5 Ibid 794F.
6 Ibid. See also 1.4.1 and 1.4.2 regarding these two possibilities.
7 Here “common law” denotes legal rules that do not originate in legislation.
8 The Act’s Afrikaans title is Wet op die Beheer oor Trustgoed. The Trust Property Control Act commenced on
31 March 1989.
9 Conze v Masterbond Participation Trust Managers (Pty) Ltd 1996 (3) SA 786 (C) 794G.
10 See the definition of “trust” in s 1 of the Trust Property Control Act discussed under 1.3. See also Jamneck
et al Law of Succession 190.
1
11
(Pty) Ltd the question arose whether the defendant was a trustee that was subject to the Act.
The court found that, despite the description of the defendant as a “trustee” in the deeds of a
number of debenture trusts, the defendant was, in reality, no more than an agent with fiduci-
ary duties – therefore a trustee in the wide sense – and consequently the Act did not apply to
12
the defendant.
This book deals, unless otherwise indicated, with the trust in the strict sense. This chapter
lays the foundation for the book’s analysis of the fundamental principles of South African trust
law by introducing the reader to some of the foundational aspects of the South African trust
and the law that governs it. The chapter also engages terminology pertinent to the expositions
in ensuing chapters.
1.2 The essential features of the South African trust

1.2.1 The separation of control from enjoyment
The South African trust is premised on a functional separation between a trustee’s control of a
trust and the property subject to that trust on the one hand, and the trust beneficiaries’
enjoyment of the benefits yielded by the trustee’s control, on the other. In Land and Agricul-
13
tural Bank of South Africa v Parker the court typified this separation of a trustee’s control
14 15
from the trust beneficiaries’ enjoyment as the “core idea” and the “essential notion” of the
South African trust. This separation entails that a trustee assumes administrative control of
16
the trust on behalf of, and in the interests of, the trust beneficiaries. Put differently, a trus-
tee’s interest in a trust is administrative in nature insofar as the trustee is the trust’s adminis-
trative controller, whereas the trust beneficiaries’ interests are beneficial in nature insofar as
they benefit from the trustee’s exercise of administrative control over the trust.
The aforementioned separation between control and enjoyment does not preclude a trustee
from being one of the beneficiaries of the trust that he or she administers. A trustee may
therefore be a co-beneficiary of the trust under his or her control because in such a scenario
the trustee does not control the trust for his or her own exclusive benefit, but also for the
benefit of the other beneficiaries. A trustee may, however, not be a trust’s sole beneficiary at
the trust’s creation because, as pointed out in the Parker case, such a situation occasions an
identity, rather than a separation, of administrative and beneficial interests that is inimical to
17
South African law’s conception of the trust.
What happens if a trust’s sole trustee, who was also a co-beneficiary at the trust’s crea-
tion, becomes the sole beneficiary at some point in time after the trust’s creation – is the
trust invalidated when the sole trustee becomes its only beneficiary?
continued
________________________
11 1996 (3) SA 786 (C).

12 At 793E–795G.
13 2005 (2) SA 77 (SCA).
14 At par 19.
15 At par 22.
16 At par 19.
17 Ibid.
2
18
In Groeschke v Trustee, Groeschke Family Trust the court answered this question in the
negative. The court reasoned that, although it may be undesirable to have a sole trustee
as a trust’s only beneficiary at some point in time during the trust’s existence, such an
eventuality does not cause the trust to fail. A shared identity of administrative and benefi-
cial interests that arises after a trust’s creation does not therefore invalidate the trust and,
as the court pointed out in the Groeschke case, this undesirability is readily curable
19
through the appointment of a co-trustee by the Master in terms of section 7 of the Act.
1.2.2 The separation

separation of estates
20
In Land and Agricultural Bank of South Africa v Parker the Supreme Court of Appeal observed
that a trust’s assets and liabilities constitute the trust estate (Afrikaans: trustboedel); moreover,
21
that the trust estate vests in the trust’s trustee as a separate entity. A trustee who is a natural
person is therefore vested with two estates: his or her own private estate as well as the trust
estate, and the trustee holds these two estates as distinct and separate entities. In Lupacchini v
22
Minister of Safety and Security the Supreme Court of Appeal affirmed the notion of the
separation between a trustee’s private estate and the trust estate when it described a trust as
a legal institution in terms of which a trustee “holds or administers property separately from
23
his or her own”. Section 12 of the Act also acknowledges the separation of estates through
its directive that trust property does not form part of a trustee’s private estate, except when
the trustee is entitled to trust property because he or she is also a trust beneficiary.
The separation of estates is vital to the protection South African law affords trust beneficiar-
ies. This is because the claims of a trustee’s private creditors lie exclusively against that
trustee’s private estate. Consequently, the insolvency of a trustee’s private estate does not
affect the separate trust estate and therefore does not pose any risk to the trust beneficiar-
24
ies. Moreover, trust beneficiaries can hold a trustee personally liable for any patrimonial
(financial) loss consequent upon the trustee’s failure to administer the trust with the requisite
25
care, diligence and skill, or because the trustee wrongfully failed to comply with a statutory
26
or a common law duty or with a directive contained in the trust instrument. Trust beneficiar-
ies’ claims against an errant trustee thus lie first and foremost against that trustee’s private
27
estate and not against the trust estate.
1.2.3 Trusteeship as a fiduciary office

Trusteeship is an office (Afrikaans: amp) and a trustee therefore administers a trust in an
official capacity and not in his or her private capacity. The official nature of trusteeship be-
stows a public element onto trusts in that the High Court (Afrikaans: Hooggeregshof) and the
________________________
18 2013 (3) SA 254 (GSJ).

19 At par 33. See 6.3.1.4 regarding the appointment of trustees by the Master.
20 2005 (2) SA 77 (SCA).
21 At par 10.
22 2010 (6) SA 457 (SCA).
23 At par 1.
24 De Waal 2000 SALJ 548 at 562; De Waal 2014 Acta Juridica 219 at 236. See 6.12 regarding the insolvency
of a trust or a trustee.
25 See 7.3.1.4 regarding a trustee’s duty of care, diligence and skill.
26 See 6.11 and 8.6.4.1.1 regarding a trustee’s personal liability for breach of trust.
27 Geach Trust Law 244–245; De Waal 2000 SALJ 548 at 559.
3
28
Master of the High Court (Afrikaans: Meester van die Hooggeregshof) fulfil important supervi-
29
sory and interventionist roles regarding trust administration. The trustee office is moreover
fiduciary in nature insofar as this office imposes a fiduciary duty on a trustee. The Supreme
Court of Appeal acknowledged this essential feature of the South African trust in Land and
30
Agricultural Bank of South Africa v Parker when it said that a trustee “is appointed and ac-
cepts office to exercise fiduciary responsibility over property on behalf of and in the interests
31
of another”.
32
A trustee’s fiduciary duty is discussed in detail in Chapter 6 but it essentially entails that a
trustee must undertake trust administration in good faith with the requisite care, diligence
and skill to serve the best interests of the trust beneficiaries. Moreover, a trustee’s fiduciary
duty obliges him or her to administer the trust impartially and devoid of any conflict with his
or her private interests; to always exercise independent judgement in respect of trust admin-
istration; and to account for trust administration when called upon to do so by the trust
33
beneficiaries or the Master.
1.2.4 Real subrogation

34
The notion of the trust as a separate estate begs the question: what happens if a particular
trust asset is replaced with another asset or if a particular trust asset is sold – is the substitute
asset or the proceeds of the sale still subject to the trust? South African law answers this
question in the affirmative because it adheres to the principle of real subrogation. Real subro-
gation means that the proceeds of a trust asset’s sale as well as any substitute asset (if an
existing trust asset is replaced with another asset or if the proceeds of the sale of a trust asset
is used to purchase another asset) remain subject to the trust and therefore do not become
35
part of the trustee’s private estate. South African law restricts the operation of real subroga-
tion to the lawful replacement of trust assets, in other words, to instances where a trustee
replaced trust assets in accordance with the law and the prescripts of the particular trust
36
instrument. Trust beneficiaries are, however, afforded a number of remedies in the event
37
that a trustee unlawfully alienates trust assets.
1.2.5 Joint action by co-

co-trustees
Trusts are frequently administered by more than one trustee. Co-trustees hold the trustee
38
office jointly, irrespective of their number. This, along with other fundamental characteristics
39
of co-trusteeship, implies that co-trustees must as a rule always act jointly in regard to trust
40
administration. The Supreme Court of Appeal noted in Land and Agricultural Bank of South
41
Africa v Parker that the joint-action rule of co-trusteeship is fundamental to South African
________________________
28 See 7.2.1 regarding the Master’s general role and function as well as its jurisdiction in respect of trustees.
29 De Waal 2000 SALJ 548 at 565–566; De Waal 2014 Acta Juridica 219 at 238.
30 2005 (2) SA 77 (SCA).
31 At par 20. See also Genesis Medical Aid Scheme v Registrar, Medical Schemes 2017 (6) SA 1 (CC) par 30.
32 See 6.7.
33 De Waal 2000 SALJ 548 at 557–559; Du Toit 2007 Stell LR 469 at 472–476; De Waal 2014 Acta Juridica
219 at 235.
34 See 1.2.2.
35 De Waal 2000 SALJ 548 at 564; De Waal 2014 Acta Juridica 219 at 237.
36 De Waal 2000 SALJ 548 at 564.
37 See 8.6.4.2 regarding a trust beneficiary’s remedies against third-party acquirers of trust property.
38 Desai-Chilwan v Ross 2003 (2) SA 644 (C) par 21.
39 See 6.8 regarding co-trusteeship.
40 Lupacchini v Minister of Safety and Security 2010 (6) SA 457 (SCA) par 2.
41 2005 (2) SA 77 (SCA).
4
42
trust law, thus confirming the rule’s importance as an essential feature of the South African
trust. A trust instrument can nevertheless permit a departure from the joint-action rule, for
example, by authorising one trustee to enter into contracts and/or litigation on behalf of all
43
the trustees. Such departures from the joint-action requirement are however the exception
44
rather than the rule.
1.2.6 The absence of legal personality

45
The separation of estates and the notion of the trust estate as a separate entity may create
the impression that the trust is in fact a legal (or juristic) person (Afrikaans: regspersoon) in
46
which the trust’s assets and liabilities vest. However, the South African trust is generally not
clothed with legal personality and South African courts have affirmed this in numerous judg-
47
ments. For example, in Land and Agricultural Bank of South Africa v Parker the Supreme
Court of Appeal acknowledged that the trust estate, although constituting a separate entity, is
48 49
in fact devoid of legal personality. In Lupacchini v Minister of Safety and Security the same
50
court reiterated that “[a] trust established by a trust deed is not a legal person”.
Despite these clear judicial pronouncements on the trust’s lack of legal personality, some
courts have erred in their engagement with this issue. In Minister of Education v Syfrets Trust
51
Ltd the court, in dealing with the applicability of section 9 of the South African Constitution
to a charitable testamentary trust, opined that “all natural and juristic persons – including a
52
charitable trust like the present one” fall within section 9’s ambit. In Steyn v Blockpave (Pty)
53
Ltd the court, in dealing with the joint-action rule of co-trusteeship, likewise said that “[t]he
legal personality of a trust requires that all trustees act together for and on behalf of the
54
trust”. These statements, if they were intended by the respective courts to convey that the
trust is in fact a legal person, do not reflect the true legal position.
A particular statute can nevertheless designate the trust as a person or a legal person for
the purpose of that statute. For example, section 1 of the Income Tax Act recognises the trust
as a “person” and thus as a separate and independent taxable entity for income tax purposes.
Section 1 of the Companies Act likewise includes a trust under its definition of “juristic per-
55
son” for the purpose of that Act. In Melville v Busane the court reasoned that the Companies
Act’s designation of a trust as a juristic person does not convert a trust into an incorporated
________________________
42 At par 15.
43 Coetzee v Peet Smith Trust 2003 (5) SA 674 (T) 679B; Lupacchini v Minister of Safety and Security 2010 (6)
SA 457 (SCA) par 2.
44 Nieuwoudt v Vrystaat Mielies (Edms) Bpk 2004 (3) SA 486 (SCA) par 16.
45 See 1.2.2.
46 De Waal 2000 SALJ 548 at 563. A legal (or juristic) person is a legal entity such as a company that exists
independently under the law and bears its own legal competencies, subjective rights and legal obligations.
A legal person exists separately from its constitutent members (for example, a company’s shareholders)
and therefore continues to exist despite any changes in its constitutent membership.
47 2005 (2) SA 77 (SCA).
48 At par 10.
49 2010 (6) SA 457 (SCA).
50 At par 1.
51 2006 (4) SA 205 (C).
52 At par 28.
53 2011 (3) SA 528 (FB).
54 At par 8.
55 [2012] 1 All SA 675 (ECP).
5
56
company that is subject to the Companies Act. The court consequently held that the appro-
priate remedy in respect of a trust that committed an act of insolvency is sequestration in
57
terms of the Insolvency Act and not liquidation under the Companies Act.
The trust’s lack of legal personality poses some theoretical conundrums. Consider the
following example: A is the sole trustee of the XYZ Trust. The trust’s property vests in A.
A dies. Does the XYZ Trust continue to exist without A as trustee? If so, in whom does the
trust property vest in the aftermath of A’s death?
De Waal points to South African law’s adherence to the principle that “a trust will not fail
for want of a trustee” and thus that a trust will continue to exist despite the death of its
58
sole trustee. South African law’s answers to the foregoing questions are therefore that
the trust property of the XYZ Trust will in all likelihood form part of A’s deceased estate
and will eventually vest as a separate estate in the executor of A’s deceased estate who
must transfer the trust property to the XYZ Trust’s new trustee once that new trustee has
59
been appointed. The practical reality is therefore that a trust can exist without any trus-
tee in the strict sense holding office and accordingly that a trust has “a life or a personali-
60
ty independent from its trustees”. It is difficult to reconcile this practical reality with
trust theory that denounces the trust as a legal person. This anomaly is one of a number
of disjunctions between trust theory and trust practice, and these disjunctions provide,
according to some commentators, impetus to the trust’s ostensible movement toward
61
legal personality.
1.3 The statutory definitions of a trust

Section 1 of the Act defines a trust for the purpose of the Act as follows:
“ ‘[T]rust’ means the arrangement through which the ownership in property of one person is by
virtue of a trust instrument made over or bequeathed –
(a) to another person, the trustee, in whole or in part, to be administered or disposed of according
to the provisions of the trust instrument for the benefit of the person or class of persons desig-
nated in the trust instrument or for the achievement of the object stated in the trust instru-
ment; or
(b) to the beneficiaries designated in the trust instrument, which property is placed under the
control of another person, the trustee, to be administered or disposed of according to the pro-
visions of the trust instrument for the benefit of the person or class of persons designated in
the trust instrument or for the achievement of the object stated in the trust instrument,
but does not include the case where the property of another is to be administered by any person as
executor, tutor or curator in terms of the provisions of the Administration of Estates Act, 1965 (Act
66 of 1965).”
This definition provides for two types of trusts. The first, described in paragraph (a) of the
definition, is where the trustee is vested with the ownership of the trust property and admin-
isters it for the benefit of the trust beneficiaries or toward the achievement of an impersonal
trust object. The second type, described in paragraph (b) of the definition, is where the trust
________________________
56 At paras 12 and 16.

58 De Waal 2009 TSAR 84 at 93.
59 Ibid at 93–94.
60 Ibid at 100.
61 Theron 1991 De Jure 319 at 322–324; De Waal 1993 THRHR 1 at 10.
6
beneficiaries are vested with the ownership of the trust property and the trustee merely
administers this property as a non-owner for the benefit of the trust beneficiaries or toward
the achievement of an impersonal trust object.
This definition of a trust in section 1 of the Act brings all trusts in the strict sense within the
62
Act’s regulatory ambit. Although the making over or bequeathing of the ownership in trust
property is central to the definition, it nevertheless provides that such ownership can vest in
either the trustee or the trust beneficiaries. The Act thus confirms that a trustee’s ownership
of trust property is not the defining feature of the trust in the strict sense. The Act’s definition
of a trust instead identifies a trustee’s administrative control, whether as owner or non-owner,
as determinative of whether or not a trust in the strict sense is at hand. This is because a
trustee’s powers of administration derive from the trust instrument and the law, in general,
63
rather than from his or her ownership of the trust property. The Act’s definition of a trust
also expresses pertinently that a trustee exercises administrative control over trust property
not for his or her own benefit, but for the benefit of the trust beneficiaries or in the pursuance
of an impersonal trust object. The definition therefore enunciates the essential feature of the
South African trust regarding a functional separation between a trustee’s control of a trust and
64
the trust beneficiaries’ enjoyment of trust benefits.
The definition of a trust in section 1 of the Act does not, however, express some of the oth-
er essential features of the South African trust. It does not, for example, reflect the notion of a
segregated trust estate in respect of which real subrogation operates, neither does it identify
the trustee office as fiduciary in nature. These features are, however, explicit in the following
definition of a trust contained in section 1 of the Income Tax Act:
“ ‘Trust’ means any trust fund consisting of cash or other assets which are administered and con-
trolled by a person acting in a fiduciary capacity, where such person is appointed under a deed of
trust or by agreement or under the will of a deceased person.”
The Income Tax Act’s definition of a trust encompasses both trusts in the strict sense and the
65
wide sense. Insofar as this definition pertains to trusts in the strict sense, it is instructive that
it refers to a trust as “any trust fund” because the notion of a trust as a fund corresponds
66
greatly with that of a trust as a segregated estate held by the trustee. Indeed, a trust estate
67
has been described as “a separate fund vested in the trustee”. Typifying a trust estate as a
fund also implicitly acknowledges that the constituent items in that fund may be replaced by
68
other items without changing the fund’s identity. This is essentially an acknowledgment of
real subrogation which is thus intimately linked to the notion of a trust as an estate or a
69
fund. The Income Tax Act’s definition of a trust therefore encapsulates the essential features
of the South African trust as a separate estate in respect of which real subrogation operates.
________________________
62 Conze v Masterbond Participation Trust Managers (Pty) Ltd 1996 (3) SA 786 (C) 794G.
63 Honoré in Zimmermann and Visser Southern Cross 865.
64 See 1.2.1.
65 This much is evident from the definition of “trustee” in s 1 of the Income Tax Act as every person
appointed or constituted as such by an act of parties, by will, by order of court or by operation of law, as
well as an executor or administrator, tutor or curator, and any person administering or controlling any
property subject to a trust, usufruct, fideicommissum or other limited interest or acting in any fiduciary ca-
pacity, or having, either in a private or in an official capacity, the possession, direction, control or man-
agement of any property of any person under legal disability. This definition of a trustee therefore
expressly includes trustees in the wide sense. See also Commissioner for Inland Revenue v Friedman 1993
(1) SA 353 (A) 373F–374A.
66 See 1.2.2 regarding the separation of estates.
67 Honoré in Rabello Aequitas and Equity 812.
68 Gretton 2000 ICLQ 599 at 613.
69 Ibid at 610. See 1.2.4 regarding real subrogation.
7
The definition also states that a trustee acts in a fiduciary capacity, thereby underlining that a
trustee functions in an official capacity; moreover, that the office of trustee is fiduciary in
nature. The definition thus confirms yet another essential feature of the South African trust,
70
namely, that trusteeship as an office has a distinctive fiduciary character.
1.4 Trust descriptions

descriptions
1.4.1 The ownership trust
An ownership trust (Afrikaans: eienaarskapstrust) is one where a trust instrument vests the
ownership of the trust property in the trustee in his or her official capacity. Paragraph (a) of
71
the definition of a trust in section 1 of the Act therefore contemplates the ownership trust.
72
The majority of trusts in South African legal and commercial practice are ownership trusts
73
and this trust is frequently referred to as the “ordinary trust” or the “most common form of
74
trust”.
1.4.2 The bewind trust

A bewind trust is one where a trust instrument vests the ownership of the trust property in the
trust beneficiaries but places the control of that property in the trustee’s hands. Paragraph (b)
75
of the definition of a trust in section 1 of the Act therefore contemplates the bewind trust.
The term bewind is derived from a corresponding arrangement in Roman-Dutch law (and in
modern Dutch law) whereby an administrator or bewindhebber controls property owned by
76
another.
1.4.3 The inter vivos trust

An inter vivos trust is established by a trust founder during his or her lifetime through the
conclusion of a trust contract between the founder and the trustee. The positive law regards
77
this trust contract as akin to a contract for the benefit of a third party (stipulatio alteri). An
78
inter vivos trust is created at the moment the trust contract is concluded.
1.4.4 The testamentary trust

A testamentary trust (will trust or trust mortis causa) (Afrikaans: testamentêre trust) is estab-
lished in terms of the trust founder’s last will and testament. A testamentary trust is usually
79
created on the founder’s (testator’s) death.
1.4.5 The vesting trust

A vesting trust (Afrikaans: vestigingstrust) is one where the trust instrument sets out exactly
who the trust beneficiaries are and to what extent each beneficiary will benefit from the trust.
________________________
70 See 1.2.3 regarding a trustee’s fiduciary office.

71 See 1.3.
72 De Waal 2000 SALJ 548 at 561.
73 Bafokeng Tribe v Impala Platinum Ltd 1999 (3) SA 517 (BH) 545E.
74 Commissioner, South African Revenue Service v Dyefin Textiles (Pty) Ltd 2002 (4) SA 606 (N) 611H.
75 See 1.3.
76 Bafokeng Tribe v Impala Platinum Ltd 1999 (3) SA 517 (BH) 542B–C. See also Du Toit 2011 TSAR 540.
77 Crookes v Watson 1956 (1) SA 277 (A) 285F; Potgieter v Potgieter 2012 (1) SA 637 (SCA) par 18.
78 Geach Trust Law 49–50. See also 4.4.2.
79 Geach Trust Law 36 and 50. See also 4.4.1.
8
Each beneficiary therefore has a vested personal right against the trust’s trustee to claim the
80
trust benefit(s) allocated to him or her in the trust instrument. The description “non-
81
discretionary trust” (Afrikaans: nie-diskresionêre trust) is often applied to a vesting trust. A
beneficiary under a vesting trust is referred to in this book as an actual beneficiary.
1.4.6 The discretionary trust

A discretionary trust (Afrikaans: diskresionêre trust) is one where the trust instrument bestows
a discretionary power on the trustee to appoint the trust beneficiaries and/or to determine
82
whether, and if so to what extent, the beneficiaries will benefit from the trust. The discretion
to appoint trust beneficiaries (usually from a class of possible beneficiaries identified by the
83
trust founder) is known as a power of appointment (Afrikaans: bemakingsbevoegdheid). A
trust beneficiary will only be vested with a personal right to claim a trust benefit once the
84
trustee has exercised the particular discretion in that beneficiary’s favour. A beneficiary
under a discretionary trust is referred to in this book as a potential beneficiary.
1.4.7 The family trust

A family trust (Afrikaans: familietrust) is established to secure the interests and protect the
property of the members of a particular family. The beneficiaries of a family trust are, as a
85
rule, related to the trust founder, usually by descent or kinship.
86
A typical example of a family trust is found in Van Zyl v Kaye: Mr K created an inter vivos
trust. The trust’s trustees acquired and held the K’s family home in trust. The trust’s initial
trustees were Mr K, Mrs K and an attorney. The trust’s beneficiaries were Mr K, Mrs K
87
and their descendants.
1.4.8 The business trust

A business trust (trading trust) (Afrikaans: besigheidstrust) is established to receive funds
and/or property that are used to conduct some business enterprise. A public business trust
invites members of the public to become income beneficiaries of the trust upon the payment
of money or the contribution of property to the trust. Each contributor receives a certificate as
proof of his or her contribution to the trust and shares in the trust income in proportion to the
contribution made. A private business trust is usually created by entrepreneurs who pool their
funds in the pursuit of a business objective and who then use the trust as a vehicle to conduct
88
the particular business.
________________________
80 Geach Trust Law 41 and 264. See 8.4.2.1 regarding the vesting of beneficiaries’ rights.
81 Jamneck et al Law of Succession 192.
82 Geach Trust Law 40 and 264; Jamneck et al Law of Succession 192. See 9.5 for further permutations
regarding this discretionary power.
83 Braun v Blann and Botha 1984 (2) SA 850 (A) 856E–F. See 8.2 regarding powers of appointment.
84 Geach Trust Law 264. See 8.4.2.1 regarding the vesting of beneficiaries’ rights.
85 Land and Agricultural Bank of South Africa v Parker 2005 (2) SA 77 (SCA) par 25.
86 2014 (4) SA 452 (WCC).
88 Geach Trust Law 46–47. See 9.6 regarding the business trust.
9
1.4.9 The private trust

A private trust (Afrikaans: privaattrust) benefits ascertained or ascertainable beneficiaries and
89
is not established to pursue an impersonal, charitable trust object. A private trust is therefore
90
by definition non-charitable in nature.
1.4.10 The charitable trust

A charitable trust (Afrikaans: liefdadigheidstrust) pursues an impersonal, charitable object and,
unlike a private trust, generally does not have ascertained or ascertainable beneficiaries. A
charitable trust’s trust instrument instead merely specifies the trust’s charitable object or
91
purpose. Charitable purposes include scientific, educational, health and religious purposes. A
charitable purpose presupposes an element of public benefit insofar as a charitable trust must
92
advance the interests of the community or a section of the community. Consequently, the
charitable trust is said to possess a public character – a characteristic not necessarily shared
93
by the private trust.
1.4.11 The off-

off-shore trust
An off-shore trust (Afrikaans: aflandige trust or buitelandse trust) is one established in a juris-
94
diction other than South Africa.
1.5 The parties to a trust

1.5.1 The trust founder
The founder (Afrikaans: oprigter) is the party who creates a trust. A trust founder can be a
95
natural person or a legal person. The founder of an inter vivos trust is sometimes referred to
96
as the settlor of the trust, alternatively as the donor because the founder usually contributes
97
the initial trust property through a donation made to the trust. The founder of a testamen-
tary trust is the testator or testatrix who provides for the creation of the trust in terms of his
98
or her will.
The founder can be a trustee of the trust he or she created. Section 1 of the Act expressly
99
defines a trustee for the purpose of the Act to include the trust founder. The founder of an
inter vivos ownership trust can, however, not be the trust’s sole initial trustee because a
100
person cannot contract with him- or herself to create the trust. Moreover, the definition of
“trust” in section 1 of the Act requires of the founder to make the trust property over to
________________________
89 Braun v Blann and Botha 1984 (2) SA 850 (A) 859H.

91 Deedat v The Master 1995 (2) SA 377 (A) 383F.
92 Ex parte Henderson 1971 (4) SA 549 (D) 554A–B; Jamneck et al Law of Succession 192.
93 Harper v Crawford 2018 (1) SA 589 (WCC) par 30; King v De Jager 2017 (6) SA 527 (WCC) par 39; Harvey v
Crawford [2018] ZASCA 147 (17 October 2018) par 60. See 3.4.1.1 regarding the public nature of charita-
ble trusts and 9.7 regarding the charitable trust in general.
94 Geach Trust Law 59.
95 See Lorentz v TEK Corporation Provident Fund 1998 (1) SA 192 (W) 224D where a company was a trust
founder.
96 Crookes v Watson 1956 (1) SA 277 (A) 282D.
97 Geach Trust Law 113–114.
98 Ibid 115.
99 See 1.5.2 and 6.1.
100 Geach Trust Law 115. See also 4.5.2.
10
101
someone else: the founder must therefore divest him- or herself of the trust property. The
founder will not be divested of the trust property if the ownership in that property is simply
102
made over to him- or herself as sole trustee. The founder can, however, be a beneficiary,
103
even the sole beneficiary, of the trust he or she created.
1.5.2 The trustee

The trustee is the party who holds, controls and administers in trust the property received
from the founder or from another. The trustee does so not for his or her own benefit, but for
104
the benefit of the trust beneficiaries or in the pursuance of an impersonal trust object. A
trustee of an ownership trust owns the trust property, but his or her ownership is frequently
typified as bare ownership to denote that it is devoid of any personal and beneficial interest
105
for the trustee. A trust can be controlled by multiple trustees and, if it is an ownership trust,
106
the co-trustees are co-owners of the trust property.
A trustee can be a beneficiary of the trust which he or she administers. A trustee cannot
however be a trust’s sole beneficiary upon the trust’s creation because that will occasion a
conjoining of control and enjoyment that is inimical to South African law’s conceptualisation
107
of the trust: no trust will come into existence in such a case. In Groeschke v Trustee,
108
Groeschke Family Trust the court pointed out that, although no trust is created if its sole
trustee and its sole beneficiary are one and the same person, a trust will not fail if a sole
109
trustee becomes that trust’s only beneficiary at some point in time after the trust’s creation.
Section 1 of the Act defines “trustee” for the purpose of the Act as any person (including
the trust founder) who acts as trustee by virtue of an authorisation in terms of section 6 of the
110
Act and includes any person whose appointment as trustee was already of force and effect
at the Act’s commencement. South African law adheres to the adage that “a trust will not fail
111
for want of a trustee”: even if a sole trustee vacates office and the trust instrument is silent
on how the vacancy is to be filled, the trust continues to exist and the Master is required to
112
appoint a new trustee.
1.5.3 The trust beneficiary

The beneficiary (Afrikaans: begunstigde or bevoordeelde) is the party who benefits from the
creation of a trust by the founder and from the administration of that trust by the trustee. A
113
general distinction can be drawn between income beneficiaries and capital beneficiaries.
Income beneficiaries receive the income or proceeds yielded by the trustee’s administration
of the trust such as interest, dividends or rentals, whereas the capital beneficiaries receive the
trust property or trust capital itself, usually upon the trust’s termination.
________________________
101 Geach Trust Law 115; Pace and Van der Westhuizen Wills and Trusts B7.1.
102 Olivier 2001 SALJ 224 at 226.
103 For example, see Groeschke v Trustee, Groeschke Family Trust 2013 (3) SA 254 (GSJ).
105 Ibid; Levin v Gutkin, Fisher and Schneier 1997 (3) SA 267 (W) 284E; Jowell v Bramwell-Jones 1998 (1) SA
836 (W) 872C; Geach Trust Law 118; Jamneck et al Law of Succession 192.
106 Land and Agricultural Bank of South Africa v Parker 2005 (2) SA 77 (SCA) par 15; Geach Trust Law 118.
107 Ibid par 19; Groeschke v Trustee, Groeschke Family Trust 2013 (3) SA 254 (GSJ) par 31.
108 2013 (3) SA 254 (GSJ).
109 At paras 32 and 33. See 1.2.1.
110 See 6.5 regarding trustee authorisation.
111 Land and Agricultural Bank of South Africa v Parker 2005 (2) SA 77 (SCA) par 12. See also 1.2.6.
112 S 7(1) of the Trust Property Control Act. See 6.3.1.4 regarding trustee appointment by the Master.
11
The following provision appears in A’s will:

“R5 million from my estate must be placed in trust for my trustee to invest in order to pay an-
nually to my surviving spouse, B, the full amount of the interest received on the investment.
These payments must continue for the remainder of my spouse’s lifetime. The trust must ter-
minate on the death of my spouse, at which time my trustee must pay the initial trust capital
(the R5 million originally placed in trust) to our only child, C.”
In this scenario, B is the trust’s income beneficiary, whereas C is its capital beneficiary. It
is nevertheless possible for one and the same person to be a trust’s sole income and capi-
114
tal beneficiary.
1.6 Trust property

Section 1 of the Act determines:
“ ‘[T]rust property’ or ‘property’ means movable or immovable property, and includes contingent
interests in property, which in accordance with the provisions of a trust instrument are to be ad-
ministered or disposed of by a trustee.”
115 116 117
Trust property constitutes the capital, corpus or subject-matter of a trust. Trust property
can consist of any asset or group of assets, whether movable or immovable, corporeal or
incorporeal. A farm, an art collection, cash, shares and copyright (to name but a few exam-
118
ples) can therefore constitute trust property. Contingent interests in property can, in terms
of the Act’s definition, also be placed in trust. A contingent interest in property is seemingly
one that exists only for the lifetime of the holder of the interest: the interest is therefore
limited in nature insofar as its continued existence is dependent on the holder being alive. A
contingent interest in this sense ceases absolutely on the holder’s death and does not pass by
inheritance to his or her successors. Examples of such interests are a fiduciary’s interest
119
under a fideicommissum and a usufructuary’s interest under a usufruct. A contingent interest
120
in property may also be one that is not yet vested, for example, a fideicommissary’s inter-
121
est under a fideicommissum during the period when the property is held by the fiduciary.
Olivier et al therefore declare that any asset that can be held in ownership and that can be
122
converted into money if liquidated can be held in trust.
________________________
114 Du Plessis v Van Niekerk 2018 (6) SA 131 (FB) par 2.

115 Jowell v Bramwell-Jones 1998 (1) SA 836 (W) 872D.
116 Ibid.
117 Ex parte Milton 1959 (3) SA 426 (C) 426H.
118 Pace and Van der Westhuizen Wills and Trusts B8.3.
119 Hansen v Commissioner for Inland Revenue 1955 (2) SA 470 (W) 476F–G. Olivier et al Trustreg en Praktyk
2.3 propose that the definitions of “property” in other statutes assist in determining what constitutes trust
property for the purpose of the Trust Property Control Act. S 3(2)(a) of the Estate Duty Act defines “prop-
erty” to include “any fiduciary, usufructuary or like interest in property” and, if Olivier et al’s proposal is
followed, this definition in the Estate Duty Act suggests that fiduciary, usufructuary or like interests in
property can be held in trust. See 9.2.1 regarding the testamentary fideicommissum and usufruct.
120 See 8.4.2.1 regarding the vesting of rights.
121 Olivier et al Trustreg en Praktyk 2.3 propose that the definitions of “property” in other statutes assist in
determining what constitutes trust property for the purpose of the Trust Property Control Act. S 2 of the
Insolvency Act typifies a fideicommissary’s interest under a fideicommissum as a contingent interest in
property and, if Olivier et al’s proposal is followed, this definition in the Insolvency Act suggests that a fid-
eicommissary’s interest in property can be held in trust. See De Waal and Schoeman-Malan Law of Suc-
cession 158–159 regarding the nature of a fideicommissary’s right during the period when the fiduciary
holds the fideicommissary property. See 9.2.1 regarding the testamentary fideicommissum.
122 Olivier et al Trustreg en Praktyk 2.3.
12
1.7 Trust instruments

Section 1 of the Act provides:
“ ‘[T]rust instrument’ means a written agreement or a testamentary writing or a court order accord-
ing to which a trust was created.”
The three trust instruments mentioned in this definition constitute the principal sources of
trusts under South African law or, put differently, the three most common modes for the
creation of trusts. “Trust document” is readily used as a synonym for “trust instrument”.
“Trust deed” (Afrikaans: trustakte) is usually employed with reference to the written agree-
ment in terms of which an inter vivos trust is created.
123
In Land and Agricultural Bank of South Africa v Parker the Supreme Court of Appeal said
124
that a trust instrument is “the trust’s constitutive charter” – it is the trust’s founding docu-
ment or constitution. A trust is consequently correctly described as a “creature of document”
125
and a trust is only as good as its trust instrument permits it to be.
1.7.1 Written agreement

A trust created by agreement during the lifetime of the founder is commonly known as an
126 127
inter vivos trust or a consensual trust. The contract constitutive of an inter vivos trust is
akin to a contract for the benefit of a third party or stipulatio alteri. A stipulatio alteri is a
contract concluded between one party, the stipulans, and another party, the promittens, in
terms of which the promittens must bestow some benefit on the third party in whose favour
the contract was concluded. An inter vivos trust contract is, by analogy, concluded between
the trust founder and trustee for the trustee to bestow a trust benefit on the trust benefi-
128
ciary. An inter vivos trust can, in principle, be concluded by way of an oral agreement but,
because the Act expressly designates only a written agreement as a trust instrument, the
129
provisions of the Act do not apply to such an oral trust. An oral trust is governed by the
130
common law. However, it is highly unlikely that the Master will authorise someone to act as
131 132
a trustee in the absence of a trust instrument as envisaged in the Act. An oral trust is
therefore essentially a non-starter. Possibly for this very reason section 2 of the Act provides
that, if a document represents the reduction to writing of an oral agreement by which a trust
was created or varied, such a document shall for the purpose of the Act be deemed a trust
instrument. This section therefore creates a mechanism for bringing an erstwhile oral trust
within the Act’s regulatory ambit.
South African law generally permits contracts to be concluded without formality. Certain
contracts nevertheless require compliance with statutory formalities for their validity. Con-
133 134
tracts for the alienation of land as well as contracts of donation fall into this category.
Therefore, the trust deed of an inter vivos trust in terms of which the founder will donate the
________________________
123 2005 (2) SA 77 (SCA).

124 At par 10.
125 Pace and Van der Westhuizen Wills and Trusts B10; Du Toit 2013 Trusts and Trustees 39.
126 Hofer v Kevitt 1996 (2) SA 402 (C) 405E.
127 Joubert v Van Rensburg 2001 (1) SA 753 (W) 768B.
128 Crookes v Watson 1956 (1) SA 277 (A) 285F; Hofer v Kevitt 1998 (1) SA 382 (SCA) 386E.
129 Deedat v The Master 1995 (2) SA 377 (A) 384I.
130 Corbett 1993 THRHR 262 at 268.
131 In terms of s 6(1) of the Trust Property Control Act. See 6.5 regarding trustee authorisation.
133 S 2 of the Alienation of Land Act.
134 S 5 of the General Law Amendment Act.
13
trust’s initial property to the trustee or one that will involve the alienation of land by the
founder to the trustee must comply with the relevant statutory formalities in order to create a
valid trust.
1.7.2 Testamentary writing

The reference to a testamentary writing (Afrikaans: testamentêre geskrif) as a trust instrument
in section 1 of the Act is generally understood to denote a trust created by virtue of a testa-
135
tor’s last will and testament. It therefore refers to the testamentary trust. The testamentary
136
trust is thus a testamentary disposition and the will in terms of which it is created must
accordingly be validly executed in compliance with the requisite formalities prescribed by the
137
Wills Act.
1.7.3 Court order

A court can create a trust by court order. This mode of creating a trust is however seldom the
consequence of an independent action by a court. More often than not a court will confirm
the creation of a trust in a court order because the litigants requested or agreed to the crea-
138
tion of a trust. A court can, for example, order that a trust be established to settle a matri-
monial dispute regarding maintenance payable to a former spouse or the children from a
dissolved marriage, or a court can confirm the creation of such a trust as part of a divorce
139
settlement.
1.7.4 Other trust instruments

A trust can be created by an instrument other than the three trust instruments prescribed by
the Act. For example, legislation can provide for the creation of trusts to achieve certain
140
purposes envisaged by particular statutes.
1.8 The South African trust in a legal-

legal-comparative context
141
Conventional wisdom dictates that the modern trust originated in England. The trust conse-
quently features pertinently in common law jurisdictions that derive their law from English
law. Civil law jurisdictions that derive their law from Roman law are, on the other hand,
142
generally unfamiliar with the trust. South Africa is a mixed jurisdiction – its civilian Roman-
Dutch common law has been influenced significantly by English law. The introduction of the
English trust to South Africa’s civilian common law is arguably one of the most telling indications
________________________
135 De Waal and Schoeman-Malan Law of Succession 166; Geach Trust Law 67.
136 Ex parte Jewish Colonial Trust Ltd: In re Estate Nathan 1967 (4) SA 397 (N) 409C–D; Geach Trust Law 67.
137 Geach Trust Law 97; Jamneck et al Law of Succession 196. S 2(1)(a) of the Wills Act lays down the testa-
mentary execution formalities. The High Court nevertheless has a power of condonation regarding
formally-irregular wills in terms of s 2(3) of the Act.
139 Geach Trust Law 453; Pace and Van der Westhuizen Wills and Trusts B7.3. For example, see Welch’s
Estate v Commissioner, South African Revenue Service 2005 (4) SA 173 (SCA) paras 2 and 87.
140 Geach Trust Law 48. See also Genesis Medical Aid Scheme v Registrar, Medical Schemes 2017 (6) SA 1 (CC)
par 29. For example, the National Lottery Distribution Trust Fund established in terms of s 21 of the Lot-
teries Act and the National Forest Recreation and Access Trust established in terms of s 41 of the National
Forests Act.
141 See 2.2.1 regarding theories on the trust’s origin.
142 Braun v Blann and Botha 1984 (2) SA 850 (A) 858H–859E.
14
143
of the mixed nature of the South African legal system. South Africa’s acceptance and subse-
quent adaptation of the English trust to align this institution with the tenets of South Africa’s
civilian common law holds valuable lessons for other civilian jurisdictions looking to introduce
144
the trust or a trust-like device into their legal systems. South African trust law scholarship
has therefore assumed a prominent place in international legal-comparative trust law dis-
145
course.
The fact that the English trust is the forebear of South Africa’s trust means that “much
146
common ground” exists between the English and South African trusts. In fact, a considera-
ble number of English trust law principles have become part of South Africa’s common law
147
regarding the trust. The common ground between the South African and English trusts also
permits South African courts to consider English trust law when adjudicating on trust law
matters and to acknowledge that the two legal systems’ trust law rules coincide in many
148
instances. South African courts are however alert to differences between South African and
English trust law and they remain cognizant of the fact that the two jurisdictions’ legal princi-
149
ples on point do not always correspond.
The South African trust has been described as “an evolutionary hybrid” insofar as it is the
English trust in modified form that nevertheless fulfils most of the functions of the trust in
English law, yet its adaptation to South Africa’s civilian common law has been unique among
150
civilian and mixed jurisdictions. The South African trust thus demands close scrutiny and
analysis by South African legal scholars and practitioners as well as international trust law
comparatists.
________________________
143 Du Toit 2015 Rabel J 852 at 855.

144 See generally De Waal 2001 Stell LR 63; Du Toit 2015 Rabel J 852.
145 For example, see the valuable comparative analyses of aspects of South African trust law with comparable
aspects of trust law from other jurisdictions by De Waal 2000 SALJ 548 and Du Toit 2018 Tulane Eur & Civ
LF 1.
146 De Waal 2000 SALJ 548 at 569.
147 For example, South Africa’s common law rules on the judicial removal of a trustee from office are derived
almost entirely from the corresponding rules of English law: Kidbrooke Place Management Association v
Walton 2015 (4) SA 112 (WCC) paras 49–52; Du Toit 2017 TSAR 124 at 124–127. See 6.13.6 regarding
trustee removal by the court.
148 For example, Sackville West v Nourse 1925 AD 516 at 535; Doyle v Board of Executors 1999 (2) SA 805 (C)
814F–G.
149 For example, Verseput v De Gruchy 1977 (4) SA 440 (W) 446H–447A; Gross v Pentz 1996 (4) SA 617 (A)
630G.
150 Honoré in Zimmermann and Visser Southern Cross 850.
15
2
The South African Trust in its Historical and
Legal Contexts
2.1 Introduction
The English trust is the forebear of the South African trust. South African trust law is, howev-
er, a uniquely home-grown product, developed principally by the courts with some assistance
from the legislature and through critical contributions by trust law scholars. Comprehending
the fundamentals of South African trust law requires a keen understanding of the history of
the South African trust: how the trust institution originated in English law, how it was received
into South African law, and how South African trust law was developed, and continues to be
developed, into a sophisticated branch of South African private law.
It is moreover important to comprehend how the English trust was adapted to South Afri-
can law as a mixed legal system with its historical roots deeply embedded in Roman and
Roman-Dutch law. An understanding of how South African law conceptualises the trust is
therefore essential to engaging with the fundamentals of South African trust law. Finally, it is
important to determine whether the South African trust, despite being shorn of some of the
definitive characteristics of the English trust, is nevertheless a true trust. These important
issues are addressed in this chapter as a precursor to the expositions on substantive South
African trust law discussed in the chapters that follow.
2.2 The history of the trust

2.2.1 Theories on the origin of the trust
The English historian and jurist Frederic Maitland famously hailed the trust as “the greatest
1
and most distinctive achievement performed by Englishmen in the field of jurisprudence”.
The assertion that the modern trust is a product of English law is undoubtedly correct insofar
as the trust as it exists in contemporary Anglo-American law was developed in England
2
through the adaptation of its predecessor, an institution known as the use. Some scholars
3
contend, however, that the use had non-Anglo-Saxon precursors and that the origin of the use
and the trust can be traced back to these institutions from continental Europe and even
________________________
1 De Waal 2000 SALJ 548 at 554.

2 See 2.2.2.
3 The Angles and the Saxons were among the peoples who inhabited Great Britain from the fifth century
after the Roman occupation of the British Isles had ended.
17
further afield. Albertus identifies a number of theories that explain the origin of the English
4
trust and its predecessor, the use.
5
• One theory holds that the fideicommissum of Roman law was introduced to England by
ecclesiasts as a mechanism to circumvent statutory restrictions on gifts of land to churches
6
without royal consent. This theory therefore explains the use in terms of its similarities
with the fideicommissum, in particular, because both institutions were designed to transfer
7
property from one party to another through the intervention of a third party. However,
8
fundamental differences exist between the use (and the trust) and the fideicommissum.
9
These differences prompted the erstwhile Appellate Division in Braun v Blann and Botha to
find that the trust and the fideicommissum are historically and jurisprudentially separate
10
and distinct legal institutions, and that the former cannot be identified with the latter.
• Another theory proposes that the origin of the use and the trust lies in the Treuhand – an
institution of Germanic law found in the Lex Salica, the civil code of the Salian Franks that
11
dates from around the turn of the fifth century. The Treuhand permitted an intermediary,
the salman, to receive property under the obligation to transfer that property to a designat-
ed beneficiary upon the death of the initial transferor. This arrangement corresponds great-
ly with the arrangement in terms of the use, in particular insofar as the use allowed an
intermediary, the feoffee, to receive property from a transferor, the feoffor, under the obli-
gation to hold and ultimately to transfer that property to a designated beneficiary, the
12
cestui que use. This theory is fortified by the fact that aspects of Salic law were introduced
to England in the aftermath of the Norman Conquest when armies from continental Europe
invaded and occupied England in 1066. The theory holds that, because the salman concept
did not exist in pre-Conquest Anglo-Saxon law, the post-Conquest introduction of the Treu-
hand institution to England provides a plausible explanation for the subsequent emergence
13
of an analogous institution, namely, the use. The Appellate Division appears to have ac-
14
cepted this theory in Braun v Blann and Botha when it opined that the developmental roots
15
of the modern English trust lie in the Germanic Treuhand.
• A third theory relies on a combination of Roman law and Germanic law to explain the
emergence of the use in England. This theory is therefore termed the “Roman-Germanic
16
theory”. It proposes that the word “use” was derived from the Latin word “opus” that ap-
peared in the records of early Germanic tribes such as the Franks and the Lombards. The
theory holds that the Germanic notion of “opus” made its way to England after the Norman
Conquest. This theory also acknowledges that the medieval Franciscan friars employed the
phrase “ad opus” to signify an arrangement that permitted the friars to enjoy the use of
property held for them by others, and in so doing, to sustain their Order notwithstanding
17
their vows of poverty. In this sense, the word “opus” was essentially a reference to the
________________________
4 Albertus 2014 Acta Juridica 268.

5 See 8.5.1 and 9.2.1 regarding the fideicommissum in South African law.
6 Albertus 2014 Acta Juridica 268 at 271.
7 Ibid.
8 Ibid at 271–272.
9 1984 (2) SA 850 (A).
10 At 859C and 866B. See also 2.4.1.
12 Ibid.
13 Ibid at 272–273.
14 1984 (2) SA 850 (A).
15 At 859A.
17 Ibid.
18
The South African Trust in its Historical and Legal Contexts
“usus” of Roman law and the connotation of “ad opus” with “usus” is said to have resulted
18
in the English term “use”.
• A final theory proposes that the use emerged in England because Crusaders encountered
the Islamic institution of the waqf during the Crusades to the Holy Land. A waqf permits a
waqif to reserve property in perpetuity for a specific purpose, either as a charitable en-
dowment or in favour of the waqif’s family members. The waqf is essentially a device em-
ployed to accommodate restrictions placed by Islamic law on the passage of property to a
19
person’s heirs. This theory holds that the returning Crusaders’ encounters with the waqf
led to the realisation that an analogous institution could be employed for an array of pur-
poses in England, among others, to circumvent the feudal dues payable by the lower clas-
20
ses (the tenants or vassals) to the higher classes (the landlords) during medieval times.
Moreover, Franciscan friars were active in the Holy Land during the time of the waqf’s de-
velopment in the Middle East and they may have realised that an institution akin to the
waqf would allow them the use of property held for them by others, and in so doing, sus-
21
tain their Order whilst still adhering to their vows of poverty. Albertus therefore declares
that “[b]ased on the historical timelines and the similarities between the use and the waqf,
22
logic would dictate that the waqf influenced the development of the use”.
The foregoing theories provide instructive perspectives on the possible origins of the English
use and the modern English trust. However, none of the theories are devoid of criticism and
23
the true origin of the use and therefore also of the trust remains uncertain.
2.2.2 The trust in England24

The practice of granting land to intermediaries for various uses occurred in England as early
as the eleventh century and was common by the thirteenth century. Franciscan friars, who
were bound by oaths of poverty and thus could not possess any wealth, yet were in need of
land to live on and cultivate produce to sustain their Order, readily transferred land to local
communities “ad opus fratrum” – to the use of the friars. Crusaders transferred land to confi-
dantes who, upon a Crusader’s return from a lengthy Crusade, had to transfer it back or,
should a Crusader not return, transfer it to a designated beneficiary. Tenants (vassals), who
received proprietary rights to land from feudal lords in return for the rendering of services,
transferred such rights to trusted parties and, in so doing, escaped the payment of feudal
dues. In each of these instances, the institution of the use was employed that enabled A (the
feoffor) to transfer property in ownership to B (the feoffee) to the use of C (the cestui que use).
B was vested with ownership in the property, but was bound by an oath to abide by the
wishes of the feoffor and to bestow the benefit stipulated by the feoffor on the cestui que use
when apposite.
________________________
18 Ibid.
19 Ibid at 274–275.
20 Ibid at 276.
21 Ibid at 276–277.
22 Ibid at 277.
23 Ibid at 291.
24 The historical development of the English trust is essentially a case study on legal evolution. An abun-
dance of material exists on this subject and what follows is only a synoptic overview of this fascinating
aspect of English law. The overview is compiled from Olivier et al Trustreg en Praktyk 1.3–1.4; Corbett
1993 THRHR 262 at 262–263; De Waal 2000 SALJ 548 at 552–554; Albertus 2014 Acta Juridica 268 at
269–270.
19
However, the English common law failed to accommodate the interest of the cestui que use
in the property held to use. This was because the common law recognised the feoffee as the
legal owner of that property and it did not afford the cestui que use a remedy against a feoffee
who failed in the oath to hold the property for the benefit of the cestui que use. The practice
developed from the thirteenth century for an aggrieved party, without a remedy in terms of
the common law (such as a cestui que use in the instance of an errant feoffee), to petition the
Chancellor (the chief adviser to the English King) for relief. The Chancellor readily awarded a
remedy to such a party, in particular if the absence of a remedy in terms of the common law
yielded unjust or inequitable consequences. The resultant body of law, known as equity, thus
mitigated the rigidity of the English common law. The division between law and equity was
initially strictly maintained by confining the application of each to a particular court – the
Common Law Courts applied the common law, while equity prevailed in the Courts of Chan-
cery. The Judicature Acts of 1873 and 1875 eliminated this duality by enabling all English
courts to apply both law and equity.
By virtue of the fact that the feoffee was obliged to hold the property to use in good faith for
the benefit of the cestui que use, the interest of the cestui que use in the feoffee’s abidance by
the terms of the use came to be legally recognised in equity. The cestui que use’s interest was
initially regarded as a mere claim against the feoffee, but from the fifteenth century it was
recognised as a proprietary interest – a form of ownership – in the property held to use. The
concept of dual ownership, divided between the feoffee’s legal ownership in terms of the
common law and the cestui que use’s equitable ownership in terms of the law of equity (or,
put differently, the division between the feoffee’s legal estate and the cestui que use’s equitable
estate in the property held to use) soon became a pertinent feature of English law.
The large-scale exploitation of the use, often for highly questionable purposes such as the
avoidance of liability toward creditors, prompted the passing of the Statute of Uses in 1535
with the aim of curbing the abuse of the use. The Statute of Uses caused the erstwhile legal
and equitable estates under a use to be vested in the cestui que use forthwith, without the
feoffee acquiring any right whatsoever to the property held to use. In so doing, the functionali-
ty of the feoffee and hence of the use itself was curtailed. The restrictive effect of the Statute of
Uses was however overcome by constructive legal ingenuity: the creation of a use upon a use.
In terms of this arrangement, A transferred property to B to the use of C to the use of D. In
1557 it was held that the Statute of Uses applied to the first use, but not to the second. The
institution of the use was thus preserved in a somewhat altered state. From around 1660 new
terminology emerged in English law: the second use became known as a trust, the intermedi-
ary as the trustee and the cestui que use as the cestui que trust or trust beneficiary. The duality
of ownership that typified the use also remained a distinctive feature of the English trust.
2.3 The reception of the trust and the development of trust law in
South Africa
2.3.1 The English trust introduced to South Africa
The Dutch settled at the Cape of Good Hope (present-day Cape Town) in the mid-seventeenth
century. The Dutch introduced Roman-Dutch law, the legal system of the Netherlands at the
25
time, to their settlement at the Cape. Roman-Dutch law was developed in the Netherlands
through the reception of Roman law and its synthesis with Germanic customary law, feudal
________________________
25 Du Toit 2015 Rabel J 852 at 854.
20
26
law and canon law. As such, Roman-Dutch law was entirely unfamiliar with the use and the
27
trust of English law. Dutch rule at the Cape came to an end when Britain seized the territory
from the Netherlands (then known as the Batavian Republic) in 1795 and, after a brief three-
year interlude from 1803 during which Britain returned the Cape to the Batavian Republic,
Britain again occupied the Cape in 1806. The Cape officially became a British colony in
28
1815. The British did not abolish Roman-Dutch law in the aftermath of their colonisation of
29
the Cape, and Roman-Dutch law remains South Africa’s civilian common law to this day.
However, the British followed an aggressive policy of Anglicisation from 1820 which occa-
30
sioned the gradual importation of English law at the Cape. For example, the British settlers
continued the familiar practice (to them) of using trusts in testamentary bequests, deeds of
31
gift, ante-nuptial contracts and land transfers. The English trust was therefore introduced at
32
the Cape simply through general usage by British settlers. Trusts were subsequently recog-
nised in legislation and court judgments of the Cape Colony as well as in those of the other
southern African territories that came under British colonial rule in the course of the nine-
33
teenth and the early twentieth centuries and that constitute present-day South Africa.
The gradual introduction of the trust to South African legal and commercial practice contin-
ued for almost a century without the courts being called upon to determine whether or not
South African law could, or indeed should, give legal effect to the trust and, if so, on what
34
basis that must occur. South African courts readily acknowledged that the English law notion
of ownership divided between a legal owner and an equitable owner was entirely foreign to,
and incompatible with, Roman-Dutch law’s adherence to singular (or unitary) ownership in
35
the form of dominium. The first opportunity for a South African court to decide authoritative-
ly on the trust’s tenability under South African law arose before the Appellate Division in
36
Estate Kemp v McDonald’s Trustee. The court stated that the trust institution was received
into South African law from English law, but that English trust law was not received simulta-
37
neously. English trust law does not therefore form part of South African law. The court
furthermore acknowledged that, the notion of a trust is not incompatible with the tenets of
South African law and, given the firm footing that the trust gained in South African legal and
commercial practice during the preceding century, it would be impossible to eradicate the
38
trust from South African law. The trust thus met with the judicial acceptance of South Afri-
ca’s highest court. This acceptance of the English trust, devoid of English trust law, was
39
affirmed in Braun v Blann and Botha when Joubert JA said:
“In South Africa, which has a civil law legal system, the trust was introduced in practice during the
19th century by usage without the intervention of the Legislature but the English law of trusts with
________________________
26 Ibid.
29 Ibid at 855.
30 Ibid at 854.
31 De Waal 2000 SALJ 548 at 555; Du Toit 2015 Rabel J 852 at 855.
32 Braun v Blann and Botha 1984 (2) SA 850 (A) 859E; De Waal 2000 SALJ 548 at 555.
33 Du Toit 2015 Rabel J 852 at 855–856.
34 De Waal 2000 SALJ 548 at 555.
35 Lucas’ Trustee v Ismail and Amod 1905 TS 239 at 244. The civil law conceives of ownership as absolute,
autonomous and indivisible, and it prescribes that a person either has full ownership or he or she does
not. The English law notion of dual ownership is therefore at odds with the civil law’s conception of own-
ership.
36 1915 AD 491.
37 At 499 and 508.
38 Ibid.
39 1984 (2) SA 850 (A).
21
its dichotomy of legal and equitable ownership (or ‘dual ownership’ according to the American law
of trusts) was not received into our law. The English conception of an equitable ownership distinct
40
from, but co-existing with, the legal ownership is foreign to our law.”
The court in the Braun case also emphasised that South African trust law is unique insofar as
the South African courts have evolved, and continue to evolve, a home-grown trust law by
41
adapting the English trust to the tenets of South African law. De Waal therefore correctly
asserts that the trust that initially appeared in South Africa was indeed the English trust, but
the trust that eventually emerged was something quite different – a uniquely South African
trust developed first and foremost by the courts and to a lesser extent by the South African
42
legislature. South African trust law scholars have also contributed to the development of the
South African trust and the law that governs it.
2.3.2 Judicial development

The courts have been, and continue to be, the principal constructors of South African trust
law. The judicial adaptation of the trust to the tenets of South African law is manifested chiefly
43
in two particular practices: alignment and innovation. The former practice refers to South
African courts’ reliance on principles regarding other fiduciary arrangements in Roman-Dutch
law to address trust law problems. In so doing, the courts align the South African trust and the
44
law that governs it with our common law prescripts regarding fiduciary conduct. The latter
practice refers to the judicial modernisation of South African trust law when changing legal,
social and/or economic conditions demand the innovation of trust law to ensure the trust’s
45
optimal functionality.
46
Instances of alignment are found in:
47
• Sackville West v Nourse where the standard of care expected of a trustee in making trust
investments was settled through an analogy with the corresponding standard of care ex-
48
acted in Roman and Roman-Dutch law from a tutor dealing with the property of a ward;
49
• Doyle v Board of Executors where a trustee’s duty of accountability to trust beneficiaries
for trust administration was expressed in terms analogous to an agent’s duty in terms of
50
the common law to account to his or her principal; and
51
• Hoosen v Deedat where the question regarding the validity of a trustee’s delegation of
trustee powers was answered through an analogy with the common law principle from the
law of agency that, where the identity and personal attributes or skills of the performer of
52
an act are of material importance, delegation is generally not permitted.
The judicial practice of alignment described above requires some contextualisation. Firstly,
53
the Appellate Division stated in Crookes v Watson, a judgment reported in 1956, that South
________________________
40 At 859E–F.
41 At 859F.
42 De Waal 2000 SALJ 548 at 555.
43 Du Toit in Smith Worlds of the Trust 260.
44 Ibid.
45 Ibid.
46 Ibid 260–263.
47 1925 AD 516.
48 At 533–534.
49 1999 (2) SA 805 (C).
50 At 813D–H.
51 1999 (4) SA 425 (A).
52 At par 26.
53 1956 (1) SA 277 (A).
22
African trust law was at that time (and arguably still is) an emerging branch of the law that
54
should not be hampered by undue associations with other branches of the law. Judicial
alignment of trust law with other common law fiduciary arrangements and thus of trustees
with other fiduciary functionaries, as a methodology to develop trust law, is appropriate only
if assistance from and associations with the common law principles underpinning other
branches of South African law are theoretically and functionally sound and coherent. The
court in the Crookes case therefore cautioned that analogies are useful only if they provide not
merely some solution to a legal problem, but a solution that satisfactorily solves that prob-
55
lem. Possibly for this very reason, doubts have been expressed regarding some South
African courts’ application of the corporate law Turquand rule to protect third parties who
56
transacted with trustees. The Supreme Court of Appeal opined in Nieuwoudt v Vrystaat
57
Mielies (Edms) Bpk that the Turquand rule does not necessarily provide a satisfactory solution
to the legal problem that these courts sought to solve through the analogous application of this
58
corporate law rule to trusts. The attempted alignment of trust law with corporate law regard-
ing the application of the Turquand rule to trusts is therefore not without criticism.
The second contextual consideration pertinent to the practice of judicial alignment by South
African courts is that this practice is not confined to invoking Roman-Dutch legal principles
with regard to trust law but, given the mixed nature of the South African jurisdiction, also
involves judicial engagement with principles and doctrines from English law. A good example
in this regard is South African courts’ crafting of remedies for parties adversely affected by a
trustee’s abuse of a trust because the trustee disregarded the functional separation between
59
control and enjoyment that underpins the South African trust. The courts have done so by
transplanting some of the legal principles regarding the piercing of the corporate veil onto
South African trust law. Piercing the corporate veil is a well-known doctrine of English law and
60
was, as such, also introduced to South Africa. South African courts have on a number of
occasions affirmed that a trust’s veneer can be pierced to curb the unconscionable abuse of a
trust by a trustee who controls that trust for his or her own benefit rather than for the benefit
61
of the trust’s beneficiaries. In WT v KT the Supreme Court of Appeal acknowledged that the
principles regarding piercing a trust’s veneer (or going behind the trust form, as it is also
called) have been transplanted from the law regarding the piercing of the corporate veil and
that, by analogous reasoning, a trustee’s unconscionable abuse of a trust will justify piercing
62
the “veil” that separates a trust’s assets from the trustee’s private assets.
The practice of judicial innovation – the second methodology employed by South African
courts to develop South African trust law – shows that the courts have, when necessary,
renewed our trust law to ensure its functional sophistication in the light of changing condi-
63 64
tions. Two examples illustrate this practice. Firstly, in Braun v Blann and Botha, the Appel-
late Division extended the common law powers of appointment, acknowledged in Roman and
________________________
54 At 290D.
55 At 290H.
56 MAN Truck & Bus (SA) Ltd v Victor 2001 (2) SA 562 (NC); Vrystaat Mielies (Edms) Bpk v Nieuwoudt 2003 (2)
SA 262 (O).
57 2004 (3) SA 486 (SCA).
58 At paras 21 and 22. See 6.8.2.4 regarding the application of the Turquand rule to trusts.
59 See 1.2.1.
60 Ex parte Gore 2013 (3) SA 382 (WCC) par 3.
61 2015 (3) SA 574 (SCA).
62 At par 31. See also RP v DP 2014 (6) SA 243 (ECP) paras 17–24. See 7.6 regarding the abuse of the trust
and piercing the trust veneer (or going behind the trust form).
63 Du Toit in Smith Worlds of the Trust 263–265.
64 1984 (2) SA 850 (A).
23
Roman-Dutch law as exceptions to the prohibition on the delegation of testamentary power in

the context of testamentary fideicommissa and usufructs, to the trustees of testamentary
trusts. Consequently, a testamentary trustee could henceforth be granted the power to ap-
point beneficiaries under a testamentary trust just as a fiduciary can be empowered to select
the fideicommissary under a testamentary fideicommissum and a usufructury can be empow-
65
ered to identify the bare owner of the property subject to a usufruct. Joubert JA based his
ruling in the Braun case explicitly on the innovation of South African trust law necessitated by
changing societal demands:
“It is one of the functions of our law to keep pace with the requirements of changing conditions in
our society. To recognize the validity of conferring our common law powers of appointment on
trustees . . . would be a salutary development of our law of trusts and would not be in conflict with
the principles of our law. The approach of our Courts is to apply the principles of our law to the
development of our law of trusts. I am accordingly of opinion that . . . this Court should in principle
recognize the validity of the conferment of our common law powers of appointment on trustees
66
. . .”
67
Administrators, Estate Richards v Nichol provides a second example of judicial innovation in
South African trust law. This judgment dealt with the strict approach that South African courts
had previously followed with regard to trust investments: trustees who had not been granted
wide investment powers were restricted to low-risk investments such as government or
municipal stocks, fixed deposits, loans on mortgage bonds and immovable property. In the
Richards case the court, finely attuned to the economic realities that define the modern
investment environment as well as the changes that occurred in investment strategy since the
establishment of the initial conservative approach to trust investments, opted for a more
flexible approach to this matter. The court emphasised that investments considered prudent
in the past could rightfully be regarded as quite imprudent in the context of modern condi-
tions. The ongoing and rapid decline in the value of money brought about by inflation – a
constant factor in modern economies – can occasion a sharp decline in the value of monetary
security over a relatively short time period. Therefore, if a trustee is to preserve a trust’s
capital and grow its income in real terms, he or she is necessarily obliged to invest in assets
with a definite growth potential. Such investments inevitably involve an element of risk but,
according to the court, the acceptance of this risk is unavoidable if a particular trust is to serve
its purpose of attaining monetary growth. Contemporary investment thinking therefore
demanded that the court in the Richards case move away from the conservative approach to
trust investments developed at a time when inflation was negligible, and the court thus
sanctioned a more realistic approach to these investments by permitting the investment of
68
trust funds in quoted shares and unit trusts, among others.
The judicial practices of alignment and innovation illustrate that the courts have been, and
continue to be, at the forefront of the development of South African trust law. South African
courts have nevertheless occasionally urged the legislature to attend to certain troublesome
69
aspects of trusts.
________________________
65 See 8.2 regarding testamentary powers of appointment.

66 At 866H–867A.
67 1999 (1) SA 551 (SCA).
68 At 557G–558E. See 7.5 regarding the investment of trust funds.
69 For example, see Joubert v Van Rensburg 2001 (1) SA 753 (W) par 10.8; Land and Agricultural Bank of
South Africa v Parker 2005 (2) SA 77 (SCA) par 34.
24
2.3.3 Statutory development

The South African legislature has made a relatively limited contribution to the development of
70
South African trust law. The Administration of Estates Act of 1913 was the first post-Union
statute to engage trusts insofar as it established state control over the executors of deceased
estates and hence also over the administrators of trusts created in respect of those estates.
The Trust Moneys Protection Act extended state control over trusts by including inter vivos
trusts within its regulatory ambit. Chapter III of the Administration of Estates Act of 1965
required that trustees obtain written authorisation before acting as such. However, Chapter III
never came into operation and was repealed by the Trust Property Control Act (the Act), the
statute that currently regulates aspects of trusteeship and related matters in South Africa. The
Act, although enacted to establish firmer state control over trusts, trustees and trust proper-
71 72
ty, was not intended, and does not function, as a trust code in South African law. The Act
merely regulates various administrative and procedural trust law matters as well as some
substantive trust law issues, but many issues surrounding trusts need to be addressed outside
73
the Act’s ambit.
2.3.4 The contribution of legal scholars

scholars
South African legal scholars have provided critical impetus to the development of South
74
African trust law. Professor Tony Honoré is the leading light in the scholarly development of
our trust law, in particular through the successive editions of his seminal work Honoré’s South
75
African Law of Trusts. Honoré’s most important contribution to the development of South
African trust law lies in two fundamental propositions put forward in this work and in many
of his other writings on South African trust law. The first proposition is that trusteeship is a
76
quasi-public office. From the trustee’s position as an office-holder, follows the separation of
the trust estate from the trustee’s private estate: the trustee holds the former in an official
capacity and the latter in his or her private capacity. The legislature subsequently recognised
77
the separateness of the trust estate from a trustee’s private estate in section 12 of the Act.
The official nature of trusteeship moreover ensures that the High Court and the Master of the
78
High Court exercise public control over the activities of trustees. The Act consequently
contains a number of provisions giving effect to the supervisory function of the High Court
79
and the Master in respect of trustees. Honoré’s second proposition, flowing from the first, is
that the residence of ownership in a trust’s property is not determinative in establishing a
________________________
70 The Union of South Africa was established on 31 May 1910 upon the unification of four southern African
British colonies: the Cape, Natal, Transvaal and Orange River colonies.
71 Corbett 1993 THRHR 262 at 267.
72 De Waal 1997 TSAR 148.
73 Ibid.
74 Du Toit in Smith Worlds of the Trust 274.
75 The first edition of Honoré’s work appeared in 1966 and is currently in its fifth edition (published in
2002). A sixth edition was pending at the time of this book’s publication. Since the fourth edition,
Honoré’s work has been co-authored by a number of leading trust law specialists. Honoré himself did not
co-author the fifth edition.
76 Cameron et al Law of Trusts 11 and 57.
77 Ibid 10–11 and 57–58. See 1.2.2 regarding the separation of estates.
78 Ibid 11–12.
79 For example, s 7 regarding the appointment of trustees and co-trustees by the Master; s 15 regarding the
Master’s receipt of a report of irregularities from the auditor of trust accounts; s 16 regarding the Master’s
powers to hold a trustee accountable for trust administration; s 19 regarding the High Court’s power to di-
rect a trustee to comply with trustee duties; s 20 regarding the High Court’s and Master’s powers to re-
move a trustee from office.
25
trust in the strict sense. He proposed that it is immaterial whether a trustee owns the trust
80
property or whether the trust beneficiaries are the owners thereof. The South African legisla-
ture also confirmed this proposition through its recognition of both the ownership trust and
81
the bewind trust as trusts in the strict sense in the definition of “trust” in section 1 of the Act.
The significance of trust law scholars’ contribution to the development of South African
trust law is also evidenced by the copious references to their scholarship in reported trust law
cases. South African courts frequently rely on this scholarship when handing down landmark
judgments on trust matters. The co-authors of this book have been cited on numerous occa-
82 83
sions by High Courts and the Supreme Court of Appeal in leading trust law cases.
2.4 The legal nature of the South African trust

84
In Estate Kemp v McDonald’s Trustee, South Africa’s highest court was faced with a will
produced in England by an English draftsman. The will provided for the creation of a testa-
mentary trust. The court in the Kemp case was willing to accommodate and give effect to this
85
testamentary disposition, cast in English legal terminology, in terms of South African law. In
order to do so, the court proposed that the English trust should be explained according to the
principles of South Africa’s civilian common law: the court undertook a “Romanist reconfigu-
86
ration” of the trust by finding a civilian legal niche for the testamentary trust.
The civilian legal niche that, according to the court in the Kemp case, best suits the testa-
87
mentary trust is the testamentary fideicommissum. The court in the Kemp case consequently
equated the testamentary trust with the testamentary fideicommissum and likened a testa-
88
mentary trustee to a fiduciary under such a fideicommissum. This equation seems appropri-
ate at first glance because the fideicommissum and the trust both effect the transfer of
property from one party to another through the intervention of a third party: under a testa-
mentary fideicommissum the fiduciary acquires ownership of the fideicommissary property
that he or she receives from the testator’s deceased estate and that property eventually passes
to the fideicommissary; under a testamentary (ownership) trust, the trustee likewise acquires
ownership of the trust property that he or she receives from the testator’s deceased estate
and that property eventually passes to the trust beneficiary. However, identifying the testa-
mentary trust with the fideicommissum is not without complications. Two issues, in particular,
are troublesome:
• A fiduciary under a fideicommissum benefits personally from the fideicommissary property
while that property is vested in him or her, whereas a trustee derives no personal benefit
from the trust property that he or she controls. Put differently, a fiduciary has a beneficial
89
interest in fideicommissary property but a trustee has no similar interest in trust property.
________________________
80 Cameron et al Law of Trusts 7 and 9.

81 See 1.3 and 1.4.
82 Minister of Education v Syfrets Trust Ltd 2006 (4) SA 206 (C); Van Zyl v Kaye 2014 (4) SA 452 (WCC);
Harper v Crawford 2018 (1) SA 589 (WCC).
83 Curators, Emma Smith Educational Fund v University of KwaZulu-Natal 2010 (6) SA 518 (SCA); In re BOE
Trust Ltd 2013 (3) SA 236 (SCA); Harvey v Crawford [2018] ZASCA 147 (17 October 2018).
84 1915 AD 491.
85 At 499 and 508.
86 Corbett 1993 THRHR 262 at 264; Cameron 1999 ELR 341 at 348.
87 See 9.2.1 regarding the testamentary fideicommissum.
88 At 499 and 512–513. The testamentary fideicommissum originated in Roman law and was received into
Roman-Dutch law and subsequently into South African law: Van der Merwe and Rowland Erfreg 301–309.
26
• The proprietary interests of a fiduciary and a fideicommissary under a fideicommissum are

successive because the fiduciary owns the fideicommissary property first and only on the
90
termination of the fiduciary’s ownership does the property pass to the fideicommissary. A
trustee’s administrative interest and a trust beneficiary’s beneficial interest under a trust
are, on the other hand, concurrent insofar as the beneficiary’s right to benefit from the
91
trust coincides with the trustee’s administration of the trust.
In order to surmount these obstacles in equating a testamentary trust with a testamentary
fideicommissum, the court in the Kemp case resorted to the fideicommissum purum, which was
92
a transient form of the fideicommissum recognised in Roman law. The fiduciary under a
fideicommissum purum had to convey the fideicommissary property immediately to the fidei-
commissary. The fiduciary therefore acted as a mere conduit for the delivery of the fidei-
commissary property to the fideicommissary and consequently enjoyed no beneficial interest
93
in that property. Moreover, the fiduciary’s momentary interest and the almost immediate
acquisition of a proprietary interest by the fideicommissary in the property subject to a
fideicommissum purum is seemingly on par with a trustee’s and trust beneficiary’s concurrent
94
interests under a trust. The fideicommissum therefore became, not only the vehicle for the
introduction of the testamentary trust to South African law but, at least initially, also the
95
constructive illustration of its legal nature.
The Kemp case did not however escape criticism. Solomon JA opined in the judgment itself
that it was unnecessary and undesirable to translate the English terms of the particular will
into Roman-Dutch law as it involved employing the terms “fiduciary” and “fideicommissary”
in a much wider sense than they were commonly used by our courts, while the terms “trusts”
96
and “trustees” were already well-established in South African legal parlance. In Braun v Blann
97
and Botha, the Appellate Division subsequently noted that the fideicommissum purum fell into
disuse during the nineteenth century – the court in the Kemp case therefore relied on an
98
outdated and antiquated institution. Joubert JA also said in the Braun case that the court in
the Kemp case misconstrued the Roman texts on which it based its analysis of the fideicom-
99
missum purum. A further difficulty created by the identification of the trust with the fidei-
commissum was the resultant distortion of trust terminology: for example, our courts did not
often refer to trustees in the strict sense as such but rather as “fiduciaries” or “fiduciaries
100 101
under a fideicommissum purum” – a practice much criticised in later decisions. It is,
however, important to note that these and other doubts raised with regard to the court’s
reasoning in the Kemp case did not prevent the trust from becoming a popular and frequently-
employed mode of testamentary disposition. Although equating of the testamentary trust with
the testamentary fideicommissum posed a theoretical conundrum, it did not negatively impact
the utility of the testamentary trust. The debate on the true legal nature of the testamentary
trust nevertheless continued.
________________________
90 De Waal and Schoeman-Malan Law of Succession 147–148.

91 See 1.2.1.
92 Estate Kemp v McDonald’s Trustee 1915 AD 491 at 502–503.
93 Braun v Blann and Botha 1984 (2) SA 850 (A) 861C–D.
94 Ibid.
96 Estate Kemp v McDonald’s Trustee 1915 AD 491 at 513.
97 1984 (2) SA 850 (A).
98 At 861E–F.
99 At 862A–864H.
100 Greenberg v Estate Greenberg 1955 (3) SA 361 (A) 368G.
101 Estate Watkins-Pitchford v Commissioner for Inland Revenue 1955 (2) SA 437 (A) 460B–D; Greenberg v
Estate Greenberg 1955 (3) SA 361 (A) 368G.
27
102
In Braun v Blann and Botha the Appellate Division, in a comprehensive analysis of the
Kemp case, provided some direction to this debate when Joubert JA made the following
instructive points:
• the trust was unknown to Roman and Roman-Dutch law because it was developed by the
English Court of Chancery from the Germanic Treuhand and not from the Roman fidei-
103
commissum or any other institution of Roman law;
• the English trust was introduced to South African practice during the nineteenth century,
but the English law of trusts with its dichotomy of legal and equitable ownership (dual or
divided ownership) was not similarly received because the English conception of equitable
ownership distinct from, but co-existing with legal ownership, is entirely foreign to South
104
African law;
• it is, in light of the aforementioned differences between the trust and the fideicommissum,
both historically and jurisprudentially wrong to identify the one with the other and to liken
105
a trustee to a fiduciary under a fideicommissum;
• the South African courts have evolved, and are still in the process of evolving, an indige-
106
nous law of trusts by adapting the trust idea to the principles of South African law; and
• in its strictly technical sense the (testamentary) trust is a legal institution sui generis – an
107
independent institution governed by its own particular legal rules and principles.
Aside from labelling the (testamentary) trust an institution sui generis, Joubert JA did not
provide any further insight into the legal nature of the trust in the Braun case. Some commen-
tators view this stance as merely pragmatic, as it requires no commitment to any further
108
exploration of the testamentary trust’s true legal nature. Pragmatism on this issue is en-
couraged by the fact that the theoretical and dogmatic questions with regard to the legal
nature of the testamentary trust do not undermine this trust’s practical utility. However, trust
theorists maintain that any uncertainty regarding the precise legal nature of the testamentary
trust subverts the order, unity and integrity of the trust institution itself. Some propose, albeit
rather tentatively, that the solution to this quandary lies in the bestowal of legal personality on
the trust and hence acknowledging that the legal nature of the trust, including the testamen-
109
tary trust, is rooted in legal personality.

South Africa’s highest court affirmed on numerous occasions that the inter vivos trust is
created contractually; moreover, that the inter vivos trust’s founding contract – its trust in-
strument or trust deed – is, or is akin to, a contract for the benefit of a third party or stipulatio
110
alteri. An inter vivos trust is therefore established through the conclusion of a contract
between the trust founder (the stipulans under a stipulatio alteri) and the trustee (the promit-
tens under a stipulatio alteri) for the benefit of the trust beneficiary (the third party under a
________________________
102 1984 (2) SA 850 (A).

103 At 858H–859A.
104 At 859E–F. See also 2.2.1 and 2.2.2.
105 At 859C and 866B.
106 At 859F–G.
107 At 859E.
108 De Waal 1993 THRHR 1 at 9.
109 De Waal and Theron 1991 TSAR 499 at 504; De Waal 1993 THRHR 1 at 9–10. See also Olivier et al
Trustreg en Praktyk 3.3.3 who favour the bestowal of legal personality on the trustee office.
110 Crookes v Watson 1956 (1) SA 277 (A) 285F–G, 288A and 305E–F; Hofer v Kevitt 1998 (1) SA 382 (SCA)
386E; Potgieter v Potgieter 2012 (1) SA 637 (SCA) par 18.
28
111
stipulatio alteri). However, typifying an inter vivos trust’s deed as a stipulatio alteri is not
entirely unproblematic. Among others, it fails to account for an inter vivos trust with an
112
impersonal object where no trust beneficiary (as a third party) exists. Moreover, a stipulatio
alteri generally results from a negotiated agreement between the stipulans and the promittens,
whereas in practice, the terms of an inter vivos trust are often not negotiated between the
founder and the trustee but are simply determined and prescribed unilaterally by either party
113
in the trust deed, thus rendering the trust’s contractual basis a fiction. Despite these and
114 115
other reservations, the South African Law Commission nevertheless recommended in its
last review of South African trust law that the status quo should be retained insofar as the
Commission affirmed that the stipulatio alteri is the contractual arrangement constitutive of
116
an inter vivos trust.
The fact that an inter vivos trust is constituted by way of a stipulatio alteri does not warrant
the frequently-encountered generalisation that such a trust can in all respects be equated to a
117
stipulatio alteri. This much is evident from Slomowitz AJ’s view in Doyle v Board of Execu-
118
tors that “the equation of a trust inter vivos with a stipulatio alteri has limits beyond which it
119 120
may not be pressed”. Matters such as the creation of an inter vivos trust; the variation of
121 122
the trust deed of an inter vivos trust; the termination of an inter vivos trust; and the ac-
123
ceptance of benefits by beneficiaries under an inter vivos trust are indeed contractual issues
124
to be resolved in accordance with the legal principles apposite to the stipulatio alteri. Simi-
larly, the interpretation rules for written contracts also apply to trust deeds of inter vivos
125
trusts. However, matters pertaining to, among others, the office of trustee; the fiduciary
duty owed by the trustee of an inter vivos trust to the trust beneficiaries; and the trustee of an
inter vivos trust’s relationships with third parties are not purely contractual issues and cannot
126
therefore be addressed in terms of the rules governing the stipulatio alteri. An important
distinction must thus be maintained between the creation, variation and termination of an
inter vivos trust (and matters related thereto) on the one hand, and the trust institution itself,
________________________
111 See also 1.7.1.

112 Van der Merwe and Rowland Erfreg 375.
113 Crookes v Watson 1956 (1) SA 277 (A) 305A–B. See also Welch’s Estate v Commissioner, South African
Revenue Service 2005 (4) SA 173 (SCA) par 86. See also 4.5.2.
114 See Claassen 2014 Acta Juridica 243 at 246–247.
115 Now called the South African Law Reform Commission.
116 Law Commission Report: Review of the Law of Trusts par 23.29–32.
117 For example, in Hofer v Kevitt 1998 (1) SA 382 (SCA) 386E Van Coller AJA stated with regard to the earlier
judgment in Crookes v Watson 1956 (1) SA 277 (A): “It will be recalled that according to the judgments of
the majority in that case a trust inter vivos is in effect a contract for the benefit of a third person”. See also
Joubert v Van Rensburg 2001 (1) SA 753 (W) par 9.2.
118 1999 (2) SA 805 (C).
119 At 812I. See also Crookes v Watson 1956 (1) SA 277 (A) 291A.
120 Griessel v Bankorp Trust Bpk 1990 (2) SA 328 (O) 333J. See 4.2 regarding trust creation.
121 Hofer v Kevitt 1998 (1) SA 382 (SCA) 386E; Potgieter v Potgieter 2012 (1) SA 637 (SCA) par 18. See 5.4.2.2
regarding inter vivos trust variation.
122 Peterson v Claassen 2006 (5) SA 191 (C) par 15. See 5.5 regarding trust termination.
123 Crookes v Watson 1956 (1) SA 277 (A) 288A; Hofer v Kevitt 1998 (1) SA 382 (SCA) 386E; Potgieter v
Potgieter 2012 (1) SA 637 (SCA) par 18. See 8.3.2 regarding the acceptance of benefits by an inter vivos
trust beneficiary.
124 De Waal 1998 TSAR 326 at 329–330; Claassen 2014 Acta Juridica 243 at 247.
125 Sea Plant Products Ltd v Watt 2000 (4) SA 711 (C) 720D–G; Erwee v Erwee [2006] 1 All SA 626 (O) 628h.
See Du Plessis v Van Niekerk 2018 (6) SA 131 (FB) as an example of the judicial interpretation of an inter
vivos trust provision in accordance with the interpretation rules for written contracts.
126 Peterson v Claassen 2006 (5) SA 191 (C) par 15; De Waal 1998 TSAR 326 at 329–330; Claassen 2014 Acta
Juridica 243 at 247.
29
on the other. The former is regulated by the contractual principles pertinent to the stipulatio
alteri, but this does not render the trust itself a contract for the benefit of a third party. This
being the case, the question regarding the legal nature of the inter vivos trust remains unre-
solved. One possibility is to regard the inter vivos trust, like its testamentary counterpart, as
127
an institution sui generis – a characterisation that has indeed met with judicial acceptance.
128
The concerns raised against such a characterisation in the context of the testamentary trust
are, however, equally apposite in regard to the inter vivos trust. The award of legal personality
to the trust institution, and hence also to the inter vivos trust, is offered by some as a tentative
129
answer to this vexing question.
2.4.3 The trust created by court order

A degree of uncertainty exists regarding the legal nature of the trust created by court order.
Pace and Van der Westhuizen submit that such a trust is merely an obligation imposed by the
130
court on the trustee to administer the trust’s property on behalf of the trust beneficiaries.
2.5 Is the South African

African trust a true trust?
Conventional wisdom has long dictated that the modern trust with its origin in English law is
a distinctive institution of Anglo-American law and that no real or proper trust can therefore
exist in civilian jurisdictions or mixed jurisdictions where the law of property is based on
civilian conceptions. This assertion is premised on the notion that dual ownership, divided
between the trustee’s legal estate and the trust beneficiary’s equitable estate in the trust
131
property, constitutes the essence of a trust. The award of legal ownership to a trustee and
equitable ownership to a trust beneficiary, so the argument goes, is not only unknown to the
civil law, but is in fact incompatible with the civilian concept of single (or unitary) owner-
132
ship. The so-called trusts or trust-like institutions encountered in civilian and mixed jurisdic-
tions that adhere to this conception of ownership have therefore met with the scorn of Anglo-
133
American jurists who regard these as imperfect imitations of the true trust.
Recent scholarship challenges this conventional wisdom on both historical and functional
grounds. It has already been pointed out that one of the principal theories on the trust’s origin
binds the English trust historically to a continental-European institution – the Germanic
134
Treuhand. Moreover, the trust exhibits some historical connections to other civilian institu-
135
tions such as the fideicommissum and fiducia cum amico. However, from a functional per-
spective, it cannot be denied that the South African trust lacks the essential feature of the
English trust, namely, the division of ownership between the trustee and the trust beneficiary.
Does this “deficiency” preclude the recognition of the South African trust as a true trust? Many
modern scholars think not. These theorists readily admit to the fact that the functional im-
portance of dual ownership in English trust law lies in the protection it affords the trust
________________________
127 Mariola v Kaye-Eddie 1995 (2) SA 728 (W) 731C; Badenhorst v Badenhorst 2006 (2) SA 255 (SCA) par 8; WT
v KT 2015 (3) SA 574 (SCA) par 26.
128 See 2.4.1.
129 Joubert v Van Rensburg 2001 (1) SA 753 (W) par 10.8; De Waal and Theron 1991 TSAR 499 at 504. See
also Olivier et al Trustreg en Praktyk 3.3.3 who favour the bestowal of legal personality on the trustee of-
fice.
131 See 2.2.2.
132 Gretton 2000 ICLQ 599 at 600; De Waal 2000 SALJ 548 at 550; Du Toit 2015 Rabel J 852.
133 De Waal 2000 SALJ 548 at 550–551.
134 See 2.2.1.
135 Van der Merwe and Rowland Erfreg 389; De Waal 2000 SALJ 548 at 551. See also 2.2.1.
30
beneficiaries. For example, the equitable proprietary rights of trust beneficiaries under Anglo-
American law prevent trust property from forming part of a trustee’s private estate and trust
136
beneficiaries are thus protected in the event of a trustee’s insolvency. Trust beneficiaries’
equitable proprietary rights under Anglo-American law furthermore establish a basis for the
137 138
award of specific remedies, such as the constructive trust, to those beneficiaries.
Many modern trust law scholars nevertheless emphasise that trust beneficiary protection
can be achieved without recourse to dual ownership. The fact that many non-Anglo-American
139
jurisdictions subscribe to the separation of estates is fundamental to this thesis. These
scholars contend that the duality of estates, coupled with the functional separation of a trus-
140
tee’s control of a trust from the trust beneficiaries’ enjoyment of trust benefits, is on par
with Anglo-American law’s duality of ownership as far as the protection afforded trust benefi-
141
ciaries is concerned. South African law provides a case in point. The trustee of an owner-
ship trust is vested with both the trust estate as well as his or her private estate – these
142
constitute separate estates in the trustee’s hands. The trustee’s interest in the trust estate is
moreover merely administrative in nature whereas the trust beneficiaries enjoy beneficial
143
interests in the trust estate. The trust beneficiaries’ beneficial interests in the trust estate are
manifested principally in their personal rights, exercisable against the trustee, to claim trust
144
benefits when these are due. The trust beneficiaries’ personal rights are protected against
the adverse consequences of a trustee’s insolvency by virtue of the fact that the claims of a
trustee’s private creditors lie only against that trustee’s private estate and not against the trust
estate. Conversely, trust beneficiaries have, save in the case of breach of trust by a trustee, no
145
claim against the trustee’s private estate. The fact that trust beneficiaries, on the one hand,
and a trustee’s private creditors, on the other, claim against different estates obviates the
need to seek trust beneficiary protection in equitable ownership that trumps the rights of a
146
trustee’s private creditors.
Trust beneficiary protection is further enhanced in South Africa, as in England, by virtue of
147
the fact that a trustee holds a fiduciary office. Both legal systems recognise that various
duties and obligations flow from the fiduciary position of a trustee, all of which are aimed at
148
protecting the interests of trust beneficiaries. The official nature of trusteeship in South
Africa and England also imports an element of public control over trustees. In South Africa,
the Master of the High Court as well as the High Court itself can intervene in the operation of
149
trusts to safeguard the interests of trust beneficiaries. Finally, real subrogation occurs
________________________
136 De Waal 2000 SALJ 548 at 559–560.

137 A constructive trust is one that equity implicitly imposes on someone to prevent him or her from being
unjustifiably enriched from holding property to which he or she is not legally entitled. A court designates
the holder of the property as a trustee who is obliged to deliver the property to the person who is legally
entitled thereto.
138 Cameron 1999 ELR 341 at 352.
139 See 1.2.2.
140 See 1.2.1.
141 Cameron 1999 ELR 341 at 352; Gretton 2000 ICLQ 599 at 612–613; De Waal 2000 SALJ 548 at 562.
142 See 1.2.2.
143 See 1.2.1.
144 See 8.4 regarding trust beneficiaries’ rights.
145 See 1.2.2.
146 Gretton 2000 ICLQ 599 at 613; De Waal 2000 SALJ 548 at 562.
147 See 1.2.3.
148 De Waal 2000 SALJ 548 at 559.
149 Cameron 1999 ELR 341 at 353–355; Gretton 2000 ICLQ 599 at 617–618; De Waal 2000 SALJ 548 at 565–
567. See 7.2 regarding public supervision and control of trustees and trust administration.
31
150
readily in South African law, as it does in English law. Real subrogation protects trust bene-
151
ficiaries by ensuring the preservation and continuity of the trust estate.
It therefore appears that the English and South African trusts share a number of core ele-
ments that constitute the essence of the trust institution: duality of interests, the fiduciary
position of a trustee, the official nature of trusteeship and real subrogation. Importantly,
duality of interests in this context need not necessarily denote the division of ownership in
trust property between a trustee and trust beneficiaries (as in Anglo-American law), but can
also entail the division of a trustee’s administrative and trust beneficiaries’ beneficial interests
in a trust estate that a trustee holds separately from his or her private estate (as in South
African law). Functional and dogmatic differences between the South African and Anglo-
American trusts obviously exist, but the commonality of the above-mentioned core elements
justifies the inference that the South African trust, like its Anglo-American counterpart, is
152
indeed a true trust.
________________________
150 See 1.2.4.

151 Gretton 2000 ICLQ 599 at 609–610; De Waal 2000 SALJ 548 at 564.
152 De Waal 2000 SALJ 548 at 569. See also De Waal 2001 Stell LR 63.
32
3
The Trust, Public Policy and
Constitutionalism
3.1 Introduction
1
Public policy or the boni mores (the Roman-Dutch equivalent) permeates South African trust
2
law. Moreover, the South African Constitution, and its Bill of Rights, in particular, apply to the
3 4
entirety of South African law and therefore also to the South African law of trusts. A consid-
eration of the impact of public policy and constitutionalism on trusts is thus essential to any
engagement with the fundamentals of South African trust law. A consideration of the role that
public policy and constitutionalism play with regard to trusts follows two broad themes.
Firstly, public policy and the Constitution recognise and protect the freedom that property
owners enjoy to dispose of their property through the creation of trusts. Secondly and con-
versely, public policy and the Constitution also restrict trust founders’ freedom to dispose of
their property when they create trusts. Public policy and constitutionalism therefore bolster
trust founders’ freedom of disposition, but also act as counterbalances to that very freedom.
Since the advent of South Africa’s democratic constitutional dispensation, our courts have
had to adjudicate on a number of policy-based and constitutionally-founded challenges to
trust provisions. Those who challenged trust provisions in these cases argued that the im-
pugned trust provisions discriminated unfairly against those excluded from benefitting under
the trusts in question and that these exclusionary trust provisions violated the public policy
5
against non-discrimination and infringed the constitutionally-protected right to equality. It
was argued in these cases that the equality rights of those from whom trust benefits were
withheld, outweighed the various trust founders’ freedom to impose discriminatory re-
strictions on benefitting when they disposed of their property by means of the trusts in
question. In some cases, this argument succeeded and in other cases it did not. These judg-
ments, discussed in greater detail later in this chapter, brought the impact of public policy and
constitutionalism on trusts to the forefront of trust law in post-constitutional South Africa.
This chapter examines how public policy and constitutionalism underpins the trust through
the recognition and protection of personal autonomy, private ownership and freedom of
________________________
1 See 3.3.1.
2 For example, Van den Heever JA said in Commissioner for Inland Revenue v Smollan’s Estate 1955 (3) SA
266 (A) at 272A: “Unless there is something in the transaction creating the trust or in its execution which
is contrary to our laws, conducive to immorality or in conflict with public policy, there is no reason why
effect should not be given to it”.
3 S 8(1) of the Constitution.
4 See Minister of Education v Syfrets Trust Ltd 2006 (4) SA 205 (C) par 28 and Curators, Emma Smith Educa-
tional Fund v University of KwaZulu-Natal 2010 (6) SA 518 (SCA) par 37 regarding the applicability of the
Constitution to charitable trusts in particular.
5 S 9 of the Constitution.
33
disposition, but also how private owners’ autonomy and freedom of disposition are limited by
policy-based and constitutional imperatives. Furthermore, the chapter surveys some of the
important post-constitutional judgments on the impact of public policy and constitutionalism
on trusts.
3.2 Personal autonomy, private ownership and the freedom of

disposition
South African society commodifies most objects and makes these objects available to be
privately owned. Section 25 of the Constitution – the constitutional property clause – guaran-
6
tees that no one will be deprived of property arbitrarily, and this clause is generally interpret-
7
ed as providing a constitutional guarantee of private ownership. The ius disponendi – an
owner’s right to dispose of his or her privately-owned property – is inherent to South African
8
law’s conception of ownership. South African law generally permits an owner to exercise the
ius disponendi autonomously; in other words, an owner can freely and voluntarily engage in
legal acts that determine the destination of his or her property. South African law and the
South African Constitution therefore readily acknowledge and protect the individual’s private
9
autonomy and, if that individual is a property owner, concomitantly acknowledge and pro-
tect the individual’s right to exercise his or her private ownership of property by disposing of
10
that property as he or she sees fit in any legally-permissible manner.
South African law expresses its adherence to private autonomy, private ownership and the
ius disponendi through, among others, the notions of freedom of contract (Afrikaans: kon-
11
trakteervryheid) and freedom of testation (Afrikaans: testeervryheid). Our law demands that,
contracts and wills concluded or executed freely and voluntarily in accordance with all appli-
cable legal prescripts must be abided by and implemented: pacta sunt servanda (agreements
must be kept) and voluntas testatoris servanda est (a testator’s wishes must be carried out).
12
These are fundamental tenets of the South African legal system. South African law acknowl-
edges, moreover, that public policy and the public interest underpin the firm adherence to
these fundamental tenets: public policy and the public interest transcend individuals’ private
interests and demand that the law must give effect to contracting parties’ and testators’
13
dispositive intent. Freedom of contract and freedom of testation are not however expressly
mentioned in the South African Constitution. South African courts have nevertheless estab-
lished firm constitutional foundations for the adherence to these fundamental tenets of our
14
law. In Barkhuizen v Napier the Constitutional Court confirmed that personal autonomy
through the exercise of contractual freedom constitutes the very essence of the Constitution’s
conception of freedom and it moreover forms an essential part of the constitutionally-
________________________
6 S 25(1) of the Constitution.

7 Haffejee v Ethekwini Municipality 2011 (6) SA 134 (CC) par 31; Shoprite Checkers (Pty) Ltd v MEC for
Economic Development, Eastern Cape 2015 (6) SA 125 (CC) par 138; Tshwane City v Link Africa 2015 (6) SA
440 (CC) par 56.
8 In re BOE Trust Ltd 2013 (3) SA 236 (SCA) par 26; Harper v Crawford 2018 (1) SA 589 (WCC) par 27; Du
Toit 2001 Stell LR 222 at 224.
9 King v De Jager 2017 (6) SA 527 (WCC) par 65.
10 Willow Waters Home Owners Association (Pty) Ltd v Koka 2015 (5) SA 304 (SCA) par 22.
11 See King v De Jager 2017 (6) SA 527 (WCC) par 54 regarding freedom of testation.
12 Barkhuizen v Napier 2007 (5) SA 323 (CC) par 57; In re BOE Trust Ltd 2013 (3) SA 236 (SCA) par 26;
Hanekom v Voight 2016 (1) SA 416 (WCC) par 16; Trinity Asset Management (Pty) Ltd v Grindstone Invest-
ments 132 (Pty) Ltd 2018 (1) SA 94 (CC) par 44.
13 Bydawell v Chapman 1953 (3) SA 514 (A) 521E–F; Barkhuizen v Napier 2007 (5) SA 323 (CC) par 57; Harper
v Crawford 2018 (1) SA 589 (WCC) par 32.
14 2007 (5) SA 323 (CC) par 57.
34
The Trust, Public Policy and Constitutionalism
15 16
guaranteed right to human dignity. In In re BOE Trust Ltd, the Supreme Court of Appeal
likewise opined that a disregard for freedom of testation undermines the constitutional right
to human dignity because it is essential that testators know that their testamentary wishes
17 18
will be carried out after their passing. In King v De Jager, the constitutional rights to priva-
19 20 21
cy, freedom of expression and freedom of association were also noted as bolstering South
22
African law’s adherence to freedom of testation.
Owners can dispose of their property by exercising their freedom of contract to create inter
23
vivos trusts and their freedom of testation to establish testamentary trusts. In Land and
24
Agricultural Bank of South Africa v Parker, the Supreme Court of Appeal acknowledged that
the trust is a flexible and an all-purpose institution that lends itself to wide-ranging applica-
25
tions. The trust is therefore a prime vehicle for property owners to exercise their personal
autonomy by disposing of their privately-owned property as they see fit in favour of trust
beneficiaries or in the pursuit of impersonal trust objects.
3.3 The limitation of freedom of disposition
3.3.1 Public policy as a limit on freedom of disposition

Freedom of disposition, whether exercised by contract or by will, is not absolute or unfet-
tered. South African law restricts, in various ways, an owner’s right to dispose of his or her
property. These restrictions on freedom of disposition must meet with the prescripts regard-
26
ing the limitation of any right contained in the Bill of Rights laid down by section 36 of the
Constitution – the constitutional limitations clause. Public policy operates as a common law
restriction on freedom of disposition insofar as South African law prohibits giving effect to a
contract or a will (or a provision in such a contract or will) that is contra bonos mores or in
violation of public policy:
27
• in AJP Properties CC v Sello, the court affirmed that contractual freedom is not absolute
and that the boni mores (good morals) represent one of the most pertinent inroads into
28
freedom of contract; and
29
• in Minister of Education v Syfrets Trust Ltd, the court acknowledged that freedom of
testation is limited by the common law principle that courts do not give effect to testamen-
30
tary directions that conflict with public policy.
________________________
15 S 10 of the Constitution. See also Brisley v Drotsky 2002 (4) SA 1 (SCA) par 94.
16 2013 (3) SA 236 (SCA).
17 At par 27. See also Harper v Crawford 2018 (1) SA 589 (WCC) par 28.
18 2017 (6) SA 527 (WCC).
22 At par 55.
23 Harper v Crawford 2018 (1) SA 589 (WCC) par 27.
24 2005 (2) SA 77 (SCA).
25 At par 23.
26 For example, the rights to property (s 25) and dignity (s 10) that underpin freedom of contract and
freedom of testation: see 3.2.
27 2018 (1) SA 535 (GJ).
28 At par 28.
29 2006 (4) SA 205 (C).
30 At par 23. See also King v De Jager 2017 (6) SA 527 (WCC) par 28; Harper v Crawford 2018 (1) SA 589
(WCC) par 14.
35
The boni mores is a concept from Roman and Roman-Dutch law; public policy, on the other
hand, is a notion prevalent in Anglo-American law. In Minister of Education v Syfrets Trust
31
Ltd, the court nevertheless reasoned that, for the purpose of limiting freedom of disposition,
the terms “public policy”, “boni mores”, “public interest” and “the general sense of justice of
32
the community” can be used synonymously. Public policy – the term used predominantly
throughout this book – or any of its aforementioned synonyms, represents, according to the
33
Constitutional Court in Barkhuizen v Napier, the legal convictions of the community; it there-
34
fore represents those values that society holds most dear.
Public policy is, however, potentially problematic when it is invoked to limit freedom of
35
disposition. In fact, public policy is frequently described as “an unruly horse” because it
36
changes over time and from one context to another. Some scholars therefore argue that
contemporary public policy is not an appropriate yardstick in evaluating dispositive intent
contained in old documents (such as trust instruments drawn up decades ago). For example,
Sonnekus asserts that, testators (contracting parties are of course similarly situated) can at
best take prevailing societal norms into account when they make their testamentary bequests
and that it is therefore inappropriate for later generations to judge the societal convictions of
37
earlier generations in terms of subsequently changed policy imperatives. Other scholars
counter this view by cautioning that, if contemporary public policy is not applied to old
documents, the law will effectively permit those who make contractual and testamentary
dispositions to “freeze in time” their perceptions of public policy, thereby preventing the
38
disposed property from being utilised optimally in conformity with evolving public policy.
South African case law appears to support the latter view. In Minister of Education v Syfrets
39
Trust Ltd, the court adjudicated on racial, gender and religious restrictions contained in a
bursary trust established in terms of a will executed in 1920. Griesel J found it “self-evident”
that, contemporary public policy, and not the public policy of 1920, is decisive to the court’s
40
adjudication. Other courts affirmed this opinion regarding the application of present-day
41
public policy to old trust instruments in subsequent judgments.
Public policy’s suitability as a yardstick for determining the tenability of dispositive intent is
also questioned on the ground that it is a fluid and malleable concept that yields excessive
uncertainty – a characteristic that renders public policy unsuited to establishing principled
42
restrictions on freedom of disposition. In Ex parte BOE Trust Ltd, the court acknowledged
that public policy is not a static concept and that conduct formerly considered to accord with
43
public policy may no longer do so at present; moreover, that the demands of public policy,
44
in any given instance, is a matter on which individual opinion may differ. However, in post-
constitutional South Africa, the Constitution and the Bill of Rights, in particular, provide
________________________
31 2006 (4) SA 205 (C).

32 At par 24.
33 2007 (5) SA 323 (CC).
34 At par 28.
35 Ex parte BOE Trust Ltd 2009 (6) SA 470 (WCC) par 13.
36 Hahlo 1950 SALJ 231 at 240. See also Harper v Crawford 2018 (1) SA 589 (WCC) par 20.
37 2012 THRHR 171 at 175–176.
38 For example, see Eason 2010 Wake Forest LR 123 at 168.
39 2006 (4) SA 205 (C).
40 At par 26.
41 King v De Jager 2017 (6) SA 527 (WCC) par 78; Harper v Crawford 2018 (1) SA 589 (WCC) par 20.
42 2009 (6) SA 470 (WCC).
43 At par 12.
44 At par 13.
36
definitive content to contemporary South African public policy. South African courts’ utilisa-
tion of public policy to adjudicate on dispositive intent must therefore occur with due cogni-
zance of South Africa’s current constitutional order.
3.3.2 Public policy in South Africa’s constitutional order

The Constitutional Court affirmed on a number of occasions that constitutional values, gener-
ally, and the rights enshrined in the Constitution’s Bill of Rights, in particular, provide defini-
45
tive content to contemporary South African public policy. South Africa’s constitutional order
is thus determinative in applying public policy to evaluate dispositive intent embodied in
contracts and wills.
46
The Constitutional Court stated in Barkhuizen v Napier that, since the advent of South Afri-
ca’s constitutional democracy, public policy is deeply rooted in the Constitution and its under-
lying values. What public policy is and whether a contractual term violates public policy is
therefore determined with reliance on the values that underpin South Africa’s constitutional
democracy, in particular, the values that emanate from the Bill of Rights. A contractual term
that is inimical to these values is invariably contrary to public policy and is thus unenforcea-
47
ble. The Constitutional Court acknowledged furthermore in the Barkhuizen case that such a
constitutionally-centred approach to public policy leaves ample room for the operation of
contractual freedom, but simultaneously permits courts to proscribe contractual terms that
conflict with constitutional values (and thus with public policy) even though the contracting
48
parties may have agreed to those terms.
49
Minister of Education v Syfrets Trust Ltd contains statements to similar effect in the context
of testamentary bequests. The court said that that the Constitution and the fundamental
values it enshrines establish an objective normative value system that counteracts the impre-
ciseness and elusiveness traditionally associated with invoking public policy as a yardstick in
50
evaluating dispositive intent contained in wills. Griesel J subscribed, in particular, to the view
that South Africa’s constitutional order demands the application of a “constitutionally-founded
51
boni mores criterion” in any policy-based assessment of testators’ dispositive intent.
It is therefore evident that, although the South African law of contract and the law of testate
succession recognise and protect personal autonomy through the exercise of the ius dispon-
endi in regard to privately-owned property, these two legal fields also contain rules that limit
contracting parties’ and testators’ freedom of disposition on policy grounds to curb the abuse
of this freedom. Contemporary South African public policy is for this purpose undeniably
rooted in the Constitution and its underlying values.
3.4 South African courts’ application of public policy and

constitutionalism to trusts
South African courts have had to adjudicate on policy-based and constitutional challenges to
testamentary trusts, and on discriminatory provisions contained in testamentary charitable
________________________
45 Carmichele v Minister of Safety and Security (Centre for Applied Legal Studies Intervening) 2001 (4) SA 938
(CC) paras 54–56; Paulsen v Slip Knot Investments 777 (Pty) Ltd 2015 (3) SA 479 (CC) par 60.
46 2007 (5) SA 323 (CC).
48 At par 30. See also Brisley v Drotsky 2002 (4) SA 1 (SCA) paras 91–95.
49 2006 (4) SA 205 (C).
50 At par 24.
51 At par 16. See also Du Toit 2001 Stell LR 222 at 235.
37
trusts, in particular, on a number of occasions since the advent of our democratic constitu-
tional dispensation. The impugned trust provisions in these cases were alleged to be discrimi-
natory because they limited trust benefits to some (and thus withheld those benefits from
others) on one or more of the grounds that designate unfair discrimination (such as race,
gender and religion) enumerated in section 9 of the Constitution – the constitutional equality
52
clause. In Harper v Crawford, a similar challenge was brought against the withholding of
benefits from adopted children under a private family trust. Before attending to these judg-
ments, another aspect of the application of public policy and constitutionalism to trusts
53
pertinent in Potgieter v Potgieter regarding the variation of the terms of an inter vivos trust
deserves mention.
54
The Potgieter case, discussed in greater detail in Chapter 5, dealt with an appeal against a
judgment on the validity of a variation to an inter vivos trust deed effected by agreement
between the trust founder and the trustees without the consent of two capital beneficiaries on
whose behalf the trust founder had, according to the Supreme Court of Appeal, earlier accept-
ed trust benefits. The court of first instance ruled that the purported variation was invalid by
reason of the absence of the capital beneficiaries’ consent thereto. The court of first instance,
instead of ordering the reinstatement of the original trust deed in unvaried form, ordered, in
light of the trust founder’s intention to include others as trust beneficiaries through the pur-
ported variation of the trust deed, that the founder’s intention must be respected in altered
form by allowing those that the founder wished to include as beneficiaries to still benefit from
the trust. The court of first instance did so on the basis of fairness to these other beneficiaries;
moreover, it based its authority to do so on the application of constitutional values to South
55
African contract law as espoused by the Constitutional Court in Barkhuizen v Napier. The
court of first instance interpreted the Barkhuizen case as laying down the rule that a court has,
in light of South Africa’s constitutional order and therefore as a matter of public policy, the
authority to refuse the implementation of a contractual term that it regards as unreasonable
56
or unfair.
The Supreme Court of Appeal vehemently disapproved of this approach. Brand JA opined
that the court of first instance not only misconstrued the Constitutional Court’s judgment in
the Barkhuizen case, but also lost sight of the fact that our common law does not prescribe
reasonableness and fairness as freestanding requirements for the exercise of a contractual
57
right. Brand JA further observed that the danger in judges deciding cases on the basis of
58
what they regard as reasonable and fair lies in the risk of “intolerable legal uncertainty”. This
is because a judge who disregards the tenets of the common law and simply invokes reason-
ableness and fairness as abstract norms in arriving at an entirely discretionary or value-based
judgment undermines the legality principle that obliges the courts to dispense justice in
accordance with the law. The legality principle is integral to the rule of law, and discretionary
or value-based judgments based solely on reasonableness and fairness therefore threaten the
59
rule of law. The Supreme Court of Appeal thus affirmed that a court cannot negate the
common law rules regarding the variation of inter vivos trust deeds through a misplaced
reliance on policy-based constitutionalism to effect an outcome that it perceives as reasonable
and fair.
________________________
52 2018 (1) SA 589 (WCC).

53 2012 (1) SA 637 (SCA).
54 See 5.4.2.2.2 and 5.4.2.2.4.
55 At par 14. See 3.2 regarding the affirmation in Barkhuizen v Napier 2007 (5) SA 323 (CC) of the constitu-
tional foundation of personal autonomy in South African contract law.
56 At par 31.
57 At par 32.
58 At par 34.
59 At par 36.
38
This issue aside, the greater part of South African jurisprudence regarding the impact of
public policy and constitutionalism on trusts deals with testamentary trusts and therefore with
a testator’s freedom to dispose of his or her property as he or she sees fit. Testamentary
charitable trusts in respect of which testators imposed restrictions on who may benefit from
60
the trusts in question form the focal point of this jurisprudence. In Harper v Crawford, this
issue arose with regard to an inter vivos trust. However, the Harper case dealt with a private
61
family trust and, as is shown later, yielded an outcome different from those in the majority
of the judgments on testamentary charitable trusts. This difference may be ascribed to the
fact that, according to some judgments, constitutionally-founded public policy does not limit
trust founders, or does not limit them to the same extent, in making purely private disposi-
tions as it does when they dispose of their property by way of charitable trusts. This is be-
cause charitable trusts are said to operate in the public domain, whereas non-charitable or
private trusts function in the private sphere. This approach that is evident from some South
African judgments necessitates a consideration of the so-called public/private divide in the
application of public policy and constitutionalism to trusts. The manner in which South
African courts have, to date, dealt with discrimination in charitable trusts and private trusts,
respectively, is considered thereafter.
3.4.1 The public/private divide

3.4.1.1 The nature of the divide
Stated broadly, the public/private divide dictates that charitable trusts function in the public
domain whereas non-charitable or private trusts function in the private sphere. Policy impera-
tives and constitutional values of a public nature, such as the equality norm, consequently
apply readily to charitable trusts but not (or at least not in equal measure) to private trusts.
Some courts and legal scholars support the public/private divide while others challenge its
tenability. Before attending to these opposing standpoints, it is important to first establish
why charitable trusts are regarded by some as public trusts that function in the public do-
main. At least three reasons are advanced for this view:
• charitable trusts generally perform functions that the state ought, first and foremost, to
perform (for example, poverty alleviation, care of the elderly, educational support and sci-
entific advancement) – charitable trusts are thus analogous to state institutions that operate
62
in the public sphere;
• charitable trusts generally pursue purposes that are for the public benefit or in the public
interest – these purposes are by definition public (rather than private) purposes and this
63
reality situates charitable trusts in the public domain; and
• the administration of charitable trusts frequently involves a public or quasi-public institu-
tion such as a government-funded public school or university – this fact bestows an ele-
64
ment of “state action” onto such charitable trusts that place them in the public domain.
________________________
60 2018 (1) SA 589 (WCC).

61 See 3.4.3.
62 Harding Charity Law 212.
63 Ibid at 213–214.
64 Minister of Education v Syfrets Trust Ltd 2006 (4) SA 205 (C) par 45. “State action” is an Americanism
denoting that the state (in other words, the government or a government agency) may not through its ac-
tions intrude on an individual’s civil rights. This term was used in the Syfrets Trust case to signify that the
involvement of a public or quasi-public institution such as a state-funded university in the administration
of a trust occasions a sufficient connection to the state that the public or quasi-public institution’s actions
are akin to the state’s actions. The implication is that a public university may not intrude on the funda-
mental rights of, for example, its students by participating in the administration of a trust that unfairly
discriminates against some students because these students are ineligible to benefit under the trust based
on, among others, their race, gender or religion.
39
3.4.1.2 Standpoints
Standpoints in favour of the divide
The Supreme Court of Appeal appears to have subscribed to the public/private divide insofar
as it acknowledged the public nature of charitable trusts and the concomitant applicability of
public norms such as those in respect of equality and non-discrimination to these trusts in
65
Curators, Emma Smith Educational Fund v University of KwaZulu-Natal. In this case, the Su-
preme Court of Appeal had to adjudicate on an appeal against the court of first instance’s
order to remove a racial restriction from a testamentary charitable bursary trust. Bertelsmann
AJA pertinently mentioned in the Supreme Court of Appeal’s judgment that the trust in ques-
66
tion is administered by the University of KwaZulu-Natal – a state-funded public university –
and he then opined that “[i]n the public sphere there can be no question that racially discrim-
67
inatory testamentary dispositions will not pass constitutional muster”. It is therefore evident
that Bertelsmann AJA situated the testamentary charitable trust at issue in this case squarely
within the public domain by reason of the involvement of the University as a public institution
68
that must apply the public policy of non-discrimination in its administration of the trust. This
placement of the particular trust in the public domain informed Bertelsmann AJA’s further
reasoning that a constitutional imperative exists to remove racially-restrictive clauses that
violate public policy from an educational trust administered by a publicly-funded educational
institution; moreover, that this constitutional equality imperative takes precedence over a
69
trust founder’s testamentary freedom to impose such racial restrictions. He consequently
70
dismissed the appeal against that part of the court of first instance’s order.
Some South African scholars also favour the public/private divide. This scholarly approach
71
is discernible in Thomas’s critique of the judgment in In re Heydenrych Testamentary Trust
where racial and gender restrictions imposed by testators in three separate wills that created
three testamentary charitable bursary trusts were at issue. The bursaries payable from the
Heydenrych Trust were for the education of White boys; those from the Houghton Trust were,
likewise, available only to White boys; and the bursaries payable from the George King Trust
were for the assistance of White music students at the University of Cape Town. The will that
established the last-mentioned trust charged the University with the administration of the
72
bursaries. The court struck the impugned racial and gender restrictions from all three wills in
73
terms of section 13 of the Act. Goliath J opined that the racial and gender restrictions ham-
74
pered the three trusts’ charitable purposes and that the Constitution’s equality directive as
75
well as the public interest demanded that these restrictions be struck from the three wills.
Thomas notes, however, that an important difference between the three trusts in this case
was that the administration of only the George King Trust involved the University of Cape
Town as a public university – no public or quasi-public institution participated in the admin-
76
istration of the Heydenrych and Houghton Trusts. Thomas then argues:
“It is trite that in the public sphere equality trumps freedom, but Heydenrych and Houghton [the
testator and testatrix of the wills that established the Heydenrych and Houghton Trusts] were in
________________________
65 2010 (6) SA 518 (SCA).

67 At par 38.
68 At par 39.
69 At par 42.
70 At par 50.
71 2012 (4) SA 103 (WCC).
72 At par 6.
73 At par 23. See 5.4.3.1 regarding the judicial variation of trust provisions in terms of s 13 of the Act.
74 At par 21.
75 At par 20.
76 Hallebeek et al Cives Necnon Peregrinos 737.
40
their private domain . . . [An] extension of the priority of equality over freedom in the private
sphere will drastically limit the freedom of testation and the freedom to distribute your personal
charity in accordance with your own personal wishes, foibles and prejudices . . . The divide be-
tween public and private sphere should be the deciding factor if freedom of testation is to be taken
77
seriously.”
Thomas’s argument can be distilled as follows: that public policy and constitutional impera-
tives regarding equality must be confined to those instances where charitable trusts function
in the public domain by reason of the presence of state action through the involvement of
public or quasi-public institutions in trust administration. His standpoint conversely holds that
personal autonomy, through the exercise of freedom of testation (or freedom of contract),
should prevail in the private sphere when an individual uses this freedom to establish a
testamentary (or inter vivos) charitable trust that does not involve a public or quasi-public
institution in its administration, yet restricts benefits on any of the grounds enumerated in the
Constitution’s equality clause. However, Griesel J opined in Minister of Education v Syfrets
78
Trust Ltd that a trust, even one created by a private individual and especially one created
79
with a charitable object, remains an institution of public concern. Griesel J therefore even
situated charitable trusts, created privately and not administered by a public or quasi-public
institution (such as the Heydenrych and Houghton Trusts in the Heydenrych Trust case),
squarely within the public domain. This view bolstered Griesel J’s decision in the Syfrets Trust
case to order a striking-out of racial, gender and religious restrictions on benefitting under a
80
privately-created and privately-administered testamentary charitable bursary trust.
The above standpoint, distilled from Thomas’s argument regarding the presence of state
action through the involvement of public or quasi-public institutions in trust administration,
suggests furthermore that the public nature of a charitable trust can be negated by the re-
moval of the public or quasi-public functionary charged with its administration and by replac-
ing such a functionary with a private one. This is because such a substitution of a public or
quasi-public functionary with a private one will eliminate the element of state action that
situates the trust in the public domain. This was exactly what the curators for the potential
beneficiaries of the bursary trust at issue in Emma Smith Educational Fund v University of
81
KwaZulu-Natal proposed to address the University of KwaZulu-Natal’s reluctance to continue
administering the trust in accordance with the discriminatory conditions imposed by the
testator: the curators requested that the University’s role in trust administration had to be
82
transferred to a private trust administrator. However, Bertelsmann AJA denied this request
because the testator explicitly involved the University in the trust’s administration – to deny
83
the University this role would, according to Bertelsmann AJA, subvert the testator’s wishes.
The Emma Smith case thus evinces a judicial reluctance to bridge the public/private divide
simply by replacing any public or quasi-public functionary involved in the administration of a
charitable trust with a private one.
84 85
The judgments in Harper v Crawford and King v De Jager conform to Thomas’s standpoint
in favour of the public/private divide and thus provide further support for the judicial ac-
ceptance of the divide in South African trust law. In the former case, the court had to adjudi-
cate on an application to include adopted children as beneficiaries under a private inter vivos
________________________
77 Ibid 738–739.
78 2006 (4) SA 205 (C).
79 At par 46.
80 At par 49.
81 2010 (6) SA 518 (SCA).
83 At par 43.
84 2018 (1) SA 589 (WCC).
85 2017 (6) SA 527 (WCC).
41
86
trust. Dlodlo J pointed out that, in earlier cases such as Syfrets Trust, Emma Smith and Hey-
denrych Trust, the courts eliminated discriminatory provisions from charitable educational
trusts of a public nature, whereas the trust at issue in the Harper case was a purely private one
87
devoid of any public dimension. Dlodlo J acknowledged, furthermore, that it was the “public
element of the discrimination” in the testamentary charitable trusts in the Syfrets Trust, Emma
Smith and Heydenrych Trust cases that afforded greater weight to the right of equality than to
88
freedom of testation in those cases. Dlodlo J’s view suggests that a private trust that includes
some and excludes others as beneficiaries lacks this public element of discrimination and that
the equality norm will consequently not necessarily outweigh freedom of disposition in
respect of such a private trust even if the exclusion is based on one or more of the grounds
designating unfair discrimination enumerated in the constitutional equality clause.
Bozalek J echoed these sentiments in the King case when he dealt with the exclusion of co-
testators’ female descendants under a testamentary fideicommissum. He stated, after having
analysed cases such as Syfrets Trust, Emma Smith and Heydenrych Trust, that the question
before him was whether, and to what extent, equality-based challenges to testamentary
dispositions should be recognised outside the area of charitable testamentary trusts that have
89
a public nature. Bozalek J answered this question in the negative and advanced as one of the
reasons for his finding that any judicial rewriting of testators’ wills to include disinherited
beneficiaries “would make a court the final arbiter in the choice of beneficiaries in testamen-
90
tary dispositions of a non-public nature in a particularly private and personal area”. Bozalek J
especially emphasised that the operation of public policy in regard to “private testation” is
more limited than with regard to “public testation” because the Constitution affords individu-
als considerable personal autonomy in arranging their private affairs in accordance with their
91
rights to dignity and self-determination.
The public/private divide appears in light of the foregoing analysis to have established itself
in South African trust law jurisprudence, with the effect that charitable trusts are, as trusts that
function in the public domain and for the public benefit, more vulnerable than private trusts
to policy-based and constitutional challenges regarding any violation of the equality norm, in
particular. However, not all scholars agree that the public/private divide is indeed tenable and
they proffer standpoints against the divide.
3.4.1.3 Standpoints against the divide

92 93
Whilst South African scholars such as Thomas and Du Toit favour the public/private divide,
some foreign commentators question the divide’s tenability. Harding argues, for example,
that the divide does not account for the fact that courts, as public institutions capable of
exercising state power, are always at liberty to consider relevant public norms in fulfilling
their judicial functions, even when those functions involve adjudicating on purely private
disputes. Section 8(3) of the Constitution bolsters this standpoint insofar as the subsection
directs that a court, when applying a provision in the Bill of Rights to a natural or juristic
person, must apply, or when necessary, develop the common law to give effect to or to limit
the relevant constitutional right. This standpoint therefore dictates that the involvement of the
________________________
86 See 3.4.3.
87 At par 22.
88 At par 30.
89 At par 38.
90 At par 61.
91 At par 65.
92 See 3.4.1.2.
93 2001 Stell LR 222 at 255.
42
courts in settling trust disputes invariably subjects even private trusts to state action and that
the courts, when adjudicating on policy-based and constitutional challenges to private trusts,
can and should develop, as well as limit, the rights of the (private) litigants in accordance with
94
public norms such as equality and non-discrimination.
The above standpoint is, however, not uncontroversial. Ackermann declares that the whole
of private law cannot be converted into state action simply because the courts enforce all
private law. He cautions that ethics should not be confused with law; moreover, that private
law is not a mirror image of personal ethics. Ackermann’s view therefore militates against
imbuing all private law with state action, thereby opening up all private law to policy-based
and constitutional judicial scrutiny and intrusion, because such a modus operandi holds the
danger that a court will not focus its adjudication on what is unlawful, but rather on what is
95
unethical. This view suggests, furthermore, that social disapproval of unethical or even
tyrannical dispositive intent does not in itself justify state intrusion on freedom of disposition
96
through the courts.
Grattan and Conway advance a second argument against the public/private divide when
they reason that public policy, applied as a normative yardstick, affects both the public do-
main and the private sphere in equal measure. They opine that the doctrine of public policy
channels constitutional protections into all of private law and that no “more exclusive person-
al sphere” therefore exists within the private law domain that is immune to the influence of
97
public policy. Grattan and Conway advocate that public policy can override even private
dispositions without the need to invoke some public “anchor” such as the public nature of
98
charitable trusts in order to achieve such an effect. Harding opines, in similar vein, that
public policy has been a long-standing and integral part of the law of trusts and that it func-
tions as an “entirely unremarkable method for importing into the private law considerations
99
of a public nature”. He concludes that the “most desirable” approach is the one that applies
the public anti-discrimination norm to dispositive intent in both the public domain and the
100
private sphere, thereby eradicating any distinction between the two.
South African courts seem to follow a different approach from the one advocated by those
101
who challenge the tenability of the public/private divide. In King v De Jager, Bozalek J admit-
ted to the fact that public policy limits testators’ freedom of testamentary disposition (as
indeed it does in respect of contracting parties’ freedom of contract) but he reasoned that the
scope of the public policy doctrine in the area of private testation is more limited and circum-
scribed because the Constitution endows private individuals with a great deal of autonomy
102
toward the fulfilment of their fundamental rights to dignity and self-determination. Bozalek
103
J noted, in particular, the Constitutional Court’s observations in De Lange v Methodist
104
Church that, although constitutional rights and values reach even the remotest corners of
South African law, our courts must be circumspect when ruling on individuals’ private lives
and personal preferences because the closer courts get to “personal and intimate spheres” the
________________________
94 2011 OJLS 303 at 317.

95 Ackermann Human Dignity 314–315.
96 Hirsch 2011 Minn LR 2180 at 2200.
97 2005 McGill LJ 511 at 534.
98 Ibid at 534.
99 2011 OJLS 303 at 312. See also Harding 2016 CJCCL 227 at 238.
100 Harding Charity Law 225.
101 2017 (6) SA 527 (WCC).
102 At par 65.
103 At par 75.
104 2016 (2) SA 1 (CC).
43
105
greater the danger of unwarranted judicial intrusion on privacy and autonomy. This stand-
point begs the question whether a person’s privacy and autonomy are in fact undermined or
even negated if he or she is denied the ability to pursue discriminatory goals when disposing
of his or her privately-owned property. Harding thinks not. He argues that autonomous choice
in the pursuit of discriminatory goals that undermine the equality norm are by definition
worthless and therefore lack inherent value – so much so that making these worthless dispos-
itive goals available to autonomous persons, even regarding their self-realisation in the private
106
sphere, does little to enhance personal autonomy. He reasons that, eliminating all the legal
rules from the law of trusts that permit trust founders to discriminate will invariably limit the
range of dispositive goals available to trust founders, but he regards the consequent impair-
107
ment of personal autonomy as “no more than trivial”. Harding contends that, if dispositive
goals may be achieved in a variety of other ways, the state not sanctioning dispositive goals
that involve discrimination – even regarding dispositions that function in the private sphere –
108
will have a negligible effect on personal autonomy.
Foreign commentators certainly advance potent standpoints against the public/private di-
vide, and the scholarly debate on this issue will likely continue. However, South African
jurisprudence appears to favour the divide. This begs the question regarding the treatment of
discriminatory charitable trusts (as public trusts) and, conversely, the treatment of discrimina-
tory private trusts by South African courts in the post-constitutional era.
3.4.2 Discriminatory charitable trusts

The tone for the future judicial treatment of discriminatory charitable trusts was set even
before the advent of South Africa’s current constitutional dispensation when a racial re-
striction on entry to homes for destitute children was struck from the provisions of a testa-
mentary charitable trust in Ex Parte President of the Conference of the Methodist Church of
109
Southern Africa: In re William Marsh Will Trust. The will in question provided that the homes
could admit only White children but Berman J, invoking the court’s power to vary trust provi-
110
sions in terms of section 13 of the Trust Property Control Act, ordered the removal of the
word “White” from the testator’s will. He reasoned that the provision containing the racial
111
restriction was, as per section 13’s requirement, in conflict with the public interest because
the public interest demands the care of destitute children regardless of their race or ethnici-
112
ty. The William Marsh case bolstered Griesel J’s decision in Minister of Education v Syfrets
113
Trust Ltd – the first reported post-constitutional judgment on point – to order the removal of
racial, gender and religious restrictions on bursary eligibility from a testamentary charitable
114
bursary trust. Griesel J applied the constitutional unfair discrimination test espoused in
115
Harksen v Lane to determine whether these restrictions occasioned unfair discrimination
116
against those excluded from eligibility and, having answered this question in the affirmative,
________________________
105 At paras 79 and 80. See also Harper v Crawford 2018 (1) SA 589 (WCC) par 34.
106 2011 OJLS 317 at 321.
107 Ibid at 324.
108 Ibid at 325.
109 1993 (2) SA 697 (C).
110 See 5.4.3.1 regarding section 13 of the Act.
111 At 703C–D.
112 At 703J.
113 2006 (4) SA 205 (C).
114 At par 34.
115 1998 (1) SA 300 (CC).
116 Minister of Education v Syfrets Trust Ltd 2006 (4) SA 205 (C) par 33.
44
he concluded that the testamentary provisions at issue contravened constitutionally-founded

117
public policy. Griesel J thus ordered the variation of the testator’s will through the deletion
118
of the offending provisions.
The Supreme Court of Appeal likewise ordered the excision of a racial restriction from a
testamentary charitable bursary trust in Curators, Emma Smith Educational Fund v University of
119
KwaZulu-Natal. The will in question limited the bursaries to European girls born of either
British South African or Dutch South African parents. Bertelsmann AJA held that racially
discriminatory testamentary dispositions that operate in the public domain will not pass
120
constitutional muster and that the constitutional imperative to remove racially-restrictive
clauses that conflict with public policy from an educational charitable trust outweighs the
121
testator’s freedom of testation. The Supreme Court of Appeal consequently confirmed the
court of first instance’s ruling in terms of section 13 of the Act to strike from the testator’s will
the words “European”, “British” and/or “Dutch South African” denoting that only White
122
students qualified for the bursaries. Goliath J followed suit when she handed down the
123
judgment in In re Heydenrych Testamentary Trust. She ruled that Blacks were effectively
disqualified from bursary eligibility by the provisions of three testamentary charitable bursary
trusts that restricted eligibility to Whites only. Goliath J held that the exclusion of Blacks from
the various bursaries was unfairly discriminatory and thus violated public policy. She conse-
quently ordered the deletion of the racial restrictions from the three wills in terms of section
124
13 of the Act. She ruled, furthermore, that two of the trusts that restricted bursary eligibility
to males occasioned unfair discrimination on the ground of gender and were as such uncon-
125
stitutional and in conflict with the public interest. Goliath J therefore ordered the variation of
126
the relevant wills to also remove all gender-based discrimination therefrom.
The aforementioned cases may create the impression that all forms of discrimination in
charitable bursary trusts are bound to be eliminated on constitutional and/or policy
grounds. Du Toit argues that this is not so. He analyses the Canadian judgment of the
127
Manitoba Court of Queen’s Bench in Re The Esther G. Castanera Scholarship Fund where
the court upheld a gender restriction on bursary eligibility in favour of female students
under a testamentary bursary trust because the restriction ostensibly sought to address
the under-representation of women in tertiary studies in the sciences. Du Toit reasons
that a South African court may arrive at a similar decision on corresponding facts because
discrimination of the kind at hand in the Castanera case seeks to address a past (or pre-
sent-day) injustice, under-representation or exclusion in order to achieve or to promote
128
substantive equality.
continued
________________________
117 At par 47.

118 Ibid. Some commentators approved of the outcome in the Syfrets Trust case: see Wood-Bodley 2007 SALJ
687. Other commentators questioned the ostensibly undermining impact of the judgment on freedom of
testation: see Van der Westhuizen and Slabbert 2007 TSAR 206. See also Ackermann Human Dignity 313–
314.
119 2010 (6) SA 518 (SCA).
120 At par 38.
121 At par 42.
122 At par 46. See 5.4.3.1 regarding section 13 of the Act.
123 2012 (4) SA 103 (WCC).
124 At par 14. See 5.4.3.1 regarding section 13 of the Act.
125 At par 20.
126 At par 23.
127 2015 MBQB 28.
128 Du Toit 2017 Manitoba LJ at 141.
45
129
This standpoint is supported by Mitchell AJ’s affirmation in Ex parte BOE Trust Ltd that
the Constitution only proscribes unfair discrimination – discrimination designed to
130
achieve a legitimate purpose is not unfair in constitutional terms. Freedom of disposi-
tion can therefore be exercised to benefit some and not others in the pursuit of a legiti-
mate purpose. Only when this differentiation amounts to unfair discrimination will it fall
131
foul of constitutional and policy imperatives regarding equality and non-discrimination.
Charitable bursary trusts that seek, for example, to eliminate the under-representation of
a particular race or gender among university students in certain academic disciplines, or
to counter the marginalisation of the speakers of a particular national language in the
higher education sector should, depending on a contextual judicial analysis of the facts of
each specific case, therefore not summarily be typified as unfairly discriminatory and
132
hence be regarded as necessarily open to judicial variation.
The provisions of the charitable trust at issue and the facts of the case at hand play an im-
portant role in the outcome of any application for the judicial variation of the terms of such a
133
trust. In Ex parte BOE Trust Ltd, the testatrix restricted bursary eligibility under a testamen-
tary charitable bursary trust to White students and charged four South African universities
with the selection of the bursary recipients. The will’s racial restriction caused all the universi-
ties to refuse participation in the bursary scheme. The trustee consequently requested the
judicial variation of the testatrix’s will through the excision of the racial restriction. Mitchell AJ,
in the court of first instance, declined to order the will’s variation because he opined that the
base-line requirement for the judicial variation of a trust instrument in terms of section 13 of
134
the Act was not met. He also remarked in an obiter dictum that the racial restriction did not
contravene public policy because it might serve the legitimate purpose of securing much
needed skills and expertise for South Africa insofar as the bursary request required the return
135
of bursary-holders to South Africa upon the completion of their studies abroad. The Su-
136
preme Court of Appeal subsequently confirmed this decision in In re BOE Trust Ltd when it
emphasised the fundamentality of freedom of testation in the South African law of wills.
Erasmus AJA reasoned that effect must be given to the testatrix’s wishes as recorded in her
will. He argued that the will expressly provided for an alternative devolution of the trust’s
income in favour of a number of charities in the event that the bursary bequest was rendered
impossible, and he viewed the universities’ refusal to participate in the bursary scheme as
having occasioned exactly such an impossibility that triggered the bequest in favour of the
137
charities. The Supreme Court of Appeal consequently dismissed the appeal against the court
of first instance’s judgment and allowed the alternative devolution of the trust’s income in
138
accordance with the testatrix’s directions.
________________________
129 2009 (6) SA 470 (WCC).

130 At par 14.
131 At par 16.
132 See also De Waal and Schoeman-Malan Law of Succession 138–139.
133 2009 (6) SA 470 (WCC).
134 At par 22. See 5.4.3.1.
135 At par 15.
136 2013 (3) SA 236 (SCA).
137 At par 31.
138 At par 33. See Modiri 2013 PELJ 581 for criticism of the Supreme Court of Appeal’s judgment.
46
3.4.3 Discriminatory private trusts

The courts, in handing down some of the aforementioned judgments on discriminatory
charitable trusts, observed that their rulings do not necessarily impact private trusts. Griesel J
139
remarked in Minister of Education v Syfrets Trust Ltd that not all clauses in wills and trusts
140
that differentiate between different groups of people are necessarily invalid. The Supreme
Court of Appeal was likewise inclined in Curators, Emma Smith Educational Fund v University of
141
KwaZulu-Natal when it addressed the curators’ concern that the proposed variation of the
testator’s will through the excision of a racial restriction on bursary eligibility would negate
freedom of testation. Bertelsmann AJA said that any decision to strike the racial restriction
from the will before him in the Emma Smith case does not affect “the case of a testator who is
a member of a congregation wishing to create a trust for members of his or her faith or a club
142
member intending to benefit the children of fellow members”. It appears that Bertelsmann
AJA regarded these trusts as more private in nature and that he felt that the Supreme Court of
Appeal’s decision regarding the charitable trust at issue in the Emma Smith case should not
summarily be supplanted onto cases of this type. Subsequent judgments support this view.
143
In Harper v Crawford, an inter vivos family trust was at issue, and the court had to address
the question whether the applicants – the adopted children of the trust founder’s daughter –
could receive the daughter’s share of the trust capital upon her death. The trust deed referred
to the founder’s “children” and their “children”, “descendants”, “issue” and “legal descend-
ants” as the trust beneficiaries. The applicants asked that these terms be interpreted to in-
clude them because, so the applicants contended, withholding trust benefits from them on
the basis that they were adopted, would violate the Bill of Rights’ equality imperative as well
144
as public policy. The applicants relied on cases such as Syfrets Trust and Heydenrych Trust in
support of their contention. However, Dlodlo J distinguished these previous cases regarding
testamentary charitable trusts from the one before him in the Harper case:
“Notably, in earlier cases that served before our courts and where courts have intervened to elimi-
nate discriminatory provisions in the deeds of charitable educational trusts of a public nature, the
relief granted did no more than widen the pool of prospective applicants for the bursaries. The
relief so granted did not take away benefits conferred on particular beneficiaries nor confer those
benefits on other persons. The trust deed under discussion in this matter is a private trust deed. It
has no provisions which affect the public. It benefits no members of the public nor does it benefit
public bodies. It is apparent that this court is asked to carry out the balancing exercise between the
donor’s constitutionally protected rights to property, dignity and privacy on the one hand and the
145
applicants’ assertion of their protected rights to equality and dignity on the other hand.”
Dlodlo J opined that, in the balancing exercise referred to in the above dictum, the public
element of the discrimination contained in the testamentary trusts at issue in cases such as
Syfrets Trust and Heydenrych Trust afforded the constitutional right to equality greater weight
146
than the various testators’ freedom of testation. He argued that similar considerations do
147
not apply to private wills or trusts. Dlodlo J therefore concluded that courts have no general
competence to vary the provisions of private trust deeds, just as they are not endowed with
any general jurisdiction to vary testator’s private wills: courts must always respect the ius
________________________
139 2006 (4) SA 205 (C).

140 At par 48.
141 2010 (6) SA 518 (SCA).
142 At par 41.
143 2018 (1) SA 589 (WCC).
144 At par 5.
145 At par 22.
146 At par 30.
147 At par 29.
47
disponendi in regard to private dispositions unless statute or the common law permits them to
148
intrude on this right. Dlodlo J found that the trust deed made it clear exactly who the found-
149
er intended as trust beneficiaries and he consequently dismissed the adopted children’s
150
application to be included as trust beneficiaries.
Bozalek J echoed some of the sentiments expressed by Dlodlo J in the Harper case when
151
the former handed down the judgment in King v De Jager. This case dealt with a fideicom-
missum in terms of which only the male descendants of the two testators’ children were
152
appointed as fideicommissary heirs. One of the children’s female descendants challenged
their exclusion (disinheritance) on the ground that the fideicommissum’s designation of only
“sons” and “male descendants” as fideicommissary heirs unfairly discriminated against them
based on their gender. Bozalek J posed the question whether equality-based challenges to
testamentary dispositions ought to be recognised outside the area of testamentary charitable
153
trusts with a public nature; in other words, are purely private testamentary bequests such as
the one before the court in the King case equally open to challenges based on averments of
unfair discrimination? Bozalek J answered this question in the negative because, in his view,
varying the terms of a testamentary bursary trust (as was done in the Syfrets Trust, Emma
Smith and Heydenrych Trust cases) merely requires of a court to determine altered terms for
the administration of property that has already been bequeathed through the exercise of a
testator’s ius disponendi, whereas varying the terms of a private testamentary bequest such as
a fideicommissum (or a private trust) to include thereunder beneficiaries that the testator him-
154
or herself did not include, is altogether a different exercise.
What did Bozalek J mean when he said that varying the terms of a testamentary bursary
trust merely requires the determination of altered terms for the administration of proper-
ty that a testator has already bequeathed? One possible interpretation of this statement is
that a testator who establishes a charitable bursary trust often has a primary charitable
purpose but he or she then imposes, as a secondary step, discriminatory restrictions that
limit bursary eligibility. For example, in the Syfrets Trust case the testator primarily
wished to benefit students “with limited or no means” to pursue studies abroad but then
he also determined that the bursary recipients must be White, male and non-Jewish. In
the Emma Smith case, the testator likewise primarily intended to benefit poor girls who,
but for the bursaries payable from the trust, would be unable to pursue tertiary studies,
but then he further stipulated that the bursary recipients must be European and born of
British South African or Dutch South African parents. The excision of the secondarily-
imposed restrictions in these cases did not negate or replace the respective testators’ ius
disponendi; it merely served (in the words of Dlodlo J in the above-quoted dictum from the
Harper case) to “widen the pool of prospective applicants for the bursaries”. The courts’
striking-out of the restrictions in the Syfrets Trust and Emma Smith cases simply meant
that the terms upon which the property bequeathed by the respective testators in pursuit
of the two trusts’ primary charitable purposes were altered through the inclusion of more
potential beneficiaries under these trusts.
________________________
148 At par 34.

149 At par 36.
150 At par 37.
151 2017 (6) SA 527 (WCC).
152 See 9.2.1 regarding the testamentary fideicommissum.
153 At par 38.
154 At par 61.
48
Bozalek J contrasted the aforementioned determination of altered terms for testamentary

charitable bursary trusts on the one hand, with varying the terms of a fideicommissum (or a
testamentary private trust) to include persons that the testator him- or herself did not include
on the other hand. This involves, according to Bozalek J, something altogether different,
namely determining whether the testator should in fact have bequeathed property to those
persons in the first place. Such an undertaking requires of a court to exercise the testator’s ius
disponendi on a surrogate basis and Bozalek J found no legal principle that supports such a
155
judicial usurpation of a testator’s ius disponendi. He consequently ruled in the King case that
the co-testators’ freedom to dispose of their property by way of a private testamentary be-
quest as they saw fit outweighed their female descendants’ right not to be unfairly discrimi-
156
nated against on the basis of their gender.
Bozalek J’s favourable view in the King case of disinheritance through private testation
raises the question whether excluding certain groups of persons from benefitting in terms
of a testamentary charitable trust is in fact any different from disinheriting certain per-
sons in a private testamentary bequest. Had the testator of the will in the Syfrets Trust
case therefore not simply instituted all White, male and non-Jewish students at the desig-
nated university as his heirs under the bursary trust and commensurately “disinherited”
all non-White, female and Jewish students? If, as the King case suggests, that disinher-
itance through private testation is beyond reproach, is the same not also true of the type
of “disinheritance” that occurs when a testator includes some and excludes others from
benefitting under a testamentary charitable bursary trust that functions in the public do-
main? Bozalek J answered this question in the negative in the King case by reason of the
absence of true equivalence between an heir or heiress in a private testamentary bequest
on the one hand, and a potential beneficiary under a testamentary charitable bursary
trust, on the other. A testamentary heir or heiress will, in the normal course of events,
become legally entitled to his or her inheritance upon the testator’s death and any person
whom the testator disinherited (such as the excluded female descendants in terms of the
will before the court in the King case) will never acquire any entitlement to an inher-
itance. On the other hand, each potential beneficiary under a testamentary charitable
bursary trust (such as the White, male, non-Jewish students in the Syfrets Trust case) is
not summarily entitled to a bursary when the bursary bequest takes effect. This is be-
cause they must first apply for the bursaries and individual bursary recipients will ulti-
mately be selected from these applicants. Even a potential beneficiary under a
testamentary charitable bursary trust may therefore never receive a bursary from that
trust because he or she may have decided not to apply for the bursary or, if he or she did
indeed apply, he or she may not have been selected as a bursary-recipient. The line be-
tween benefitting and not benefitting is thus, according to Bozalek J in the King case,
considerably clearer in the case of disinheritance in a private bequest than in the case of
a testamentary charitable bursary trust, and this distinction, in the judge’s opinion, ren-
ders any equalisation between exclusion from a private bequest on the one hand, and
157
exclusion from a testamentary charitable trust, on the other, rather tenuous.
Bozalek J opined in the King case that South African public policy has not advanced to the
point that our courts should act as the final arbiters of whether a testator may discriminate,
158
even unfairly, in his or her private will, nor in his view would the general public regard a
________________________
155 At par 61.

156 At par 69.
158 At par 78.
49
testator’s decision to discriminate in a private testamentary bequest as so unreasonable and

159
offensive that it contravenes public policy. The Harper and King cases therefore support the
contention that South African law has not yet reached the point where the exclusion from
benefitting under private dispositions – and this includes private trusts – is open to challenge
on constitutional and/or policy grounds. A majority of the Supreme Court of Appeal subse-
160
quently affirmed the Harper decision in Harvey v Crawford. The outcome of the appeal
against Bozalek J’s decision in the King case was pending at the time this book went to print.
It appears likely that it will not be long before the Constitutional Court will be called upon to
adjudicate on the tenability of exclusionary private dispositions, and private trusts, in particu-
lar.
________________________
159 At par 81.

160 [2018] ZASCA 147 (17 October 2018).
50
4
The Creation of a Trust
4.1 Introduction
South African law recognises the existence of a trust in the strict sense only if it was validly
created. The law sets a number of requirements for a trust’s creation. No trust comes into
existence if one or more of these requirements are not met. Once a trust has been created,
further requirements must be satisfied for trust administration to commence. This chapter
analyses both the creation requirements as well as the requirements for the commencement
of trust administration to provide a complete picture regarding the establishment as well as
the administration-readiness of a trust in the strict sense.
4.2 The requirements for the creation of a valid trust

1
In Administrators, Estate Richards v Nichol the court enumerated the following five
requirements for the creation of a valid trust:
• an intention on the part of the founder to create a trust;
• the expression by the founder of the intention to create a trust in a mode suited to the
creation of a legal obligation;
• a reasonably certain definition of the trust property;
• a reasonably certain definition of the trust object; and
• the lawfulness of the trust object.
These requirements are discussed in turn hereafter to highlight key aspects of each
requirement.
4.2.1 An intention to create a trust

The creation of a trust invariably burdens the property subject to the trust because the trustee
must administer that property strictly in accordance with the trust instrument’s directives.
Trust provisions are therefore by definition onerous in nature. For this reason, a trust founder
must intend clearly and unambiguously to impose this burden on property through the
2
creation of a trust in the strict sense.
The intention to create a trust is readily inferred from the wording of the trust instrument.
The trust instrument must therefore clearly express this intention and should preferably do so
________________________
1 1996 (4) SA 253 (C) 258E–F. See also Dempers v The Master 1977 (4) SA 44 (SWA) 56E–F.
2 De Waal and Schoeman-Malan Law of Succession 171; Jamneck et al Law of Succession 195; Geach Trust
Law 80; Pace and Van der Westhuizen Wills and Trusts B8.1.
51
3
in peremptory (absolute) language. The use of precatory words that merely advise or suggest
4
the formation of a trust are generally insufficient to create a trust. The express use of the
words “trust” and “trustee” in a trust instrument is generally indicative of the founder’s
5
intention to create a trust, but is not necessarily decisive. What is therefore required is for the
trust instrument to convey the founder’s unequivocal intention to create a trust by imposing a
6
binding trust obligation on the trustee or on another. In the case of the inter vivos trust, given
its contractual underpinnings, the intention to create a trust must be shared by the founder
7
and the trustee. When doubt exists regarding the intention to create a trust, that intention
8
must be determined through a proper interpretation of the trust instrument. If the
interpretation of a trust instrument reveals that a serious intention to establish a trust is
absent because the founder, for example, endowed the supposed trustee with a mere
9
discretion to create a trust or to implement its provisions, no trust comes into existence.
A particularly problematic issue regarding the intention to create a trust arises when it
appears that this intention is present but, upon closer inspection, it becomes evident that the
requisite intention is in fact absent or that the true intention is to create something other than
a trust. This issue brings the notion of a sham trust (Afrikaans: skyntrust) to the fore.
4.2.1.1 The sham trust

The inter vivos trust is by its very nature more susceptible to being a sham trust because the
trust founder and the trustee can, as contracting parties, consensually devise between them
an arrangement that appears to be a trust but that is in fact anything but a trust. No trust
comes into existence in such a case but the arrangement between the trust founder and the
10
trustee is often called a sham trust. A sham trust is therefore not a trust at all and the term
“sham trust” is used only to signify that, although the creation of a trust was never intended,
the arrangement devised by the founder or by the founder and the trustee assumes the form
of a trust.
The court set out the following general principles regarding the sham arrangement in
11
Zandberg v Van Zyl:
• the parties to a contract usually express themselves in language that unequivocally
embodies their agreement – they intend the contract to be exactly what it purports to be
and the shape the contract assumes corresponds precisely to the parties’ intention;
• however, sometimes contracting parties conceal a contract’s real character insofar as they
call it by a name or give it a shape intended not to express but to disguise its true nature;
________________________
3 In re Estate Grayson 1937 AD 96 at 99; Ex parte Executors Estate Kemp 1940 WLD 26 at 32; Deedat v The
Master 1995 (2) SA 377 (A) 383I.
4 Ex parte Bruton 1970 (4) SA 154 (E); Cronjé and Roos Law of Succession 385.
5 Jarvis v Hawken 1959 (2) SA 594 (FC) 598H–599G; De Waal and Schoeman-Malan Law of Succession 171.
6 In re Estate Grayson 1937 AD 96 at 100; Jarvis v Hawken 1959 (2) SA 594 (FC) 598H–599G;
Administrators, Estate Richards v Nichol 1996 (4) SA 253 (C) 258G; De Waal and Schoeman-Malan Law of
Succession 171. See 4.2.2 regarding the nature of the trust obligation.
7 De Waal 2012 Rabel J 1078 at 1084; Van der Linde 2012 THRHR 371 at 384.
8 Dempers v The Master 1977 (4) SA 44 (SWA) 58C.
9 Pritchard’s Trustee v Estate Pritchard 1912 CPD 87 at 96; Villet’s Estate v Villet’s Estate 1939 CPD 152 at
156; Harter v Epstein 1953 (1) SA 287 (A) 293C–D.
10 Van Zyl v Kaye 2014 (4) SA 452 (WCC) paras 18–20; De Waal 2012 Rabel J 1078 at 1084.
11 1910 AD 302 at 309.
52
• when a court is asked to adjudicate on any rights under a contract, it can only do so by
giving effect to what the transaction really is and not according to the shape it purports to
be;
• the maxim plus valet quod agitur quam quod simulate concipitur applies in such a case to
denote that what the parties actually did (or intended) is more important than what the
12
parties seem to have done (or intended); and
• a court must examine the facts of each case in which the allegation of a simulated contract
is made to determine whether a real and definitely ascertainable intention exists that
differs from the simulated intention devised by the contracting parties.
De Waal explains that, following the exposition in the Zandberg case, the question whether a
particular trust is a sham must be answered by determining whether a trust founder intended
13
a trust to be exactly what it purports to be. If this inquiry yields a negative outcome, it is
likely that the trust in question is indeed a sham.
At least two permutations of the sham trust exist. Firstly, it is possible that the founder did
not intend to create a trust but instead intended to create some other legal institution such as
agency, a modus (a disposition burdened with an obligation), a fideicommissum or a
14
partnership. In Khabola v Ralitabo a trust was ostensibly created in terms of a trust deed that
described the applicant as the donor (founder) and the other parties to the arrangement as the
co-trustees. The applicant conducted farming activities on the supposed trust property and the
co-trustees were required to contribute financially to this venture. No trust beneficiaries were
appointed under this ostensible trust. The court reasoned that the parties seemed to have
intended the creation of a partnership or some other association rather than a trust, but that
15
they simulated their arrangement to appear like a trust. The second permutation of a sham
trust is where the founder never intended to create any particular legal institution but only
used the name and/or form of a trust to gain some or other advantage that the law does not
otherwise bestow. It is especially in this instance that the “trust” in question is properly called
a sham because no trust was ever intended and no trust ever came into existence.
A court adjudicating on an allegation that a trust is a sham must therefore determine
whether all the creation requirements – and the intention requirement in particular – were
met (in which case a trust was validly created) or whether the founder or the founder and
trustee merely devised the appearance that these requirements were met (in which case no
trust was created and the resultant arrangement constitutes a sham trust). Binns-Ward J
16
therefore stated in Van Zyl v Kaye:
“Holding that a trust is a sham is essentially a finding of fact. Inherent in any determination that a
trust is a sham must be a finding that the requirements for the establishment of a trust were not
17
met, or that the appearance of having met them was in reality a dissimulation.”
________________________
12 See also BC Plant Hire CC t/a BC Carriers v Grenco (SA) (Pty) Ltd 2004 (4) SA 550 (C) par 33.
13 De Waal 2012 Rabel J 1078 at 1084–1085.
14 [2011] ZAFSHC 62 (24 March 2011).
15 At par 4. See Vorster and Coetzee 2015 PELJ 1797 for criticism of this conclusion.
16 2014 (4) SA 452 (WCC).
17 At par 19.
53
What are the consequences of a trust being a sham? As pointed out above, a sham trust is
18
in reality a non-existent trust. The purported trust founder thus remains the owner of
the so-called trust assets. Consequently, neither the supposed trustee nor the supposed
19 20
trust beneficiaries acquire any rights with regard to these assets. In Van Zyl v Kaye the
applicants, the provisional trustees of the insolvent’s (Kaye’s) estate, applied for legal
21
standing to have a particular transaction set aside as a voidable disposition. The
transaction concerned the mortgaging of immovable property registered in the name of a
trust created by the insolvent. Binns-Ward J correctly contextualised the applicants’
request as follows:
“In order to achieve that end the . . . property must fall to be regarded as an asset not of the Trust,
but of Kaye’s personal estate in insolvency. The only ways in which that object can be achieved are
by showing that the Trust should be treated as a sham, in other words, declared to be non-existent,
or by showing that as a matter of fact the property did not vest in the Trust. If the Trust were a
sham, the original trustees would be seen as having acquired the . . . property as agents of Kaye,
22
and it would thus have been acquired for him as their principal.”
4.2.1.2 The alter ego trust

For the sake of completeness, it is necessary to distinguish a sham trust from an alter ego
trust. This is because the terms “sham trust” and “alter ego trust” are frequently, though
23
incorrectly, used synonymously as if they denote one and the same thing. The Supreme
24
Court of Appeal noted in Nieuwoudt v Vrystaat Mielies (Edms) Bpk the emergence of a “newer
25
type of trust” where a trust is created “while everything else remains as before”. The same
26
court elaborated on this statement in Land and Agricultural Bank of South Africa v Parker
27
when Cameron JA said that the core idea of the trust is debased in this “newer type of trust”
because the trust is employed not to separate the beneficiaries’ enjoyment from the trustee’s
control, but instead to permit everything to remain “as before”. This occurs typically under a
family trust because a family trust’s trustees and beneficiaries are, as family members,
usually the same individuals: a family trust’s beneficiaries therefore effectively control the
28
trust because they are also among the trust’s trustees. The trust is thus nothing other than
these trustees-beneficiaries’ alter ego because they invariably treat the trust property as if it is
their own property and as if the trust does not exist – everything therefore remains as it was
before the trust was created. This “newer type of trust” is open to abuse by those who are
both trustees and beneficiaries because the trustees can ignore the trust instrument’s
prescripts and commit breaches of trust whilst knowing that the beneficiaries will not hold
29
them accountable or liable (because the trustees themselves are also the trust beneficiaries).
________________________
18 Van Zyl v Kaye 2014 (4) SA 452 (WCC) par 16.

19 De Waal 2012 Rabel J 1078 at 1097.
20 2014 (4) SA 452 (WCC).
21 A voidable disposition in terms of the Insolvency Act is generally one that was made by an insolvent,
either before or after the sequestration of his or her estate, that a court may set aside in the interests of
the insolvent’s creditors.
22 At par 15.
24 2004 (3) SA 486 (SCA).
25 At par 17.
26 2005 (2) SA 77 (SCA).
27 See 1.2.1.
28 See the example of a typical family trust discussed under 1.4.7.
29 At par 26. See 7.6 regarding the abuse of the trust.
54
This “newer type of trust” under which there is no functional separation between the
trustee’s control and the trust beneficiaries’ enjoyment is often referred to as an “alter ego
30
trust”. An alter ego trust thus differs markedly from a sham trust because the former is a
trust that was validly created and exists as a trust but is open to abuse by its trustees-
beneficiaries, whereas the latter was never validly created as a trust and does not exist as
31
such. Moreover, the fact that an alter ego trust is abused through a debasement of the trust’s
core idea does not convert it into a sham trust and does not vest that trust’s assets in the
32
abusive trustee’s private estate. The legal consequences of an alter ego trust are thus vastly
different from the consequences of a sham trust.
4.2.2 The eexpre

xpression
xpression of the intention in a mode suited to create an
obligation
The intention to create a trust must be expressed in a mode appropriate to create a legal
obligation. The recognised trust instruments constitute the requisite modes in this regard –
the intention to create a trust must therefore be contained in a written agreement (the inter
33
vivos trust), a will (the testamentary trust) or a court order. Other sources of trusts such as
34
statutes also constitute modes suited to create an obligation.
The legal obligation that must be imposed by means of the particular trust instrument
depends, as far as its content is concerned, on the situation at hand. If the trust property has
already been transferred to, or otherwise placed under the control of a duly appointed trustee,
the obligation is one that is imposed on that trustee to administer the trust property in
accordance with the trust instrument’s prescripts to attain the trust object. If a trustee has not
yet been appointed, has not yet assumed office, or has not yet been vested with either the
ownership in the trust property or control of that property, the obligation is one that is
imposed on the founder or on another (such as the executor of the founder’s deceased estate)
to enable the trustee to administer that property subject to the trust, for example, by
35
transferring the property to the trustee.
The foregoing does not necessitate the presence of a duly appointed trustee who has
accepted such an appointment in order to create a valid trust – the existence of the
aforementioned binding obligation is sufficient. For this reason, a trust is validly created even
if there is no trustee in office and, as pointed out earlier, a trust will thus not fail for want of a
36
trustee. Moreover, where a trust instrument determines that a specified minimum number
of trustees must at all times occupy the trustee office and the number of trustees in office falls
below this minimum, or the trustee office becomes completely vacant, the trust obligation
37
does not fall away and the trust consequently continues to exist.
The necessity of the trust instrument imposing a trust obligation holds an important
implication for the creation of an inter vivos trust by way of the conclusion of a trust contract
________________________
30 Nedbank Ltd v Thorpe [2008] ZAKZHC 72 (26 September 2008) par 27; Van Zyl v Kaye 2014 (4) SA 452
(WCC) paras 15 and 29; De Waal 2012 Rabel J 1078 at 1079.
31 Van Zyl v Kaye 2014 (4) SA 452 (WCC) par 21; De Waal 2012 Rabel J 1078 at 1094.
33 See 1.7 regarding trust instruments.
34 See 1.7.
35 Administrators, Estate Richards v Nichol 1996 (4) SA 253 (C) 258I; Commissioner, South African Revenue
Service v Dyefin Textiles (Pty) Ltd 2002 (4) SA 606 (N) 611I; Pace and Van der Westhuizen Wills and Trusts
B8.2.
36 See 1.2.6 and 1.5.2.
37 Land and Agricultural Bank of South Africa v Parker 2005 (2) SA 77 (SCA) paras 11 and 12.
55
between the founder and the trustee. Given the inter vivos trust’s contractual underpinnings, it
stands to reason that the appointment of a trustee and that trustee’s acceptance of the
appointment as well as the trust obligation that accompanies it, are necessary for the creation
of an inter vivos trust. The bilateral or multilateral nature of the creation of an inter vivos
38
trust, stemming from this trust’s contractual basis, requires of the founder to make an offer
of trusteeship and the accompanying trustee obligation to the trustee as well as the trustee’s
acceptance of this offer. A trustee is thus an indispensable party to, and hence a requirement
39
for the creation of, a valid inter vivos trust by way of contract.
4.2.3 A definition with reasonable certainty of the trust property

“Trust property” or “property” is defined in section 1 of the Act to mean movable or
immovable property, and includes contingent interests in property which are to be
administered or disposed of by a trustee in accordance with the provisions of a trust
40
instrument. A trust’s property must be identified with reasonable certainty in the trust
instrument or must be identifiable with reasonable certainty in terms of criteria set out in the
41
trust instrument. A failure to identify a trust’s property with the requisite degree of certainty
42
invalidates that trust. A court can however address any uncertainty regarding a trust’s
property by interpreting the trust deed to ascertain what property was intended as the
43
particular trust’s subject-matter.
The foregoing does not imply that a trust must have actual trust property upon its
44
inception. In Deedat v The Master the court opined that the definition of a trust in section 1 is
sufficiently wide to include property that is adequately identified in the trust instrument but
45
that the trustee will only acquire in the future from outside sources. A trust can moreover
become devoid of all trust property at some point in time during its existence. Such a trust is
frequently called a dormant trust, but it continues to exist despite being without trust
46
property. This is because the absence of trust property does not cause the trust obligation to
cease – the obligation remains on the trustee to take control of any property that the trust
may acquire in the future and to administer that property in accordance with the trust
47
instrument’s prescripts to attain the trust object.
4.2.4 A definition with reasonable certainty of the trust object

48
In Peterson v Claassen the court distinguished between a trust’s object (Afrikaans: doel) and a
trust’s purpose (Afrikaans: oogmerk). The court opined that a trust’s object is usually stated
________________________
38 See 4.5.2.
39 Olivier et al Trustreg en Praktyk 2.8.2.2; De Waal 2014 Acta Juridica 219 at 231.
40 See 1.6 regarding the Act’s definition of “trust property” or “property”.
41 Deedat v The Master 1995 (2) SA 377 (A) 384E–F; Administrators, Estate Richards v Nichol 1996 (4) SA 253
(C) 258I–J.
42 Ex parte Executors Estate Kemp 1940 WLD 26 at 32; Dempers v The Master 1977 (4) SA 44 (SWA) 60B.
43 Deedat v The Master 1995 (2) SA 377 (A) 384B. For example, see Ex parte Executors Estate Kemp 1940
WLD 26; Coetzee v Stellenbosch Universiteit 1959 (4) SA 705 (C); Dempers v The Master 1977 (4) SA 44
(SWA).
44 1995 (2) SA 377 (A).
45 At 385C. See also De Waal 2014 Acta Juridica 219 at 229.
46 De Waal 2014 Acta Juridica 219 at 229.
47 Jowell v Bramwell-Jones 1998 (1) SA 836 (W) 853E; Jowell v Bramwell-Jones 2000 (3) SA 274 (SCA) 281B.
48 2006 (5) SA 191 (C).
56
clearly in the trust instrument and all the parties dealing with a trust are regarded as having
49
knowledge of the trust’s object. The objects of most family trusts such as the one at issue in
the Peterson case is usually to acquire trust property and to apply that property for the benefit
50
of the trust beneficiaries. The purpose of a trust is, according to the court in the Peterson
case, that which is sought to be achieved through the use of the trust regardless of its stated
object. It is therefore conceivable that a trust with a lawful object can be used to achieve an
illegal or unlawful purpose. Such a nefarious trust purpose is usually known only to those
51
complicit in pursuing this purpose, in particular, the trust founder and trustee. While the
distinction drawn in the Peterson case between a trust’s object and its purpose appears sound,
the two can, and likely will, more often than not coincide. Be that as it may, if a trust
instrument does not provide an adequate indication of the trust’s intended object, no trust is
created. In such a case the trust instrument purports to restrict the utilisation of the trust
property without indicating the object to be achieved by that restriction. Such and objectless
52
restriction constitutes a nudum praeceptum (a nude or ineffective prohibition) and is invalid.
Trusts are usually created either to benefit one or more persons or classes of persons as
trust beneficiaries or to attain some impersonal, usually charitable, object. The former are
53
generally referred to as private trusts and the latter as charitable trusts. In the former case,
the beneficiaries, whether as individuals or as members of a class, must be identified in the
trust instrument or, if not so identified, must at least be capable of objective determination
through criteria set out in the trust instrument. Should the persons or classes of persons
intended as beneficiaries not be adequately determined or determinable, the trust will fail for
54
want of a certain object.
A founder who creates a trust for the benefit of trust beneficiaries need not however
appoint those beneficiaries him- or herself: a discretionary power can instead be bestowed on
the trustee to appoint the actual trust beneficiaries, usually from a group of potential
55
beneficiaries designated by the founder. An omission on the part of the founder of such a
56
discretionary trust to specify adequately the group of potential beneficiaries from which the
trustee must appoint the actual beneficiaries can result in the trust’s failure for want of a
certain object and, if it is a testamentary trust, may also constitute an improper delegation of
57
the founder’s testamentary power.
If the founder intends a trust to attain an impersonal object, often charitable in nature, the
trust instrument must stipulate that object with sufficient certainty. However, South African
courts usually construe charitable trusts benevolently. If the charitable intent of the trust
founder is beyond doubt, a court will therefore maintain the trust despite a failure to define its
58
object with the precision otherwise required.
________________________
49 At par 16.
50 Ibid.
51 At par 17.
52 Ex parte Bruton 1970 (4) SA 154 (E) 158A–E; Vorster v Steyn 1981 (2) SA 831 (O) 832G–833A; De Waal
and Schoeman-Malan Law of Succession 172.
53 See 1.4.9 and 1.4.10 regarding this terminology.
54 De Waal and Schoeman-Malan Law of Succession 172.
55 Braun v Blann and Botha 1984 (2) SA 850 (A) 867A.
56 See 1.4.6 regarding this terminology.
57 De Waal and Schoeman-Malan Law of Succession 49. See 8.2 regarding powers of appointment and the
delegation of testamentary power.
58 De Waal and Schoeman-Malan Law of Succession 172 and 185. See 9.7 regarding the charitable trust.
57
4.2.5 Lawfulness of the trust object

59
The object of a trust must be lawful. A trust object is unlawful if it is illegal or contrary to
60 61
public policy. In Peterson v Claassen the distinction between a trust’s object and its
62
purpose informed the court’s finding that a trust with a lawful object may be used for an
63
illegal or unlawful purpose. The court in the Peterson case ruled that a trust is not invalid
64
merely because it was created to achieve a fraudulent, illegal or immoral purpose. Instead,
any contract that the trustee of such a trust purported to conclude after the trust’s creation
65
may be void or voidable in accordance with ordinary contractual principles. The
circumstances surrounding the conclusion of such a contract are determinative to a court’s
66
adjudication on this matter. The court in the Peterson case nevertheless alluded to the
possibility that a trust’s object and purpose can overlap, in which case a fraudulent, illegal or
67
immoral purpose can conceivably negate the trust’s validity.
While the identification of a trust’s object as illegal (contrary to the law) generally presents
little difficulty, it is often more problematic to determine whether a particular trust object
contravenes public policy. This is because a trust object considered in conflict with public
policy in the past need not necessarily be similarly regarded at present; conversely, policy
considerations may require a trust object previously regarded as completely lawful to be
68
considered at odds with contemporary public policy. Each case must ultimately be judged in
the light of its particular facts and circumstances as measured against prevailing policy
69
imperatives.
Contemporary South African public policy is rooted in the South African Constitution. The
Constitution and its Bill of Rights, in particular, therefore establish an objective normative
70
value system by means of which policy considerations are channelled into the law of trusts.
The analysis of the impact of public policy and constitutionalism on trusts in Chapter 3
therefore bears directly on the present discussion. The analyses of the judgments on point in
Chapter 3 suggest that trust provisions that occasion unfair discrimination do not necessarily
render the object of the trusts in issue unlawful. No South African court has to date invalidated
a trust in its entirety because that trust’s instrument contained provisions that occasioned
unfair discrimination. Instead, the courts have in a number of cases invalidated the particular
________________________
59 Dempers v The Master 1977 (4) SA 44 (SWA) 58B; Administrators, Estate Richards v Nichol 1996 (4) SA 253
(C) 259A; Peterson v Claassen 2006 (5) SA 191 (C) paras 14 and 16.
61 2006 (5) SA 191 (C).
62 See 4.2.4.
63 At par 16. In the Peterson case several trusts were alleged to have formed part of a scheme to place assets
beyond the reach of creditors; in Dunlop Tyres (Pty) Ltd v Brewitt [1999] 2 All SA 328 (W) a trust was
found to have been set up as a ruse to protect a business from its creditors’ claims; in Jordaan v Jordaan
2001 (3) SA 288 (C) a trust was part of a fraudulent scheme to prejudice the plaintiff (the founder’s spouse
who instituted divorce proceedings against him). See further Van der Linde and Venter 2002 De Jure 355.
65 A contract is void if it is invalid from the outset. A contract is voidable if it is valid upon conclusion but
can be annulled or otherwise set aside by a court.
66 At par 22.
67 At par 17 where the court said that a trust’s illegal or immoral purpose cannot in all circumstances be
equated with its object, suggesting that an overlap between purpose and object may occur in some
instances.
68 See also 3.3.1 and 3.3.2.
58
provisions that occasioned the unfair discrimination and ordered the excision of those
provisions from the trust instrument at hand. However, the possibility that the object of the
trust in question might have been unlawful by reason of the unfairly discriminatory provisions
contained in the trust instrument was not raised in any of these cases. It therefore remains to
be seen whether a South African court will invalidate a trust in its entirety as having an
unlawful object by reason of unfairly discriminatory provisions contained in its trust
instrument if such an argument is presented to a court in the future.
4.3 The requirements

requirements for trust administration to commence
Once the foregoing requirements have been met and a trust has been created, at least two
further requirements must be satisfied in order for trust administration to commence,
namely, the presence of a duly appointed trustee who has accepted the appointment as such,
and the transfer of the trust property to the trustee or the trust beneficiary.
4.3.1 A trustee
The presence of a duly appointed trustee who has accepted the trustee appointment is, except
71
with regard to the inter vivos trust, not essential to the creation of a valid trust – the
existence of a binding trust obligation is sufficient. The trustee is however the pivotal
functionary as far as administering the trust property is concerned and trust administration
can therefore commence only once a trustee is in office. A trustee accedes to the trustee
72
office by having been appointed as trustee and having accepted that appointment. If the
trustee office is vacant or cannot be filled upon a trust’s creation, the Master and the High
Court are empowered to appoint a trustee in order to ensure the commencement of trust
73
administration.
A trustee’s failure to comply with the statutory duties and procedures that accompany his
74
or her appointment as trustee will not prevent the commencement of trust administration.
75
Therefore, a trustee furnishing the Master with security; receiving written authorisation from
76 77
the Master; lodging the trust instrument with the Master; and notifying the Master of his or
78
her address are not required for trust administration to commence. However, although non-
compliance with these duties does not prevent the commencement of trust administration, it
renders continued trust administration extremely difficult. A trustee cannot, for example,
contract or litigate on behalf of a trust unless the Master has authorised him or her to act as
79
trustee. It is therefore important that a trustee complies with the duties that accompany his
or her appointment as such in order to facilitate the commencement of trust administration.
________________________
71 See 4.2.2.
72 See 6.3 and 6.4.
73 See 6.3.1.4 regarding the Master’s power to appoint a trustee and 6.3.1.5 regarding the High Court’s
corresponding power.
74 Cameron et al Law of Trusts 176–177.
75 See 6.6 regarding a trustee’s duty to furnish security.
76 See 6.5 regarding a trustee’s authorisation.
77 See 5.3 regarding lodgement of the trust instrument.
78 See 7.3.1.2 regarding notification of address.
79 See 6.5.3 regarding acts performed by an unauthorised trustee.
59
4.3.2 The transfer o

off trust property to a trustee or trust beneficiary
A trustee, in order to commence administering trust property, must either be vested with the
80
ownership of that property or acquire control of such property. Ownership in the trust
property must therefore be transferred to the trustee of an ownership trust whereas the
property must vest in the trust beneficiaries, but be placed under the trustee’s administrative
control in the case of a bewind trust for the administration of these two types of trusts to
81
commence.
4.4 The moment at which a trust comes into being

A testamentary trust exists from the moment that the deceased estate “falls open” (also
known as the moment of delatio) which, unless it is postponed in some way, occurs on the
82
trust founder’s (testator’s) death. This is also the earliest moment for testamentary trust
83
beneficiaries to acquire their rights to trust benefits. These propositions follow logically from
84
the general rule that a will takes effect on a testator’s death.

An inter vivos trust exists from the moment the trust contract is concluded between the
85
founder and trustee. The moment of an inter vivos trust’s creation is, unlike its testamentary
counterpart, not necessarily the moment when the trust beneficiaries acquire their rights to
trust benefits. This is because inter vivos trust beneficiaries are vested with their rights to trust
86
benefits only when they accept the benefits stipulated in their favour.
Does the fact that the law associates an inter vivos trust contract with a stipulatio alteri, with
the founder and trustee as the parties to this contract, limit the creation of inter vivos trusts
only to trust contracts concluded between trust founders and trustees? Some commentators
think not. Abrie et al opine that an inter vivos trust can also be created through the conclusion
of a trust contract between the founder and the trust beneficiaries in terms of which the
founder is obliged to transfer the trust property to another (whether to the trustee or the trust
beneficiaries), to be administered by the trustee for the benefit of the beneficiaries. This
method of inter vivos trust creation ensures that the trust beneficiaries obtain their rights to
trust benefits upon the trust contract’s conclusion and that, from that moment onward, the
87
trust provisions cannot be varied without the beneficiaries’ consent. Although the creation of
an inter vivos trust in the manner suggested by Abrie et al appears possible, the vast majority
of inter vivos trusts are created with the founder and trustee as the founding contracting
parties.
________________________
80 Olivier et al Trustreg en Praktyk 3.4.2.1.2.

81 De Waal 2014 Acta Juridica 219 at 229. See 1.4.1 and 1.4.2 regarding the distinction between the
ownership trust and the bewind trust.
82 Olivier et al Trustreg en Praktyk 2.5.1; De Waal 2014 Acta Juridica 219 at 229.
83 See 8.4.2 regarding a trust beneficiary’s right to trust benefits.
85 Olivier et al Trustreg en Praktyk 2.5.2; De Waal 2014 Acta Juridica 219 at 229.
86 See 8.3.2 regarding the vesting of rights under an inter vivos trust.
87 Estate and Financial Planning 87.
60
4.5 Is the creation of a trust a unilateral or multilateral act?

A will is a unilateral and voluntary expression of a testator’s wishes, executed in accordance
with prescribed formalities, that determines how the testator’s property must be dealt with
88
after his or her death. It therefore follows that the creation of a testamentary trust, being a
mode of testamentary disposition, is the result of the unilateral act of will-making performed
89
by the trust founder as testator.

The contractual foundation of an inter vivos trust renders its act of creation, at least
theoretically, bilateral in nature where a single trust founder contracts with a single trustee or
multilateral in nature where a single trust founder contracts with multiple trustees; where
multiple trust founders contract with a single trustee; or where multiple trust founders
90
contract with multiple trustees. Olivier et al argue however that the terms of an inter vivos
trust are often determined unilaterally by the founder insofar as he or she not only decides to
create the trust but also determines what property is to be held in trust, who the beneficiaries
are, what rights the beneficiaries will acquire under the trust and what powers the trustees
will have to administer the trust property. The trustee’s role is therefore limited to accepting
his or her appointment as such, followed by receiving the trust property for the purpose of
administering it in accordance with the trust instrument’s prescripts. An inter vivos trust deed
is thus not necessarily the product of negotiations and consensus between the founder and
trustee. This is because the founder does not make an offer to the trustee to agree to the
terms of the trust but rather requests the trustee to assume the trustee office and to carry out
91
the trust’s terms as predetermined by the founder. Conversely, the trustee sometimes
determines the terms of an inter vivos trust unilaterally. For example, professional trustees
such as banking institutions and trust companies draft their own trust deeds and determine
92
unilaterally the terms of the trusts that they administer for their clients. In this scenario there
is also no negotiated consensus between the client (as trust founder) and the trustee to speak
of. Despite this state of affairs in practice, the positive law dictates that an inter vivos trust is
created through the conclusion of the trust contract between the founder(s) and trustee(s) thus
rendering the formation of that trust a bilateral or multilateral act.
________________________

90 Ibid.
91 Trustreg en Praktyk 2.6. See also Crookes v Watson 1956 (1) SA 277 (A) 305A–B.
61
Can a trust founder create an inter vivos trust during his or her lifetime through a
unilateral declaration of trust, for example, by simply stating or documenting: “I hereby
create the ABC trust”?
Pace and Van der Westhuizen submit that in light of the bilateral or multilateral nature of
an inter vivos trust’s creation, a unilateral declaration of trust is legally invalid in terms of
93 94
South African law. Their view is supported by Crookes v Watson where Van den Heever
JA said: “I can think of no principle of our law according to which the individual can
during his lifetime unilaterally sequester a portion of his estate and dedicate it to certain
95
ends”.
The bilateral or multilateral nature of an inter vivos trust’s creation also supports Geach’s
view that an inter vivos trust founder is precluded from being such a trust’s sole initial
trustee. This is because a person cannot contract with him- or herself: A cannot, as trust
96
founder, conclude a contract with him- or herself as trustee to create an inter vivos trust.
97
However, in Groeschke v Trustee, Groeschke Family Trust an inter vivos trust deed
98
determined that the trust founder was the trust’s “sole and initial trustee”. Such an
identity of roles is, in light of Geach’s standpoint, inimical to a trust’s creation but neither
the applicant nor the court addressed this matter in the Groeschke case.
________________________
93 Wills and Trusts B7.1.

94 1956 (1) SA 277 (A).
95 At 298B–C.
97 2013 (3) SA 254 (GSJ).
98 At par 1.
62
5
The Trust Instrument
Instrument
5.1 Introduction
This chapter analyses important aspects regarding the trust instrument. Firstly it deals with
the constitutive status accorded a trust instrument. A trust instrument’s constitutive nature
does not however mean that it is cast in stone and that its provisions cannot be varied. South
African law indeed permits the variation of trust provisions in appropriate circumstances. The
High Court can vary the provisions of both testamentary and inter vivos trusts in certain
instances. This judicial variation of trust provisions can occur in terms of either the common
law or statutory law. The common law also permits the parties to testamentary and inter vivos
trusts to vary the provisions of trusts in certain circumstances. This chapter deals with all
these variation possibilities. The chapter concludes with a brief consideration of a trust’s
termination in accordance with the prescripts of its trust instrument.
It bears repeating that section 1 of the Act defines a trust instrument for the purpose of the
Act to mean a written agreement, a testamentary writing, or a court order according to which
1
a trust was created. Section 2 of the Act stipulates that if a document represents the reduc-
tion to writing of an oral agreement by which a trust was created or varied, such a document
2
shall be deemed a trust instrument for the purpose of the Act.
5.2 The constitutive nature of the trust instrument

Courts regularly, and quite rightly, emphasise the trust instrument’s constitutive nature. For
3
example, in Land and Agricultural Bank of South Africa v Parker the South African Supreme
4
Court of Appeal called a trust instrument “the trust’s constitutive charter” and in Egerer v
5
Executrust (Pty) Ltd the Namibian Supreme Court concurred when it referred to a trust in-
strument as the trust’s “constitution” that sets out the framework within which the trust
6
operates. Commentators echo these judicial depictions of the trust instrument. For example,
7
Du Toit draws attention to a trust instrument’s “foundational nature” whilst Pace and Van der
8
Westhuizen refer to a trust as a “creature of document”. The trust instrument is therefore the
9
defining source of the prescripts regarding the administration of a particular trust. This
________________________
1 See 1.7.
2 See 1.7.1. See also Groeschke v Trustee, Groeschke Family Trust 2013 (3) SA 254 (GSJ) par 15.
3 2005 (2) SA 77 (SCA).
4 At par 10.
5 [2018] NASC 5 (6 February 2018).
6 At par 31.
7 2013 Trusts and Trustees 39.
8 Wills and Trusts B10.
9 Hanekom v Voight 2016 (1) SA 416 (WCC) par 13.
63
constitutive nature of the trust instrument demands that its directives must be respected and
10
followed meticulously.
The Act also acknowledges a trust instrument’s constitutive nature. It is instructive that this
Act comprises only 27 sections, yet no less than 13 of these sections pertain to trust instru-
ments or other documents pertinent to trusts. The Act thus ensures that trust instruments and
other documents relevant to trusts are assimilated into the government’s legal-administrative
machinery. The Act ensures moreover that a constructive record of the administration of a
particular trust is maintained and it facilitates a measure of public access to this record. The
Act therefore evinces clearly the South African legislature’s estimation of trust instruments as
foundational documents through the Act’s regulation of matters pertaining to the administra-
tion of justice.
5.3 The lodgement of trust instruments

instruments and access to trust
documents
Trust instruments’ constitutive nature renders these instruments highly relevant in the con-
11
text of the public control exercised over trusts. It is especially important that the Master is
able to access a particular trust’s instrument and section 4(1) of the Act therefore instructs a
trustee, before he or she assumes control of the trust property and upon payment of a pre-
scribed fee, to lodge (Afrikaans: indien) with the Master the trust instrument in terms of which
the particular trust’s property is to be administered or disposed of by him or her, or a copy
thereof certified as a true copy by a notary or another person approved by the Master. The
subsection however relieves a trustee of the duty to lodge a trust instrument if the Master is
already in possession thereof by virtue of its earlier lodgement by someone else. Section 4(2)
of the Act demands that where a trust instrument that was previously lodged with the Master
is varied, the trustee must lodge with the Master the variation or a copy thereof certified as a
true copy by a notary or another person approved by the Master.
Section 4 of the Act is cast in peremptory terms and the section therefore imposes a statu-
tory duty on a trustee regarding the lodgement of a trust instrument or its variation. However,
a trustee’s non-compliance with these directives does not negate either the validity of a trust
12
or the validity of a variation of the trust instrument. Section 4(2) does not stipulate a time-
frame for the lodgement of a variation of a trust instrument and the validity of such a varia-
13
tion is consequently not negatively affected by any delay in lodgement. When an inter vivos
trust instrument is lodged with the Master, that particular Master’s office allocates a reference
number to it. For example, reference number IT 50/2019 indicates that the particular trust
instrument is the fiftieth inter vivos trust deed lodged in that office during the year 2019. The
reference number pertaining to the same example in the case of a testamentary trust is
MT 50/2019.
Lodgement of a trust instrument with the Master enables the Master to fulfil the statutory
duty in terms of section 18 of the Act regarding the release of copies of documents to inter-
ested parties. Section 18 provides:
“Subject to the provisions of section 5(2) of the Administration of Estates Act, 1965 (Act 66 of
1965), regarding the documents in connection with the estate of a deceased person, the Master
________________________
10 Pascoal v Wurdeman 2012 (3) SA 422 (GSJ) par 21.

11 See 7.2 regarding public supervision and control of trustees and trust administration.
12 Groeschke v Trustee, Groeschke Family Trust 2013 (3) SA 254 (GSJ) par 19.
13 Ibid par 25.
64
shall upon written request and payment of the prescribed fee furnish a certified copy of any docu-
ment under his control relating to trust property to a trustee, his surety or his representative or any
other person who in the opinion of the Master has sufficient interest in such document.”
Section 18 of the Act imposes a duty on the Master to release copies of trust documents
to a trustee, his or her surety, or his or her representative. The section furthermore en-
dows the Master with a discretion to release copies of trust documents to any other per-
son with a sufficient interest in those documents. Which other persons will have a
sufficient interest for the purpose of section 18? The Act does not provide an answer to
this question. However, actual and potential trust beneficiaries as well as trust creditors
14 15
immediately come to mind. In Jowell v Bramwell-Jones the court reasoned that the pro-
fessional adviser to a trustee, whether an accountant, a stockbroker or a lawyer, has a
16
right of access to the relevant trust instrument. Geach suggests furthermore that an out-
sider who genuinely intends entering into a contract with a trust also qualifies as an in-
17
terested party.
It is evident that the Master’s discretion under section 18 enables him or her to refuse
access to trust documents if the Master deems a particular person not to have the requi-
18
site interest in the relevant documents. However, Pace and Van der Westhuizen draw
19
attention to the Chief Master’s Directive that proposes a procedure to be followed by all
20
Master’s offices regarding applications in terms of section 18. This procedure aims to
give effect to the Promotion of Access to Information Act and the Promotion of Adminis-
trative Justice Act. The essence of the Chief Master’s Directive is that where any person,
other than a trustee, his or her surety, or his or her representative brings such an applica-
tion, the Master must exercise the discretion afforded by section 18 by weighing up the
interests of the parties involved when he or she determines whether or not the requested
information should be provided. The Master must moreover consult with the trustee and,
in the case of an inter vivos trust, also with the trust founder. If the Master refuses the
application for access to trust documents, he or she must refer the unsuccessful applicant
to the Information Officer of the Department of Justice and Constitutional Development.
The Master’s refusal of such an application for access to trust documents is in any event
21
challengeable in terms of section 23 of the Act.
As mentioned above, section 4(1) of the Act relieves a trustee of the duty to lodge a trust
instrument if the Master is already in possession thereof by virtue of its earlier lodgement by
someone else. The trust instrument of a testamentary trust, being the will of its founder, is
subject to the usual rules regarding the lodgement of wills with the Master. Section 8 of the
Administration of Estates Act stipulates in this regard that all documents purporting to be wills
must be delivered or transmitted to the Master, who must then register such documents.
Section 5(2) of the Administration of Estates Act allows any person to inspect and copy any
________________________

15 1998 (1) SA 836 (W).
16 At 881J–882A.
19 Chief Master’s Directive 2 of 2009.
20 Wills and Trusts B15.1.3.
21 Fesi v Trustees Elect of the Ndabeni Communal Property Trust [2018] 2 All SA 617 (SCA) par 54. See 7.2.1.4
regarding judicial review of the Master’s actions.
65
will, written instrument, death notice, inventory and account so lodged with the Master.
Testamentary trust instruments are thus open to public inspection by virtue of section 5(2) of
the Administration of Estates Act and section 18 of the Trust Property Control Act is hence
made subject to this subsection of the Administration of Estates Act. However, inter vivos trust
instruments fall outside the ambit of the aforementioned provisions of the Administration of
Estates Act because they are not pertinent to the administration of deceased estates. Inter
vivos trust instruments are thus not open to public inspection in terms of the Administration
of Estates Act. Section 18 of the Act addresses this discrepancy by allowing the parties men-
tioned in this section to obtain a certified copy of any document relating to trust property
22
lodged with the Master.
The efficacy of section 18’s goal of making trust documents available to the public has nev-
ertheless elicited mixed judicial opinion. Some courts view the content of inter vivos trust
deeds as public knowledge (apparently by reason of the section 18 process, although they do
23
not always expressly state as much). On the other hand, in Nieuwoudt v Vrystaat Mielies
24
(Edms) Bpk the Supreme Court of Appeal identified several practical hindrances to the pub-
lic’s access to trust documents, one of them being the fact that South Africa does not have a
central register for trusts or trustees. The court pointed out that a person who wants to obtain
a particular trust instrument will first have to determine precisely in which Master’s office that
instrument was lodged. If successful, such a person will then have to apply to the Master for
permission to obtain a copy of that trust instrument, which the Master, in the exercise of the
25
discretion under section 18, may refuse. This state of affairs led Harms JA in the Nieuwoudt
case to question whether the law can truly attribute knowledge of the contents of trust deeds
26
to the public.
27
An important development in this regard is the Chief Master’s Directive which states that
28
from 15 September 2014 every letter of authority issued to the trustee of an inter vivos trust
must contain a suffix that is added to the abovementioned trust reference number that
29
identifies the location of the relevant Master’s office from which it is issued. For example,
the hundredth inter vivos trust deed registered in Cape Town during 2019 would be indicated
as IT 100/2019 (C) or in Kimberley as IT 100/2019 (K). While this development goes some
way toward outsiders overcoming the obstacles highlighted in the Vrystaat Mielies case when
they seek access to trust instruments, two stumbling blocks remain: the location identifier
requirement was not imposed retrospectively and it moreover assists only those third parties
who deal with trusts after the abovementioned date and who are in possession of the trust’s
appropriately suffixed reference number.
________________________
22 Law Commission Report: Review of the Law of Trusts par 4.2.

23 MAN Truck & Bus (SA) Ltd v Victor 2001 (2) SA 562 (NC) 569G; Vrystaat Mielies (Edms) Bpk v Nieuwoudt
2003 (2) SA 262 (O) 266E and 267C; Peterson v Claassen 2006 (5) SA 191 (C) 197C–D.
24 2004 (3) SA 486 (SCA).
25 At par 18.
26 At par 19.
28 See 6.5.1 regarding the Master’s letter of authority.
66
5.4 The variation of trust provisions

5.4.1 The judicial
judicial variation of trust provisions in terms of the common
law
A testamentary trust is created in terms of the will of its founder and an inter vivos trust by
30
the trust contract concluded between its founder and trustee. The fundamentality of free-
dom of testation and freedom of contract, coupled with a strict judicial adherence to the
31
maxims voluntas testatoris servanda est and pacta sunt servanda dictate that South African
32
courts possess no general jurisdiction to vary the terms of wills and contracts and this non-
variation rule applies equally to the provisions of testamentary and inter vivos trusts. The
common law nevertheless permits a court to authorise a departure from the terms of both a
will and a contract in exceptional circumstances, and hence also to vary the provisions of a
testamentary and an inter vivos trust instrument in these circumstances. Three instances
deserve mention with regard to trusts.
5.4.1.1 The variation

variation of trust provisions ob causam necessariam
A court can authorise the variation of or deviation from the provisions of a will ob causam
33
necessariam, in other words to address a dire necessity. Dire necessity may be present when
34
a testator’s minor children are in need of maintenance, when expenses arise regarding the
35
maintenance and preservation of bequeathed property, or when legal costs have been
36
incurred relating to bequeathed property. A frequently-encountered instance of dire necessi-
ty in regard to trusts, and in respect of testamentary trusts, in particular, relates to the frustra-
tion of a trust’s purpose. The test applied by our courts to determine whether they can vary a
trust’s provisions in order to negate the frustration of that trust’s purpose involves a determi-
nation of the following issues:
• whether a change of circumstances occurred since the execution of the will;
• whether this change of circumstances was unforeseen and not contemplated by the trust
founder; and
• whether the unforeseen change of circumstances renders compliance with the founder’s
37
directives practically impossible or utterly unreasonable.
The parties to an inter vivos trust can of course readily respond to any unforeseen change of
circumstances that arises during the trust’s existence and they can vary the trust provisions
accordingly by means of the variation possibilities afforded these parties in terms of the
38
common law. However, the founder of a testamentary trust is already deceased when
unforeseen circumstances arise that frustrate the trust’s purpose. The parties negatively
affected by the frustration of the trust’s purpose are often left with no other option but to turn
________________________
30 See 1.4.3, 1.4.4 and 4.2.2.

31 See 3.2 regarding these maxims.
32 See Ex parte Jewish Colonial Trust Ltd: In re Estate Nathan 1967 (4) SA 397 (N) 409C–D regarding wills and
South African Forestry Co Ltd v York Timbers Ltd 2005 (3) SA 323 (SCA) par 30 regarding contracts.
33 Ex parte Jewish Colonial Trust Ltd: In re Estate Nathan 1967 (4) SA 397 (N) 411A.
34 Ex parte Strauss 1949 (3) SA 929 (O) 946; Ex parte Hutchinson 1952 (2) SA 219 (O) 222F.
35 Ex parte Strauss 1949 (3) SA 929 (O) 946.
36 Ex parte Isted 1948 (2) SA 71 (C) 84.
37 Ex parte Sidelsky 1983 (4) SA 598 (C) 601F; Administrators, Estate Richards v Nichol 1996 (4) SA 253 (C)
261D; Harper v Crawford 2018 (1) SA 589 (WCC) par 34. See also the subsequent confirmation in Harvey v
Crawford [2018] ZASCA 147 (17 October 2018).
38 See 5.4.2.2 regarding the variation of inter vivos trust provisions by the parties to the trust.
67
to the court to apply for the judicial variation of the trust’s provisions ob causam necessariam.
A court that sanctions a departure from the provisions of a testamentary trust in a case of dire
necessity, does not change the founder’s will arbitrarily, but rather strives to give effect to the
founder’s intention by taking into consideration special and often unexpected circumstances
that arose after the will’s execution and the founder’s death. In so doing, the court seeks to
39
preserve and not to undermine the founder’s freedom of testation.
40
Administrators, Estate Richards v Nichol provides a good example of the variation of tes-
tamentary trust provisions by reason of a frustration of a trust’s purpose. The testator in
this case placed his entire estate in trust under the control of his trustees. Clause 7 of the
testator’s will, executed in 1953, instructed the trustees to acquire, after the death of the
testator’s spouse, a residence for the testator’s stepdaughter and/or her daughter at a cost
not exceeding £3 000. The court, on application by the trustees to adjust this amount,
authorised the trustees to purchase a house to the value of R230 000 instead of the
R6 000 (the equivalent of £3 000) prescribed by the testator. The court found that the
testator evidently wanted to provide his beneficiary with a suitable residence but that the
testator’s instruction regarding the purchase of such a residence was clearly impossible to
carry out because it was, by reason of the rise in property values, no longer possible to
buy a suitable home at the prescribed price. The court opined that the testator could not
have foreseen the significant devaluation of money in relation to the rise in the value of
41
immovable property that followed the execution of his will. The court also regarded the
adjustment requested in respect of the purchase price, and hence the variation of the
42
terms of the testamentary trust, as fair and appropriate. The Estate Richards case shows
that the judicial variation of testamentary trust provisions in terms of the common law in
order to negate the frustration of a trust’s purpose often occurs to combat the erosive
43
effect of inflation on the value of money. However, our courts deal with instances of
trust variation ob causam necessariam by and large on a case-to-case basis and it is there-
fore difficult to derive hard and fast rules from the courts’ decisions in this regard.

variation of trust
trust provisions that are illegal or contrary to public
policy
It is an established common law principle that a court will not give effect to testamentary
44
provisions that are illegal or contrary to public policy. The common law therefore empowers
the High Court to intervene in testamentary dispositions in order to negate any illegality or
45
contravention of public policy that those provisions occasion. However, Mitchell AJ rightly
46
pointed out in Ex parte BOE Trust Ltd that the common law does not grant a court an unre-
stricted power to vary testamentary provisions, and hence also testamentary trust provisions,
that conflict with public policy: a court can only strike out any offending provision if it is
________________________
39 Heymann v Administrators Estate Heymann 1932 WLD 45–47; Administrators, Estate Richards v Nichol
1996 (4) SA 253 (C) 261E–F.
40 1996 (4) SA 253 (C).
41 At 260D–261G.
42 At 260G.
43 See also Ex parte Sidelsky 1983 (4) SA 598 (C).
44 Corbett et al Law of Succession 40; De Waal and Schoeman-Malan Law of Succession 4.
45 See Minister of Education v Syfrets Trust Ltd 2006 (4) SA 205 (C) paras 23 and 47 regarding the contraven-
tion of public policy.
46 2009 (6) SA 470 (WCC).
68
severable from the remainder of the testamentary disposition, failing which the entire disposi-
47
tion can be set aside. Mitchell AJ emphasised that a judicial finding that a particular provision
in a will, and thus in a testamentary trust instrument, is contrary to public policy does not
48
mean that the court is empowered to vary that provision as it sees fit.
Mitchell AJ’s exposition of the common law position is pertinent to the judgment in Minister
49
of Education v Syfrets Trust Ltd. In this case the testator’s will created a bursary trust under
which the testator initially made bursaries available to students of either sex but of European
descent only at the University of Cape Town. The testator subsequently executed a codicil (an
addendum to his will) in which he also excluded all Jewish students as well as all female
students from bursary eligibility. The applicants requested the excision of these restrictions
from the testator’s will. Griesel J held that the provision limiting bursary eligibility to students
of European descent occasioned indirect discrimination based on race or colour and that the
codicil’s exclusion of Jewish and female students constituted direct discrimination on the
50
grounds of religion and gender. He adjudged this discrimination as being contrary to section
9(3) of the Constitution and that the will’s provisions that brought about this discrimination
51
thus violated public policy. Griesel J, invoking the common law principle that the implemen-
tation of a testamentary provision that violates public policy is prohibited, consequently
ordered the excision of the reference to European descent in the will as well as the striking-
52
out of the entire codicil. Du Toit cautions that Griesel J’s striking-out of the codicil is permis-
sible in terms of the common law because the codicil was severable from the remainder of
the trust disposition but that Griesel J’s excision of the words “of European descent only” from
the trust provision is questionable because the common law does not permit a court to selec-
tively delete only certain words from a testamentary disposition: to do so is tantamount to the
practice that Mitchell AJ denounced in the BOE Trust case, namely, the variation of a testa-
53
mentary provision as the court sees fit. Du Toit proposes that Griesel J should instead have
54
developed the common law explicitly in terms of section 8(3) of the Constitution to permit
the course of action he chose to follow. Had the judge done so, his circumvention of the
strictures of the common law non-variation rule with regard to testamentary provisions would
55
have rested on a legally sound basis.
The common law principle that a court will not give effect to contractual provisions that are
illegal or contrary to public policy is equally well-established as the aforementioned principle
56
regarding testamentary provisions that conflict with public policy. The common law there-
fore bestows on the High Court the power to intervene in contractual provisions in order to
negate any contravention of public policy brought about by those provisions. In particular, a
57
court can nullify a contract that violates public policy. Should a court find that an inter vivos
trust deed, being a contract by nature, violates public policy, either wholly or in respect of
________________________
47 At par 19.
48 Ibid.
49 2006 (4) SA 205 (C).
50 At par 33.
52 At par 49.
53 2012 Tul Eur & Civ LF 97 at 129.
54 S 8(3) empowers a court to develop rules of the common law to limit a constitutionally-protected right
such as the right to property and thus implicitly the right to freedom of testation.
55 Du Toit 2012 Tul Eur & Civ LF 97 at 130.
56 Barkhuizen v Napier 2007 (5) SA 323 (CC) par 29. See also Minister of Education v Syfrets Trust Ltd 2006 (4)
SA 205 (C) par 23.
57 Brisley v Drotsky 2002 (4) SA 1 (SCA) par 91.
69
some of its provisions, that court can declare such a deed unenforceable and hence halt the
trust’s execution. However, it is submitted that the general rules concerning the severability of
58
an illegal or unlawful part of a contract from the rest of that contract should also apply to the
provisions of an inter vivos trust deed. Severance should therefore be pursued if only certain
provisions in an inter vivos trust deed are contrary to public policy, particularly if severance
will permit the remainder of the trust deed to be upheld.
The analysis of the impact of public policy and constitutionalism on trusts conducted in
Chapter 3 bears directly on the present discussion, in particular insofar as the analyses of
relevant judgments in Chapter 3 show that our courts have invoked constitutionally-founded
public policy when they were required to apply the public policy yardstick to adjudicate on
the variation of trust provisions.

variation of trust provisions in terms of the cy près doctrine
The cy près doctrine permits the High Court to vary the provisions of a charitable trust. This
doctrine operates when a charitable trust’s object cannot be realised because the founder’s
charitable purpose cannot be accomplished or because the method by which the purpose is to
be accomplished is impossible or incapable of execution. In such a case, a court can authorise
the use of the trust’s property for a purpose cy près, that is for a purpose as near as possible
to the trust object originally stipulated by the founder or in a manner that still serves the
59
founder’s charitable purpose.
5.4.2 The var

variation
ariation of trust provisions by the parties to the trust
5.4.2.1 The testamentary trust
5.4.2.1.1 Unilateral variation by the trustee
Some commentators propose that a trust founder can empower a testamentary trustee to
60
vary testamentary trust provisions unilaterally. However, these commentators concede that,
if it is indeed possible to award such a power of variation to a testamentary trustee, the
trustee can only vary the trust provisions in consonance with the founder’s intention as well
as the trust’s object. In this light, a trustee’s power to vary testamentary trust provisions
unilaterally is most likely restricted to variations of an administrative nature and the trustee
cannot effect dispositive changes that defeat the founder’s intention or deviate from the
61
trust’s object. A testamentary trustee can therefore be empowered to change the number of
annual trustee meetings prescribed in the trust instrument (this is an example of a variation of
62
an administrative nature) but a testamentary trustee cannot be empowered to diminish trust
beneficiaries’ vested rights to trust benefits conferred by the trust instrument (this is an
63
example of a variation of a dispositive nature). It is desirable that a testamentary trust
founder who wishes to bestow the power on a trustee to effect such administrative variations
________________________
58 Van Huyssteen et al Contract 200 and 309.

59 De Waal and Schoeman-Malan Law of Succession 185; Jamneck et al Law of Succession 197. For example,
see Ex parte Blum: In re Estate Kalson 1964 (2) SA 643 (C); Truter v Die Administrateur, Kaapprovinsie 1978
(3) SA 489 (C). See also 9.7 regarding the cy près doctrine.
60 Geach Trust Law 337. See also Kernick April 2008 De Rebus 50 at 52.
61 Ibid.
62 Kernick April 2008 De Rebus 50 at 52.
70
should do so in a clause that prescribes the exact manner in which these variations must
occur as this would reduce legal and other complications associated with this grey area of the
law.
5.4.2.1.2 Variation by agreement

agreement between the trustee and trust beneficiaries
A general rule of the law of testate succession prescribes that a testamentary trustee and the
trust beneficiaries cannot vary testamentary trust provisions by agreement between them
unless there is a provision in the testamentary trust instrument that permits consensual
64
variation by these parties. This rule operates principally to protect the valid exercise of the
65
testamentary trust founder’s power of testation. Despite this rule, the court affirmed a
variation of a testamentary trust instrument by agreement between the trust’s initial trustee
66
and its beneficiaries in Hanekom v Voight. Dlodlo J (writing for a full bench of the High Court)
67
opined that it was immaterial that the trust in question was of “testamentary origin”. He
68
reasoned that, as soon as the deceased trust founder’s estate was finally wound-up, the trust
created in terms of the founder’s will moved out of the realm of the law of testate succession
and functioned as an independent legal entity, thereby freeing it from the strictures of the
abovementioned rule regarding the non-variation of testamentary trust provisions by agree-
69
ment between the trustee and trust beneficiaries.
The Hanekom judgment elicited considerable criticism from commentators. De Waal dis-
putes Dlodlo J’s aforementioned opinion, and instead regards it as highly significant that the
trust in the Hanekom case was of testamentary origin. De Waal argues that the founder’s will
remained the trust instrument in terms of which the trust had to be administered and that the
parties to the trust could therefore not simply disregard the abovementioned non-variation
rule by consensually deviating from those provisions, nor could the court affirm such a devia-
70
tion by the parties without establishing a sound legal basis for doing so. Wood-Bodley echoes
De Waal’s sentiments when he points to the fallaciousness of the argument that a testamen-
tary trust somehow obtains a character different from the will that created it. He regards this
71
notion as “an artificial concept without any historical or theoretical foundation”. He also
points out that the legal rules regarding the variation of testamentary and inter vivos trusts
have always emanated from their founding documents. Wood-Bodley therefore cautions that
if, as Dlodlo J proposed in the Hanekom case, a testamentary trust and, by analogy, also an
inter vivos trust indeed assume characters different from their founding documents, the legal
rules regarding the variation of these trusts become greatly obscured to the extent that the
courts may not know where to look for guidance when addressing the question whether or
72
not a particular testamentary or inter vivos trust instrument can indeed be varied.
Dlodlo J relied on a further consideration in support of the court’s decision in Hanekom v
Voight to affirm the variation of the testamentary trust instrument in that case. He noted that
the will gave the trust’s initial trustee the discretion to decide when to terminate the trust and
________________________
64 Ibid 336–338.
65 Ibid 338.
66 2016 (1) SA 416 (WCC).
67 At par 16.
68 A deceased estate’s executor administers or winds-up that estate in terms of the Administration of Estates
Act.
69 At par 17.
70 2015 Annual Survey 1053 at 1068–1070.
71 2017 SALJ 728 at 738.
72 Ibid.
71
that this power meant, according to Dlodlo J, that the trustee also had the power to vary the
trust instrument because the greater power (of termination) necessarily included the lesser
73
power (of variation). Whereas Wood-Bodley supports this proposition in principle (but
74
expresses doubts regarding its application in the Hanekom case), De Waal cautions that it
cannot summarily be assumed that a greater trustee power includes a lesser one – much will
depend on the terms of the trust instrument in question, the nature of the variation at issue,
75
and the facts of the particular case.
5.4.2.1.3 Variation by agreement between the trust beneficiaries

beneficiaries
Testamentary trust beneficiaries are always free to repudiate their vested rights that entitle
76
them to receive trust benefits under a testamentary trust or otherwise to dispose of these
rights between themselves in any manner that best suits them, and a testamentary trustee
77
can give effect to any such consensual arrangement between the beneficiaries. These bene-
ficiaries can also, even prior to the vesting of the rights to their testamentary trust benefits,
78
agree on a re-division of benefits that will become effective only after vesting. Agreements of
this kind frequently occur between beneficiaries of family trusts where the trust beneficiaries
are all members of one family. These agreements are accordingly often referred to as family
79
agreements. A family agreement between trust beneficiaries is valid only if all the beneficiar-
ies who are party to the agreement have the necessary contractual capacity and have indeed
consented to the agreement in terms of which they repudiate or otherwise dispose of their
80
vested rights under the trust. The High Court can however consent on behalf of minor or
81
unborn beneficiaries and the Act empowers the tutor or curator of a beneficiary under
tutorship or curatorship to agree on behalf of such a beneficiary to the variation of the provi-
82
sions of a trust instrument, provided the variation is advantageous to the beneficiary.
A family agreement is unenforceable if some of the contracting parties lack the required
capacity or if the agreement purports to dispose of the rights of beneficiaries who are not
parties to it. Such unenforceability may however be cured if the court adds its consent on
behalf of minor or unborn beneficiaries, or if beneficiaries originally excluded from the
83
agreement subsequently become parties to it. A family agreement is invalid if it purports to
make dispositive changes to the trust instrument that alter the devolution of the trust property
84
as prescribed by the trust instrument. A court will thus not confirm a family agreement that
purports to vary a trust provision regarding the time set for the division of trust property or
85
the manner in which the trustee must administer that property because in such a case the
________________________
73 Hanekom v Voight 2016 (1) SA 416 (WCC) par 18.

74 2017 SALJ 728 at 734–736.
75 2015 Annual Survey 1053 at 1070.
76 See 8.3.1 regarding the repudiation of testamentary trust benefits and 8.4.2.1 regarding the vesting of
rights.
77 Bydawell v Chapman 1953 (3) SA 415 (A) 523G–H; Hoeksma v Hoeksma 1990 (2) SA 893 (A) 897I–898A.
78 Ex parte Trustees Estate Loewenthal 1939 WLD 78 at 81.
79 Ex parte Govender 1984 (4) SA 217 (D) 220G–H.
80 Bydawell v Chapman 1953 (3) SA 415 (A) 523G–H; Levin v Gutkin, Fisher and Schneier 1997 (3) SA 267 (W)
283F and 291B.
81 Levin v Gutkin, Fisher and Schneier 1997 (3) SA 267 (W) 283G–H.
82 S 14.
83 Levin v Gutkin, Fisher and Schneier 1997 (3) SA 267 (W) 283F–H.
84 Bydawell v Chapman 1953 (3) SA 514 (A) 523H; Starkey v McElligott 1984 (4) SA 120 (D) 130A–C; Levin v
Gutkin, Fisher and Schneier 1997 (3) SA 267 (W) 291A.
85 Cronjé and Roos Law of Succession 245.
72
trust beneficiaries seek not merely to rearrange their own rights under the trust but indeed to
86
affect or alter the testator’s dispositive plan.
5.4.2.2 The inter vivos trust

5.4.2.2.1 Unilateral variation by the founder
The founder of an inter vivos trust can reserve in the trust instrument the right to vary the
87
trust provisions unilaterally during his or her lifetime. This state of affairs appears, at least at
88
first glance, irreconcilable with the contractual nature of an inter vivos trust deed. The fact
that an inter vivos trust deed is essentially a contract concluded between the trust founder and
trustee suggests that such a trust deed can, at least prior to the trust beneficiaries’ acceptance
89
of their trust benefits, only be varied in the same manner in which it was created, namely,
90 91
by agreement between the founder and trustee. It was however pointed out earlier that the
terms of an inter vivos trust are frequently determined unilaterally by either the trust founder
or the trustee, and that the trust’s terms do not therefore necessarily result from a negotiated
settlement between these parties. This practical reality regarding the absence of a truly
consensual basis for an inter vivos trust instrument’s provisions seems to open the door for an
inter vivos trust founder, who frequently dictates the trust’s terms, to reserve a right of unilat-
eral variation in the trust deed. This stance implies conversely that a founder cannot vary an
inter vivos trust deed unilaterally without the right to do so having been reserved in his or her
92
favour in that deed.
93
In Groeschke v Trustee, Groeschke Family Trust an inter vivos trust founder was the trust’s
sole trustee and his son was the trust’s sole income and capital beneficiary. The trust deed
prescribed that the trustee may change the trust’s capital beneficiaries during the founder’s
lifetime. It provided furthermore that, while the founder was alive, only the founder could
vary the trust deed. The founder (as the trust’s only trustee) varied the trust deed by passing a
resolution that removed his son as the trust’s sole income and capital beneficiary and ap-
pointed the founder himself as the trust’s income and capital beneficiary. One of the ques-
tions before the court concerned the validity of these actions taken by the founder. Bester AJ
opined that the trust deed expressly bestowed on the founder the right to vary the trust
provisions unilaterally and that he therefore varied the trust’s terms validly in accordance
94
with the trust deed’s prescripts.
________________________
86 Ex parte Trustees Estate Loewenthal 1939 WLD 78 at 81; Cronjé and Roos Law of Succession 196.
87 The Supreme Court of Appeal alluded to this possibility in Hofer v Kevitt 1998 (1) SA 382 (SCA) 384F. See
also Pace and Van der Westhuizen Wills and Trusts B18.2.1.
88 See 1.7.1, 4.2.2 and 4.5.2 regarding the contractual nature of an inter vivos trust deed.
89 See 5.4.2.2.4.
90 Pace and Van der Westhuizen Wills and Trusts B18.2.1.
91 See 4.5.2.
93 2013 (3) SA 254 (GSJ).
94 At paras 12, 17 and 39.
73
The court in the Groeschke case also addressed the question regarding the form that a
unilateral variation by an inter vivos trust founder in terms of a reserved right to vary trust
provisions can take. The variation can, according to the court, occur by way of a written
document, whether as an addendum to the existing trust contract or as a further contract,
95
in terms of which the trust deed is varied. As in the case of any variation to an existing
contract by a subsequent document, the document that varies an inter vivos trust deed
96
must be read with the original deed in order to determine the terms of the varied deed.
Bester AJ affirmed in the Groeschke case that because the founder had the right to vary
the trust deed unilaterally, a formal contract was not required. The resolution signed by
the founder (as trustee) and two witnesses in terms of which the founder varied or re-
97
solved to vary the trust deed was sufficient. The resolution was therefore not a mere
statement of intent to vary the trust deed in the future by means of a more formal act of
variation, and Bester AJ opined that it was thus not necessary for the founder to perform
98
any further act of variation to confirm the resolution.
The reservation by an inter vivos trust founder of the right to vary the trust provisions unilat-
erally during his or her lifetime, although ostensibly legally valid, is not entirely without
complications. It is certainly arguable that if a founder retains the lifelong power to vary the
trust provisions in accordance with such a reservation in the trust deed, it can be construed,
depending on the facts and circumstances of a particular case, as an attempt by the founder
to retain control over the trust and therefore that the founder failed to divest him- or herself
99
sufficiently of control of the trust property. A failure by the founder to relinquish control of
the trust and its property may raise the spectre that the trust is in effect the founder’s alter
100
ego.
5.4.2.2.2 Unilateral variation by the trustee

An inter vivos trust instrument can empower another, usually the trust’s trustee, to vary the
101
trust’s provisions unilaterally after the founder’s death. Olivier et al opine that inter vivos
trust beneficiaries’ acceptance of trust benefits does not restrict or negate this power. Where
an inter vivos trust instrument therefore provides that the trustee can vary the trust provisions
unilaterally, that trustee can, according to this view, do so without the consent of the trust
102
beneficiaries who had accepted trust benefits. Pace and Van der Westhuizen contend on the
other hand that, once inter vivos trust beneficiaries have accepted trust benefits, the trustee
requires their consent to any variation of the trust provisions even if the trust instrument
103
contains a clause that authorises the trustee to vary the trust provisions unilaterally. This
difference of opinion among commentators is also discernible in case law. In Law Society of
________________________
95 At par 16.
96 Ibid.
97 At par 17.
99 See 1.5.1 regarding the necessity of the founder divesting him- or herself of control of the trust property.
100 Olivier 2000 SALJ 224 at 227; Kernick March 2008 De Rebus 48. See 4.2.1.2 and 7.6 regarding the alter
ego trust.
101 Pace and Van der Westhuizen Wills and Trusts B18.2 and B18.2.3; Olivier et al Trustreg en Praktyk
2.9.2.2.4.
102 Trustreg en Praktyk 2.9.2.2.4. See 5.4.2.2.4 regarding the role of inter vivos trust beneficiaries’ acceptance
of trust benefits with regard to their participation in the variation of trust provisions.
103 Wills and Trusts B18.2 and 18.2.3.
74
104
the Cape of Good Hope v Randell the court, although not called upon to decide the issue,
regarded an argument that corresponded greatly with Olivier et al’s opinion as “dogmatically
105 106
sound”. On the other hand, in Potgieter v Potgieter an inter vivos trust deed empowered
the trust’s trustees to vary the deed by changing the trust’s capital beneficiaries – something
that the trustees purported to do together with the trust founder without the consent of capital
107
beneficiaries on whose behalf trust benefits were, in the court’s opinion, accepted earlier.
The Supreme Court of Appeal invalidated the purported variation on the ground that the
108
contractual nature of an inter vivos trust deed, being akin to a stipulatio alteri, required the
capital beneficiaries to consent to any variation to the trust provisions made in the aftermath
109
of their acceptance of trust benefits. Whilst the Potgieter case concerned the variation of an
inter vivos trust instrument by agreement between the founder and the trustees, and not by
the trustees unilaterally, the judgment seems to support Pace and Van der Westhuizen’s view
that any trustee power to vary inter vivos trust provisions unilaterally remains subject to the
protection the law affords inter vivos trust beneficiaries by requiring their consent to any
110
variation of the trust’s provisions effected after they have accepted their trust benefits.
111
Other courts have affirmed this view espoused in the Potgieter case. However, some com-
112
mentators remain critical of this approach. Although this issue is therefore not finally
113
settled, the Chief Master acknowledged that where an inter vivos trust instrument expressly
permits the variation of its provisions by the trustee without the trust beneficiaries’ consent,
the trustee can indeed unilaterally vary the trust deed without the consent of trust beneficiar-
ies who have accepted their trust benefits, on condition that the variation complies fully with
the trust deed’s prescripts.
5.4.2.2.3 Variation by agreement between the founder and trustee

The creation of an inter vivos trust by way of a trust contract that is akin to a stipulatio alteri
114
renders its variation subject to contractual principles. Inter vivos trust provisions can there-
fore be varied by agreement between the founder and trustee provided that the trust benefi-
ciaries have not (yet) accepted the trust benefits stipulated in their favour. This mode of
115
variation is possible even if the trust instrument does not authorise it expressly. Our case
law abounds with authority that supports this legal position. In Commissioner for Inland Reve-
116
nue v Estate Crewe the court said that a trust beneficiary’s right under an inter vivos trust is
at most inchoate (not fully formed) prior to that beneficiary’s acceptance of trust benefits, and
that such a beneficiary can consequently be deprived of this incomplete right by agreement
between the founder and trustee. This legal position regarding an inter vivos trust beneficiary
corresponds with that of a third party who has not (yet) accepted his or her contractual
117 118
benefit under a stipulatio alteri. In Crookes v Watson the court affirmed that a trust deed
________________________
104 [2015] 4 All SA 173 (ECG).

105 At paras 57–59.
106 2012 (1) SA 637 (SCA).
107 See also 5.4.2.2.4 in this regard.
108 See 1.7.1 and 2.4.2.
111 Smart v Burne [2013] ZAKZDHC 59 (19 July 2013).
112 De Waal 2013 Annual Survey 984 at 1006; Claassen 2014 Acta Juridica 243 at 250–252.
114 See 1.7.1 and 2.4.2.
115 Hofer v Kevitt 1998 (1) SA 382 (SCA) 384F.
116 1943 AD 656.
117 At 673–676.
118 1956 (1) SA 277 (A).
75
executed by a founder and trustee for the benefit of the trust beneficiaries is similar to a
contract between the founder and trustee for the benefit of third parties, and that the founder
and trustee can, according to the principles applicable to the stipulatio alteri, vary (or even
cancel) the contract they entered into at any time before the beneficiaries accept the benefits
119
conferred on them under the contract. The court reasoned that, prior to an inter vivos trust
beneficiary’s acceptance of trust benefits, no vinculum juris (legal bond) exists between the
120
founder and trustee on the one hand, and that beneficiary on the other hand.
However, it stands to reason that a variation of inter vivos trust provisions by agreement
between the founder and trustee prior to the beneficiaries’ acceptance of their trust benefits
can prejudice those beneficiaries, in particular, if the agreement diminishes or even revokes
the trust benefits to which the beneficiaries will or would have become entitled upon their
eventual acceptance of those benefits. This reality raises the question whether a trustee who
agrees with the founder to such a prejudicial variation of trust provisions does not breach his
or her fiduciary duty to the trust beneficiaries? Put differently, can an inter vivos trust benefi-
ciary who has not (yet) accepted his or her trust benefit challenge the validity of a prejudicial
variation of the trust’s provisions by the founder and trustee on the ground that the trustee
breached his or her fiduciary duty toward that beneficiary by consenting to a variation that
will ultimately prejudice the beneficiary? After all, a trustee’s fiduciary duty compels him or
121
her to act in the interests of all the trust beneficiaries, and a trustee who consents to a
variation of trust provisions that prejudices a beneficiary who has not (yet) accepted his or her
trust benefit appears to act contrary to that beneficiary’s interest.
122
In Hofer v Kevitt the court rejected a challenge based on the foregoing argument where
the challengers sought to invalidate three variations made to an inter vivos trust deed. The
court reasoned that a trustee’s fiduciary duty bears first and foremost on his or her proper
administration of the trust and that this duty does not therefore extend to any contractual
undertaking on the trustee’s part to protect the interests of beneficiaries who have yet to
123
accept their benefits under an inter vivos trust. The Supreme Court of Appeal in Hofer v
124
Kevitt in an appeal against the aforementioned decision, circumvented the issue of a breach
of a trustee’s fiduciary duty by limiting its inquiry to the question whether the variations
made to the particular trust deed by agreement between the trust founder, the trustees and,
subsequent to their acceptance of trust benefits, two trust beneficiaries, were validly effected
in terms of the law as stated in Crookes v Watson. The court ruled that the variations occurred
in accordance with the precedent set in Crookes v Watson and that they were thus validly
125
made. The legal position established in these judgments can therefore be summarised as
follows:
• the trustee of an inter vivos trust owes a fiduciary duty to the trust beneficiaries who have
accepted trust benefits as well as the beneficiaries who have not (yet) accepted trust bene-
fits;
126
• the trustee’s fiduciary duty arises from the trustee office and not from the trust contract
127
concluded between the founder and trustee;
________________________
119 At 285F. See also Hofer v Kevitt 1998 (1) SA 382 (SCA) 386E; Potgieter v Potgieter 2012 (1) SA 637 (SCA)
par 18; Gowar v Gowar [2016] 3 All SA 382 (SCA) par 43.
120 Crookes v Watson 1956 (1) SA 277 (A) 288A.
121 See 6.7 regarding a trustee’s fiduciary duty.
122 1996 (2) SA 402 (C).
123 At 407F and 408A.
124 1998 (1) SA 382 (SCA).
125 At 387B.
126 See 1.2.3 and 6.7 regarding the fiduciary nature of the trustee office.
127 See the court’s erroneous statement to the contrary in Hofer v Kevitt 1996 (2) SA 402 (C) 408B–D.
76
• a trustee’s fiduciary duty, although ensuring that the trustee administers the trust properly
and in the beneficiaries’ interests, cannot be invoked to challenge the validity of a variation
of inter vivos trust provisions by agreement between the founder and trustee, even if that
variation prejudices the interests of beneficiaries who have not (yet) accepted their trust
benefits;
• the validity of any variation of inter vivos trust provisions is a contractual matter that must
be resolved, on the authority of Crookes v Watson and other judgments on point, in accord-
ance with the legal principles that pertain to the variation of the stipulatio alteri; and
• a trust beneficiary who has been prejudiced by a variation of inter vivos trust provisions
effected consensually by the trust founder and trustee prior to that beneficiary’s ac-
ceptance of his or her trust benefit, cannot invoke any supposed breach of the consenting
128
trustee’s fiduciary duty to challenge the variation’s validity.
Does the aforementioned legal position imply that a trustee’s fiduciary duty is wholly
irrelevant when his or her consent to the variation of inter vivos trust provisions is at is-
sue? Geach opines that although the common law is clear on how inter vivos trust provi-
sions can be varied in terms of the law of contract, it does not compel a trustee to be a
129
willing party to each and every such variation. Geach therefore advises that a trustee
must always consider the nature, purpose and effect of the proposed variation inde-
pendently and objectively, and then make a considered decision regarding whether or
130
not he or she should consent to it. Claassen concurs with this view by emphasising that
a trustee’s fiduciary duty compels him or her to conduct trust administration inde-
pendently, responsibly and impartially, and that a trustee must thus not consent to a
variation of inter vivos trust provisions that will cause his or her fiduciary duty to the trust
131
beneficiaries to conflict with his or her private interests. Whereas the validity of a varia-
tion of inter vivos trust provisions cannot therefore be challenged after the event with
reliance on a breach of the consenting trustee’s fiduciary duty, a trustee is by reason of
his or her fiduciary duty compelled to consider carefully beforehand whether he or she
should indeed consent to the proposed variation.
5.4.2.2.4 Variation by agreement between the founder, trustee and trust

beneficiaries
Acceptance by inter vivos trust beneficiaries of the benefits stipulated in their favour renders,
in accordance with the contractual principles applicable to the stipulatio alteri, their consent a
132
prerequisite for the consensual variation of that trust’s provisions. This is because an inter
vivos trust beneficiary’s acceptance of the benefit stipulated in his or her favour vests that
beneficiary with a right to the benefit concerned (provided of course that all other conditions
133
prescribed by the trust instrument regarding vesting have been fulfilled). The founder,
trustee and beneficiaries who have accepted their trust benefits are therefore at liberty to vary
________________________
128 De Waal 1998 TSAR 326 at 332; Du Toit 2001 TSAR 123 at 127; Claassen 2014 Acta Juridica 243 at 250–
252 and 263–267.
130 Ibid 333–334.
131 2014 Acta Juridica 243 at 266.
132 Potgieter v Potgieter 2012 (1) SA 637 (SCA) par 18.
133 Van Zyl Inter Vivos Trust 217. See 8.3.2 regarding the effect of an inter vivos trust beneficiary’s acceptance
of a trust benefit and 8.4.2.1 regarding the vesting of rights.
77
134
the terms of an inter vivos trust by mutual agreement. Stated differently, an inter vivos trust
beneficiary who has accepted his or her trust benefit can prevent the variation of that trust’s
provisions by withholding his or her consent from the founder and trustee who wish to vary
the trust provisions.
The aforementioned legal position is based on the fact that an inter vivos trust beneficiary’s
acceptance of an unconditional trust benefit (a benefit to which no further conditions are
135
attached) vests that beneficiary with a personal right to claim the particular benefit. The law
thus protects this vested personal right by demanding the beneficiary’s consent to any varia-
tion of the trust’s provisions because such a variation may affect the trust beneficiary’s vested
136
right negatively. However, Potgieter v Potgieter contains statements to the effect that an
inter vivos trust beneficiary can also accept a conditional or contingent trust benefit (or a
137
conditional or contingent right to such a benefit) and that such an acceptance holds implica-
tions for the variation of that trust. The Supreme Court of Appeal found in the Potgieter case
that inter vivos trust benefits were accepted on the two appellants’ behalf prior to the date set
in the trust instrument for the vesting of those benefits in the appellants. The founder and
trustee concluded an agreement that purported to vary the trust’s terms, in particular, by
revoking the two appellants’ status as named capital beneficiaries and reducing that status to
members of a class of potential capital beneficiaries. This agreement was concluded without
the appellants’ consent. Brand JA, in invalidating the variation agreement, said:
“I do not think it can be gainsaid that at the time of the variation agreement . . . the appellants
enjoyed no vested rights to either the income or the capital of the trust. They were clearly contin-
gent beneficiaries only. But that does not render their acceptance of these contingent benefits irrel-
evant . . . The import of acceptance by the beneficiary is that it creates a right for the beneficiary
pursuant to the trust deed, while no such right existed before. The reason why, after that ac-
ceptance, the trust deed cannot be varied without the beneficiary’s consent, is that the law seeks to
protect the right thus created for the first time. In this light, the question whether the right thus
created is enforceable, conditional or contingent should make no difference. The only relevant con-
138
sideration is whether the right is worthy of protection, and I have no doubt that it is.”
The question whether an inter vivos trust beneficiary can accept a contingent trust benefit (or
a contingent right to such a benefit) and therefore whether Brand JA’s foregoing approach in
the Potgieter case is indeed correct, is a contentious one. Claassen asserts that if the contin-
gent right that Brand JA had in mind in the Potgieter case is a contingent right in the strict
sense – that it is an incomplete right that is not (yet) fully formed but is nevertheless more
139
than a mere hope or expectation (spes) to receive a trust benefit in the future – then it is
capable of being accepted by a trust beneficiary. According to Claassen, and as held by Brand
JA in the Potgieter case, any variation to an inter vivos trust instrument undertaken in the
aftermath of the beneficiary’s acceptance of such a contingent right requires that beneficiary’s
140
consent. Van Zyl opines on the other hand that an inter vivos trust beneficiary’s purported
acceptance of a contingent right under the trust is inconsequential to the trust instrument’s
variation. She reasons that if beneficiary acceptance under the stipulatio alteri is correctly
transplanted onto beneficiary acceptance under an inter vivos trust, only an acceptance of a
________________________
134 Pace and Van der Westhuizen Wills and Trusts 18.2.2; Olivier et al Trustreg en Praktyk 2.9.2.2.1.
135 See 8.4.2.1.
136 2012 (1) SA 637 (SCA).
137 See 8.4.2.1 regarding contingent rights.
138 At par 28.
139 See 8.4.2.1 regarding the distinction between a contingent right in the strict sense and the broad sense.
140 2014 Acta Juridica 243 at 262.
78
trust benefit that results in the accepting beneficiary’s acquisition of a vested right to the
benefit concerned, involves that beneficiary in the trust deed’s variation. Van Zyl maintains
that a contingent right under an inter vivos trust arises not by reason of a trust beneficiary’s
acceptance but rather automatically in terms of the trust contract and that a beneficiary’s
141
supposed acceptance of a contingent right is accordingly meaningless. Van Zyl thus advo-
cates, contrary to Brand JA’s view in the Potgieter case, that only an inter vivos trust benefi-
ciary who holds a vested right to a trust benefit by reason of his or her acceptance of that
benefit can prevent the founder and trustee from varying the trust’s provisions by withholding
142
his or her consent to that variation. This issue, like other issues regarding the variation of
143
inter vivos trust provisions, has not finally been resolved.
5.4.3 The judicial variation of trust

trust provisions in terms of statute
5.4.3.1 Section 13 of the Trust Property Control Act
Section 13 of the Act expands the High Court’s common law power to vary the terms of
testamentary and inter vivos trusts. This section applies also to trusts created by court order.
Section 13 provides:
“If a trust instrument contains any provision which brings about consequences which in the opinion
of the court the founder of a trust did not contemplate or foresee and which –
(a) hampers the achievement of the objects of the founder; or
(b) prejudices the interests of beneficiaries; or
(c) is in conflict with the public interest,
the court may, on application of the trustee or any person who in the opinion of the court has a
sufficient interest in the trust property, delete or vary any such provision or make in respect thereof
any order which such court deems just, including an order whereby particular trust property is sub-
stituted for particular other property, or an order terminating the trust.”
Section 13 consists of a subjective criterion and an objective criterion. The former entails that
the trust provision at issue occasions consequences that the trust founder, judged subjectively,
failed to contemplate or foresee. The latter demands that the trust provision at issue, judged
objectively, hampers the trust object, or prejudices the trust beneficiaries’ interests, or con-
144
flicts with the public interest. Both criteria must be satisfied for an application in terms of
145
section 13 to succeed. However, section 13 establishes a definite sequence with regard to
meeting the aforementioned criteria – the subjective criterion must be met first and, only if it
is met, does the meeting of the objective criterion become relevant. This much is evident
146
from Mitchell AJ’s decision in Ex parte BOE Trust Ltd where he emphasised that in the
absence of the formation of a judicial opinion that the trust provision in issue brought about
consequences that the founder did not contemplate or foresee, section 13 does not empower
the court to interfere with the founder’s directions. In Mitchell AJ’s opinion, the subjective
criterion is the primary “jurisdictional fact” on which a court’s power to vary a trust provision
147
in terms of section 13 rests. The judicial variation of a trust provision is therefore not
________________________
141 Van Zyl Inter Vivos Trust 186.

142 Ibid 216.
143 See 5.4.2.2.2 regarding other unresolved issues in respect of inter vivos trust variation.
145 Harper v Crawford 2018 (1) SA 589 (WCC) paras 21 and 35. See also the subsequent confirmation in
Harvey v Crawford [2018] ZASCA 147 (17 October 2018).
146 2009 (6) SA 470 (WCC).
147 At par 20.
79
possible unless this jurisdictional fact is established. Mitchell AJ was not satisfied in the BOE
Trust case that section 13’s subjective criterion was indeed met on the case’s facts with
regard to an application to remove an allegedly discriminatory racial restriction on bursary
eligibility from a testamentary bursary trust. He opined that the testatrix foresaw that the
bursary trust might fail by reason of the racial restriction she imposed and that she therefore
148
stipulated alternative beneficiaries who should benefit from the trust income in such a case.
Mitchell AJ consequently dismissed the application to vary the trust provisions through a
149 150
striking-out of the racial restriction, and his decision to this end was confirmed on appeal.
Once the presence of section 13’s primary jurisdictional fact is establish, the court can pro-
ceed to a consideration of whether the section’s objective criterion – the secondary jurisdic-
151
tional fact – is met. The three possibilities enumerated in section 13(a)–(c) are stated in the
alternative in this regard – the court must therefore be satisfied that the trust provision in
question occasioned at least one of the three eventualities. In Ex parte President of the Confer-
152
ence of the Methodist Church of Southern Africa: In re William Marsh Will Trust, the first
reported judgment on section 13 of the Act, a testator executed a valid will in 1899 in which
he provided for the creation of a testamentary trust to erect and maintain a home for desti-
tute White children. Several homes for destitute White children were established during the
early years of the twentieth century in consequence of this trust provision. The Methodist
Church of Southern Africa assumed responsibility for the homes’ administration in the 1970s.
However, the number of White children admitted to the homes declined dramatically over the
course of time and this trend was expected to continue into the future. The President of the
Conference of the Methodist Church therefore applied in the early 1990s for a variation of the
trust’s provisions in terms of section 13 through the removal of the racial restriction from the
testator’s will in order to open the homes to children of all races. The court held that section
13’s subjective criterion was met because, in Berman J’s opinion, the founder neither con-
templated nor foresaw that the homes established in terms of his testamentary trust would
become emptier and emptier as White South Africans became increasingly affluent and the
153
number of White children in destitute circumstances decreased commensurately. The court
addressed section 13’s objective criterion exclusively with reference to the section’s public
interest component and found that opening the half-empty homes to destitute children of all
races would better serve the public interest than to persist in admitting only destitute White
154
children to the homes. Berman J therefore granted the application for the deletion of the
155
racial restriction from the testator’s will.
Applicants also invoked section 13 successfully to have racial restrictions on bursary eligibil-
ity removed from testamentary bursary trusts in Curators, Emma Smith Educational Fund v
156 157
University of KwaZulu-Natal and In re Heydenrych Testamentary Trust. The public interest
component of section 13’s objective criterion played a decisive role in the outcomes of these
________________________
148 At par 24.

149 At par 30.
150 In re BOE Trust Ltd 2013 (3) SA 236 (SCA).
151 Harper v Crawford 2018 (1) SA 589 (WCC) par 35. See also the subsequent confirmation in Harvey v
Crawford [2018] ZASCA 147 (17 October 2018).
152 1993 (2) SA 697 (C).
153 At 703B–C.
154 At 703I–J.
155 At 704A–B. See Van der Spuy 1993 De Jure 447 for criticism of the judgment in the William Marsh case.
See also Du Toit 2005 JJS 39.
156 2010 (6) SA 518 (SCA).
157 2012 (4) SA 103 (WCC).
80
158
judgments. The Emma Smith case has however been criticised on the ground that the court
had its eyes set so firmly on the objectionableness of the racial restrictions imposed under the
bursary trust in that case, and hence on compliance with section 13’s objective criterion, that
the court payed inadequate attention to the question whether section 13’s subjective criterion
159
– its primary jurisdictional fact – was met on the facts at hand. Our courts’ engagement
with section 13 has therefore not always been entirely satisfactory.
Section 13 empowers the court extensively, more so than the common law, to intervene in
160
trust provisions: the court can delete or vary a trust provision; the court can make any order
regarding a trust provision that it deems just, including an order whereby particular trust
property is substituted for other property; and the court can even order the termination of the
particular trust. Section 13 cannot however be employed to supplement omissions from a
161
trust instrument. The range of possible applicants who can invoke section 13 to seek the
court’s intervention in trust provisions is stated in fairly wide terms: a trustee or any person
who, in the opinion of the court, has a sufficient interest in the trust property – the latter
includes trust beneficiaries, amici curiae (parties who join in litigation as friends of the
162 163
court), government officials, parties who, although not trustees, are involved in a trust’s
164
administration and possibly also trust creditors.
5.4.3.2 Sections 2 and 3 of the Immovable Proper

Property (Removal or Modification
of Restrictions) Act
Section 2(1) of the Act provides:
“If any beneficiary interested in immovable property which is subject to any restriction imposed by
165
will or other instrument before or after the commencement of this Act, desires to have such re-
strictions removed or modified on the ground that such removal or modification will be to the ad-
vantage of the persons, born or unborn, certain or uncertain, who are or will be entitled to such
property or the income thereof under such will or instrument, such beneficiary may apply to the
court for the removal or modification of such restriction.”
Section 3(1) of the Act stipulates:
“If the court to which application is made under this Act, is satisfied –
(a) that the shares which any of the beneficiaries in being at the time of the making of such
application individually hold in the immovable property concerned are so small that they can-
not be beneficially occupied or enjoyed; or
(b) that no beneficial use can be made of the immovable property concerned by the beneficiaries
owing to there being a prohibition in the will or other instrument against the subdivision of the
property; or
(c) that since the taking effect of the will or other instrument imposing any restriction upon the
immovable property concerned circumstances materially affecting the value of the property
have arisen which in the opinion of the court were not contemplated or foreseen by the person
who made or executed the will or other instrument; or
________________________
158 At par 40 of the Emma Smith case and paras 14 and 20 of the Heydenrych Trust case. See the discussions
of these judgments in Chapter 3.
161 Conze v Masterbond Participation Trust Managers (Pty) Ltd 1996 (3) SA 786 (C) 792D–E.
162 In re Heydenrych Testamentary Trust 2012 (4) SA 103 (WCC) par 3.
164 Ibid par 8.
165 The Act commenced on 1 October 1965.
81
(d) that it will be in the public interest or in the interests of the persons referred to in sub-section
(1) of section two, to do so,
it may remove or modify any restriction such as is referred to in sub-section (1) of section two and
order the property to be sold in whole or in part or may make such further or other order as to it
may seem just.”
Section 3(2) of the Act provides:
“If the court orders the property or any portion thereof to be sold, it may further order that the
proceeds derived from such sale –
(a) be paid over to some person specially appointed by the court who shall, for the benefit of the
persons referred to in sub-section (1) of section two, invest the same in securities or immovable
property which shall mutatis mutandis be subject to all the terms, conditions and trusts con-
tained in the will or other instrument relating to the property sold; or
(b) be distributed among the beneficiaries in being to be enjoyed by them absolutely; or
(c) be dealt with in such further or other manner as to it may seem just in order to give effect to
any order it may make under sub-section (1) of this section.”
A court will authorise the removal or modification of restrictions imposed on immovable trust
property, and commensurately authorise the variation of the particular trust provisions that
impose the restrictions, if an applicant brings an application to that effect within the ambit of
any of the grounds listed in section 3(1) of the Act. However, the above provisions are rarely
employed with regard to trust property because a trustee’s power to deal with trust property
166
is usually extensive rather than restrictive in nature. The restrictions envisaged by the Act
are therefore rarely imposed on immovable trust property.
5.5 The termination of a trust

167
A trust can terminate in a number of ways. A trust instrument frequently prescribes when
the trust must terminate, for example, when the trust’s stipulated operational period lapses,
when the event or time stipulated for its termination arrives, or when its object is realised. An
inter vivos trust instrument can also include the reservation of a right by the founder to unilat-
erally revoke the trust during his or her lifetime or by the trustee after the founder’s death. A
trust’s provisions can furthermore cause a trust to come to an end, for example, when a
168
resolutive condition for its termination is fulfilled or when trust benefits accelerate upon an
169
income beneficiary’s repudiation of his or her right to receive trust income. A trust instru-
ment’s provisions must therefore be consulted whenever the question of that trust’s termina-
tion arises.
________________________
166 See 7.4 regarding trustee powers.

167 Corbett et al Law of Succession 426–427; De Waal and Schoeman-Malan Law of Succession 188–189.
168 A resolutive condition extinguishes a particular legal position upon the occurrence of an uncertain future
event.
169 See 8.5.3 regarding the acceleration of trust benefits.
82
6
The Trustee
6.1 Introduction
Once a trust has been created, the trustee assumes responsibility for the administration of the
trust property to benefit the trust beneficiaries or to attain an impersonal trust object. A
trustee acts in two capacities: he or she is simultaneously a trustee who holds the trust estate
in an official capacity that places the trustee in a fiduciary relationship toward the trust bene-
ficiaries, as well as a private individual who holds his or her own estate separately from the
1
trust estate. The trustee office affords considerable protection to a trust’s beneficiaries be-
cause it is fiduciary in nature: this office imposes a fiduciary duty on a trustee that obliges him
2
or her to always act in the trust beneficiaries’ interests. The trustee office is governed by the
common law and statute and is subject to public supervision by the High Court and the
3
Master. The Trust Property Control Act, as South Africa’s principal statute that regulates
aspects of trusteeship, therefore imposes a number of statutory duties on trustees and also
vests the High Court as well as the Master with administrative, supervisory and interventionist
4
powers over trustees.
Four conditions must be met for a trustee to take office and to act in the capacity of trus-
5
tee:
6
• the trustee must possess the necessary competence to be a trustee;
7
• the trustee must be appointed as the trustee of a particular trust;
8
• the trustee must accept the appointment as trustee; and
9
• the trustee must be authorised in writing by the Master to act in the capacity of trustee.
The trust instrument plays a crucial role regarding a trustee’s appointment and his or her
10 11
administration of a trust. The trust instrument is the trust’s founding document and it
12
determines the ambit of a trustee’s capacities, duties and powers. A trustee’s actions on a
________________________
1 See 1.2.2 regarding the separation of estates and 1.2.3 regarding trusteeship as a fiduciary office.
2 See 1.2.3 regarding trusteeship as a fiduciary office and 6.7 regarding a trustee’s fiduciary duty.
4 Fesi v Trustees Elect of the Ndabeni Communal Property Trust [2018] 2 All SA 617 (SCA) par 57.
5 Ibid par 56; Geach Trust Law 149–150; Pace and Van der Westhuizen Wills and Trusts B6.2.3.1.
6 See 6.2 regarding the competence to be a trustee.
7 See 6.3 regarding trustee appointment.
8 See 6.4 regarding the acceptance of the appointment as trustee.
11 See 5.2 regarding the trust instrument’s constitutive nature.
12 Pace and Van der Westhuizen Wills and Trusts B16.1; Geach Trust Law 147 and 186; De Waal and
Schoeman-Malan Law of Succession 173.
83
13
trust’s behalf are therefore only valid if they comply with the trust instrument’s prescripts.
However, the trust instrument and the trustee office operate within the parameters of consti-
14
tutional imperatives, statutory provisions and the common law.
An examination of the trustee’s legal position is essential to a consideration of the funda-
mentals of South African trust law. It bears repeating that section 1 of the Act defines a
trustee for the purpose of the Act as any person (including the trust founder) who acts as a
trustee by virtue of an authorisation in terms of section 6 of the Act, and includes any person
whose appointment as trustee was already of force and effect when the Act commenced. This
chapter deals with key aspects of trusteeship by looking at five broad themes pertinent to a
trustee’s legal position: becoming a trustee (a trustee’s appointment and authorisation); co-
trusteeship (the relationships between multiple trustees of the same trust); aspects of trust
administration; breach of trust by a trustee; termination of trusteeship. A trustee’s pivotal role
in trust administration is discussed further in Chapter 7.
6.2 The competence

competence to
to be a trustee
15
The law sets no special requirements or qualifications for trustees. Any natural or legal
16
person is thus competent to be a trustee. However, anyone chosen to be a trustee should
ideally possess the necessary knowledge, skill and expertise, be it legal, commercial or other-
wise, to conduct the administration of the particular trust to which he or she is to be appoint-
ed. A trust instrument can prescribe certain express or implied requirements or qualifications
for trusteeship (for example, that a trustee must adhere to a particular religious faith or hold a
specific tertiary degree), or may disqualify certain individuals from serving or continuing to
serve as trustees (for example, the termination of a serving trustee’s trusteeship in the event
17
that his or her private estate becomes insolvent and is sequestrated).
The following persons are however legally incompetent to be trustees:
• Persons who lack the legal capacity to act (and hence also contractual capacity) such as
18
infants and persons who suffer from severe mental disorders. A minor has limited legal
capacity to act and can therefore, in principle, be a trustee provided that he or she is as-
sisted by his or her parent or guardian. However, the restrictions on a minor’s ability to
administer the trust due to his or her limited capacity render a minor’s appointment as a
19
trustee entirely impracticable. The Chief Master thus directed that a minor should not be
20
appointed as a trustee.
• Persons who are subject to immediate removal from the trustee office on any of the
21
grounds enumerated in section 20(2) of the Act.
• Any person who is disqualified from benefitting from a will by section 4A of the Wills Act
22
may not be appointed as the trustee of a testamentary trust created in terms of that will.
________________________
13 Land and Agricultural Bank of South Africa v Parker 2005 (2) SA 77 (SCA) par 10; Du Toit 2013 Trust Law
International 18; Geach Trust Law 182.
15 Pace and Van der Westhuizen Wills and Trusts B6.2.2; Olivier et al Trustreg en Praktyk 3.2.2.
16 Olivier et al Trustreg en Praktyk 3.2.2.
18 Pace and Van der Westhuizen Wills and Trusts B6.2.2 and B6.2.3.1; Geach Trust Law 182–184.
21 Pace and Van der Westhuizen Wills and Trusts B.6.2.2; Geach Trust Law 151. See also the Chief Master’s
Directive 2 of 2017. See 6.13.5 regarding trustee removal by the Master in terms of s 20(2) of the Act.
22 Pace and Van der Westhuizen Wills and Trusts B6.2.2; Geach Trust Law 151. See also the Chief Master’s
Directive 2 of 2017.
84
The Trustee
Section 4A(1) and (3) of the Wills Act, read together, disqualifies any person who witnessed
a will, signed a will on a testator’s behalf (such a person is called an amanuensis) or wrote a
will, or any part thereof, in his or her own handwriting, as well as the spouse of any of the
aforementioned three persons, from being appointed as a testamentary trustee. Section
4A(2)(a) of the Act provides that a court can nevertheless declare such a disqualified person
competent to be a trustee if the court is satisfied that he or she did not defraud or unduly
influence the testator in the execution of the will. Section 4A(2)(c) permits that a witness
who was appointed as a testamentary trustee may take up that appointment if the will was
signed by at least two other competent witnesses who do not benefit from that will.
• Section 43(5) of the Companies Act prohibits a company’s director or prescribed officer to
act as a trustee for the holder of that company’s debt instruments. This prohibition also
applies to any person who is related or inter-related to a company, that company’s director
or that company’s prescribed officer, as well as any person who has “any interest in, or
23
relationship with, the company that might conflict with the duties of a trustee”.
• The Master may not in his or her official capacity act as a trustee in the wide sense nor
24
may he or she act as a trustee in the strict sense.
6.3 A trustee
trustee’
rustee’s appointment
Neither the Act nor the common law prescribes a particular form of trustee appointment
25
(Afrikaans: aanstelling). Neither does the law impose any restriction on the number of
26 27
trustees appointable to a specific trust. The trust instrument creates the trustee office and
28
filling this office occurs in accordance with the trust instrument’s directives regarding the
identity and number of the trustees as well as the manner of their appointment and/or re-
29
placement. The appointment of trustees, in particular, at a trust’s creation, is however not
solely determined by the trust instrument. For example, the Master must consider appointing
an additional independent trustee to every family business trust created and registered after 6
30
March 2017. A trust instrument’s directives regarding trustee appointment may moreover
be vague or uncertain which necessitates a proper interpretation of the trust instrument. For
31
example, in Erwee v Erwee an inter vivos trust deed drafted in Afrikaans permitted the trust
founder to nominate (Afrikaans: benoem) additional trustees. The court held that this power
did not entitle the trust founder to also appoint (Afrikaans: aanstel) such additional trustees
because a proper construction of the trust instrument revealed that those trustees that the
trust founder nominated could in fact only be appointed as such once all the trustees in office
32
took a decision to that effect.
________________________

24 S 99 of the Administration of Estates Act; Pace and Van der Westhuizen Wills and Trusts B6.2.2; Geach
Trust Law 184.
26 Pace and Van der Westhuizen Wills and Trusts B6.2.3.1.
27 Metequity Ltd v NWN Properties Ltd 1998 (2) SA 554 (T) 557G–H; Fesi v Trustees Elect of the Ndabeni
Communal Property Trust [2018] 2 All SA 617 (SCA) par 58; De Waal 2017 TSAR 111 at 118.
28 Erwee v Erwee [2006] 1 All SA 626 (O) 629e–h; Fesi v Trustees Elect of the Ndabeni Communal Property
Trust [2018] 2 All SA 617 (SCA) par 58; Pace and Van der Westhuizen Wills and Trusts B6.2.3.1.
30 Chief Master’s Directive 2 of 2017. See 6.3.1.4 regarding the Master’s appointment of an independent
trustee and regarding the definition of a family business trust for the purpose of the Chief Master’s Di-
rective. See also 9.6.1 in the latter regard.
31 [2006] 1 All SA 626 (O).
32 At 629i–631d.
85
6.3.1 Methods of trustee appointment

6.3.1.1 Appointment by the founder
The trust founder usually appoints a trust’s initial or original trustee(s) in the trust instru-
33
ment. It is common for a testator to also appoint the executor of his or her deceased estate
as the trustee of a trust to be created in terms of that testator’s will. In such a case the execu-
34
tor will, once the winding-up of the deceased estate is completed, take up the appointment
as trustee of the testamentary trust. The founder usually also provides for the number of
trustees; the procedure for the appointment of new and/or additional trustees; the term of
trusteeship; the filling of vacancies in the trustee office; and the succession of trustees. Any
omission on the part of the founder to provide for any of these matters in the trust instrument
can be remedied but this will necessitate either intervention by the Master in appointing a
35
trustee or co-trustee or, if the circumstances permit, an appropriate variation of the trust
36
instrument. The founder can also stipulate who may not be appointed as a trustee.
6.3.1.2 Appointment by the serving trustees

A trust founder can empower a trust’s serving trustees to appoint additional trustees and to fill
37 38
vacancies in the trustee office. This authority is known as the power of assumption (Afri-
kaans: mag van assumpsie) and, for it to be available to trustees, it must be expressly be-
39
stowed in the trust instrument. Trust founders regularly stipulate procedural directives for
the exercise of a power of assumption, often regarding quorum requirements for trustee
meetings where the serving trustees intend to appoint additional or new trustees. These
40
directives must be followed for the power of assumption to be duly exercised.
A trust founder can also confer the power of subrogation (Afrikaans: mag van subrogasie) on
a trust’s serving trustees. This power authorises a trustee who resigns or otherwise vacates the
41
trustee office to appoint another trustee in his or her stead.
6.3.1.3 Appointment by the trust beneficiaries

The appointment of trustees by the trust beneficiaries is the exception rather than the rule
42
and can happen only if the trust instrument confers the power to do so on the beneficiaries.
Beneficiaries however usually participate in the various consultation processes that can
precede the appointment of trustees. For example, the court will as a matter of course consult
with a trust’s beneficiaries before it appoints an additional or a new trustee to an existing
43
trust. Moreover, the Act obliges the Master to consult with interested parties before carrying
44
out his or her statutory duty to appoint trustees. Trust beneficiaries undoubtedly count
among such interested parties.
________________________
33 Olivier et al Trustreg en Praktyk 3.2.1.1.

34 The administration or winding-up of a deceased estate is undertaken by that estate’s executor in
accordance with the prescripts of the Administration of Estates Act.
35 See 6.3.1.4.
36 See Chapter 5 regarding the variation of trust provisions.
37 Corbett et al Law of Succession 402; Olivier et al Trustreg en Praktyk 3.2.1.2.
39 Smit v Van de Werke 1984 (1) SA 164 (T) 173D–E.
40 Mohamed v Ally 1999 (2) SA 42 (SCA) 46F.
41 Corbett et al Law of Succession 402; Olivier et al Trustreg en Praktyk 3.2.1.2.
43 Ex parte Leandy 1973 (4) SA 363 (N) 368A; Ex parte Klopper 1974 (1) SA 289 (O) 290F. See 6.3.1.5
regarding the judicial appointment of trustees.
44 See 6.3.1.4 regarding trustee appointment by the Master.
86
The Trustee
6.3.1.4 Appointment by the Master

The Master enjoys no common law powers in respect of trustees generally or regarding the
45
appointment of trustees specifically. Section 7 of the Act alters the common law by empow-
ering the Master to make appointments to the trustee office in two scenarios. The Master’s
appointment of a trustee is compulsory in the first scenario, whereas it is a matter of the
Master’s discretion in the second scenario.
Section 7(1) of the Act regulates compulsory trustee appointment:
“If the office of trustee cannot be filled or becomes vacant, the Master shall, in the absence of any
provision in the trust instrument, after consultation with so many interested parties as he may
deem necessary, appoint any person as trustee.”
It is evident that the Master is obliged to appoint a trustee in terms of this subsection if the
office of trustee cannot be filled or becomes vacant and the trust instrument is silent on how
such an eventuality is to be addressed. Inability to fill the trustee office occurs, for example,
when a nominated trustee dies before he or she has taken office or when a nominated trustee
declines to be appointed as such. The office of trustee becomes vacant when, for example, a
46
sole trustee dies whilst in office or when a sole trustee is removed from office. If the trust
instrument contains neither an express nor an implied indication regarding how the trustee
office must be filled in circumstances such as these, section 7(1) of the Act obliges the Master
to appoint a trustee. A trust will thus not fail for want of a trustee because the Master is
47
statutorily obliged to fill any vacancy in the trustee office.
Section 7(1) requires the Master to consult with interested parties prior to making a trustee
appointment. While the Act does not specify who these interested parties are, the following
persons will, depending on the particular circumstances, likely qualify as such: the founder of
an inter vivos trust; actual and/or potential income and/or capital trust beneficiaries; trust
creditors; and even parties with an interest in a trust’s failure, such as a testamentary trust
founder’s intestate heirs. The Master need not however consult with all possible interested
parties: section 7(1) limits his or her responsibility in this regard to consultation with those
interested parties with whom consultation is deemed necessary. The Master’s decision to
exclude possible interested parties from consultation is challengeable in terms of section 23 of
48
the Act. This section allows any person who feels aggrieved by a decision of the Master
49
made in terms of the Act to apply to the court for appropriate relief. Importantly, section
7(1) merely requires the Master to consult with interested parties: the subsection does not
require that the Master obtain these parties’ consent prior to appointing trustees. The legisla-
ture ostensibly envisaged that the Master put the proposed appointment to the interested
parties, allow those parties to air their views on the proposed appointee, and then fairly and
50
objectively consider these views before making the appointment.
Section 7(2) grants the Master discretionary power to appoint co-trustees:
“When the Master considers it desirable, he may, notwithstanding the provisions of the trust in-
strument, appoint as co-trustee of any serving trustee any person whom he deems fit.”
The Master will probably exercise the discretionary power granted by this subsection if the
appointment of a co-trustee will provide a trust’s administration with specialised knowledge
or expertise that a serving trustee does not possess; when the intervention of a co-trustee will
________________________

46 See 6.13 regarding loss of office by a trustee.
49 See 7.2.1.4 regarding judicial review of the Master’s actions.
87
likely diffuse friction between the serving trustees or between the serving trustee and the trust
beneficiaries; or where it is doubtful whether a serving trustee is administering a trust in a
51
manner that ensures the requisite separation between control and enjoyment. Section 7(2),
unlike section 7(1), does not require of the Master to consult with interested parties prior to
52
appointing a co-trustee. In Moore v Du Toit the court acknowledged that the Master is not
legally compelled to consult with interested parties before appointing a co-trustee in terms of
53
this subsection, but opined that it is nevertheless proper for the Master to do so. The court in
the Moore case also said that any appointment by the Master in terms of section 7(2) is in any
54
event challengeable in terms of section 23 of the Act.
55
Cameron JA advised in Land and Agricultural Bank of South Africa v Parker that in order
to curb trustees’ abuse of trusts – and family business trusts in particular – through those
56
trustees’ disregard of the functional separation between control and enjoyment, the
Master must appoint “an independent outsider as trustee to every trust in which (a) the
57
trustees are all beneficiaries and (b) the beneficiaries are all related to one another”. The
Chief Master consequently directed that special rules apply from 6 March 2017 to the
appointment of the trustees of such family business trusts that are created and registered
58
after that date. All Masters must, namely, consider appointing such an independent
trustee who is neither a trust beneficiary nor “has [a] family relation or connection, blood
or other, to any of the existing or proposed trustees” to act as a co-trustee. This appoint-
ment must occur in respect of all trusts in which the trustees are (a) empowered to create
trust creditors by contracting with independent third parties; (b) the trustees are all trust
59
beneficiaries; and (c) the trust beneficiaries are all related to one another. These special
rules are aimed at curbing trust abuses thereby protecting the interests of third parties
60
who transact with trusts. The rules however permit that the appointment of an inde-
61
pendent trustee is dispensed with if good cause is shown for doing so. A trust instru-
ment can of course expressly direct that an independent trustee must be appointed for
that particular trust but, in the absence of such a directive, the Master must utilise section
7(2) of the Act to make the necessary appointment. The special rules further advise the
Master to obtain nominations for such an appointment in consultation with the trust
founder, the serving trustees and those beneficiaries who have vested rights in respect of
62
the trust property.
________________________
51 For example, see Deedat v The Master 1998 (1) SA 544 (N) 546G–547A and 549E; REM v VM 2017 (3) SA
371 (SCA) par 20.
52 [2009] ZAKZPHC 66 (30 November 2009).
53 At par 19.
54 At paras 14 and 15. See also Fesi v Trustees Elect of the Ndabeni Communal Property Trust [2018] 2 All SA
617 (SCA) par 54. See 7.2.1.4 regarding judicial review of the Master’s actions.
55 2005 (2) SA 77 (SCA).
56 See 1.2.1 regarding the separation between control and enjoyment and 7.6 regarding the abuse of the
trust form.
59 See also 9.6.1.
61 Chief Master’s Directive 2 of 2017. If the appointment of an independent trustee is dispensed with, the
Master may, according to the Directive, nevertheless request the furnishing of security by the family
member trustees or may request the trust’s financial statements to be audited on an annual basis along
with an instruction to the auditor to inform the Master of any potential harm to creditors.
62 Chief Master’s Directive 2 of 2017. See 8.4.2.1 regarding the vesting of rights.
88
The Trustee
6.3.1.5 Appointment by the High Court

The High Court has an inherent jurisdiction in terms of the common law to appoint new
63
trustees, additional trustees and substitute trustees to any trust. The court retains this juris-
64
diction despite the Master’s power to appoint trustees in terms of section 7 of the Act.
However, trustee appointment by the Master is a more expedient procedure and is likely to
65
be favoured by parties seeking such an appointment.
6.3.2 The appointment

appointment of a forei
foreign
gn trustee
Section 8 of the Act permits a foreign trustee to administer trust property in South Africa
under the Act’s prescripts:
“When a person who was appointed outside the Republic as trustee has to administer or dispose of
trust property in the Republic, the provisions of this Act shall apply to such trustee in respect of
such trust property and the Master may authorize such trustee under section 6 to act as trustee in
respect of that property.”
6.4 Acceptance of the appointment as a trustee

66
A trustee must accept his or her appointment as such. Consequently, a trustee does not
67
accede to the trustee office until he or she has accepted the appointment as trustee. All
trustees – whether of testamentary or inter vivos trusts – must furnish the Master with docu-
68
mentation that indicates their acceptance.
A person’s refusal to accept his or her appointment as trustee will not generally result in the
failure of the trust – the trustee office merely remains vacant until it is filled in one of the
69
ways discussed above. However, because an inter vivos trust is created by an agreement
between the trust founder and trustee, and because a trustee who has accepted the appoint-
70
ment as such is therefore a requirement for an inter vivos trust’s creation, a refusal by the
prospective trustee to conclude the trust agreement and hence to accept his or her appoint-
71
ment as trustee will indeed prevent the creation of an inter vivos trust.
6.5 A trustee’
trustee’s authorisation
6.5.1 The Master’
Master’s letter of authority
A trustee who has been validly appointed and who has accepted that appointment, assumes
the trustee office. Such a trustee may not however perform any act as a trustee until he or she
________________________

66 Olivier et al Trustreg en Praktyk 3.2.3; Geach Trust Law 154.
67 Corbett et al Law of Succession 400; Olivier et al Trustreg en Praktyk 3.2.3.
68 A trustee of an inter vivos trust must complete Form J417 (Acceptance of trusteeship) and submit it to the
Master. A testamentary trustee’s application to the Master for authorisation to act as a trustee (see 6.5.1)
must also include an acceptance of trusteeship: Olivier et al Trustreg en Praktyk 9.2.6.32(c).
69 See 6.3.1.
70 See 4.2.2.
89
has received written authorisation in the form of a letter of authority (Afrikaans: mag-
72
tigingsbrief) from the Master. Section 6(1) of the Act sets this requirement:
“Any person whose appointment as trustee in terms of a trust instrument, section 7 or a court or-
der comes into force after the commencement of this Act, shall act in that capacity only if author-
ized thereto in writing by the Master.”
An important distinction must therefore be maintained between a trustee’s appointment, on
73
the one hand, and a trustee’s authorisation, on the other. The former occurs in terms of the
trust instrument or, if the trust instrument is silent, by one of the methods prescribed by the
74
Act; the latter occurs exclusively through the Master’s exercise of the statutory power con-
75
ferred by section 6(1) of the Act. The Act renders the Master’s authorisation of a trustee
76
subject to the furnishing of security by that trustee. A trustee can be exempted from furnish-
77
ing security, but must desist from acting as trustee until he or she has received the Master’s
78
authorisation. The authorisation to act as a trustee is effective from the moment the Master
79
issues the letter of authority, not from the moment the trustee receives the letter. However,
if a trustee’s appointment is irregular, the subsequent authorisation of that trustee by the
80
Master is equally irregular. Any error on a letter of authority is however correctable by an
81
amended letter of authority. A copy of the Master’s authorisation often accompanies (or
should accompany) a trustee when he or she transacts with third parties or litigates in respect
82
of trust matters.
The Master may, should the need arise, allow representations by interested parties before
83
he or she issues a particular trustee with a letter of authority. The Master’s authorisation of a
84
trustee is challengeable before the High Court in terms of section 23 of the Act.
6.5.2 The authorisation

authorisation of a corporate
corporate trustee
Section 6(4) of the Act provides that authorisation given to a trustee that is a corporation shall,
subject to the provisions of the particular trust instrument, be given in the name of a nominee
of the corporation for whose actions as trustee the corporation is legally liable. Any substitu-
tion of such a nominee with some other person must be endorsed on the authorisation
85
concerned. In Metequity Ltd v NWN Properties Ltd the court held section 6(4) to be an express
86
indication of the competence of a corporation to be a trustee.
A trustee that is a corporation admittedly performs its trustee duties and exercises its trus-
tee powers through natural persons (such as directors and other officials) acting on that
________________________
72 Lupacchini v Minister of Safety and Security 2010 (6) SA 457 (SCA) par 3. See also the Chief Master’s
73 See generally De Waal 2017 TSAR 111.
74 See 6.3.
75 Metequity Ltd v NWN Properties Ltd 1998 (2) SA 554 (T) 557E–H; Hanekom v Voight 2016 (1) SA 416 (WCC)
par 13.
76 S 6(2)(a).
77 S 6(2)(b).
78 Wood-Bodley 2001 SALJ 374 at 386.
79 De Waal 2000 THRHR 472 at 473; Wood-Bodley 2011 SALJ 233 at 234.
80 Erwee v Erwee [2006] 1 All SA 626 (O) 631e.
81 Watt v Sea Plant Products Bpk [1998] 4 All SA 109 (C) 112a.
82 Rosner v Lydia Swanepoel Trust 1998 (2) SA 123 (W) 126C; Wood-Bodley 2001 SALJ 374 at 387.
83 Deedat v The Master 1998 (1) SA 544 (N) 548H–I.
84 For example, see Deedat v The Master 1998 (1) SA 544 (N) 545I–J. See 7.2.1.4 regarding judicial review of
the Master’s actions.
85 1998 (2) SA 554 (T).
86 At 557I.
90
The Trustee
corporation’s behalf. However, should a corporation be appointed as a trustee, the trustee

office vests, according to the court in the Metequity case, in the corporation itself and not in
87
the corporation’s nominee in whose name the Master issued the letter of authority. The
nominee is issued with this letter for practical reasons insofar as it enables the Master to
direct inquiries and issue directives to a specific natural person instead of directing inquiries
and issuing directives to the corporation itself where, given the nature of corporate anonymi-
ty, these inquiries and directives may never reach someone who assumes responsibility for
88
responding to the Master. Section 6(4) nevertheless refers to “a nominee of the corporation
for whose actions as trustee the corporation is legally liable” and this may create the impres-
sion that the trustee office vests partially in the corporation and partially in the nominee. The
court dispelled this notion of possible dual trusteeship between the corporation and its nomi-
nee in the Metequity case when it found that this prescript in section 6(4) instead envisions
the corporation’s vicarious liability (Afrikaans: middellike aanspreeklikheid) for actions per-
89
formed by its nominee. The court’s finding in the Metequity case that, when a corporation is
appointed as a trustee, trusteeship indeed vests in that corporation, prompted its further
ruling that a trustee corporation itself (and not its nominee) has locus standi (legal standing) to
litigate on trust matters. Such litigation will as a matter of course occur with the active partici-
90
pation of the corporation’s nominee in whose name the Master issued the letter of authority.
The Chief Master directed that when a corporation’s nominee ceases to act as such, the
corporation must nominate a replacement. The Master must also be furnished with a letter
from the corporation that confirms that the original nominee vacated this position. This letter
must furthermore contain the particulars of the replacement nominee and must confirm that
the corporation followed the trust instrument’s procedures regarding the replacement of
91
nominees.
6.5.3 Acts performed by an unauthorised trustee

6.5.3.1 Contracting by an unauthorised trustee
Prior to the Supreme Court of Appeal’s judgment in Lupacchini v Minister of Safety and Securi-
92
ty, the question regarding the validity of contracts concluded by trustees before being au-
thorised by the Master in terms of section 6(1) of the Act was a particularly troublesome one.
Indeed, by the time the Supreme Court of Appeal finally settled this question in 2010, it had
93
been adjudicated upon in no less than six reported High Court judgments, and had been the
94
subject of considerable debate among commentators.
________________________
87 At 557I–J.
88 At 556J–557A and 557I–558A.
89 At 558A and 558E–F. Vicarious liability is liability imposed on someone for the acts or omissions of
another.
90 At 558G–H. See also Nel v Metequity Ltd 2007 (3) SA 34 (SCA) 40D–H.
92 2010 (6) SA 457 (SCA).
93 Simplex (Pty) Ltd v Van der Merwe 1996 (1) SA 111 (W); Metequity Ltd v NWN Properties Ltd 1998 (2) SA
554 (T); Watt v Sea Plant Products Bpk [1998] 4 All SA 109 (C); Kropman v Nysschen 1999 (2) SA 567 (T);
Van der Merwe v Van der Merwe 2000 (2) SA 519 (C); Kriel v Terblanche 2002 (6) SA 132 (NC). A seventh
matter, that of Harris v Rees 2011 (2) SA 294 (GSJ), was in the process of adjudication when the Supreme
Court of Appeal delivered the Lupacchini judgment.
94 See De Waal 2000 THRHR 472; Wood-Bodley 2001 SALJ 374; Smith 2007 Stell LR 53; Smith and Van der
Westhuizen 2007 JJS 163; Bothma 2010 Stell LR 489.
91
95
Two dissonant High Court judgments, namely, Simplex (Pty) Ltd v Van der Merwe and
96
Kropman v Nysschen illustrate the crux of this uncertainty. In the Simplex case, an application
was made to eject the respondents (as trustees) from a property in respect of which one of
them concluded a contract of sale before receiving the Master’s written authorisation. The
applicant contended that the absence of authorisation rendered the contract null and void and
that the respondents’ occupation of the property was accordingly unlawful. The court, in
deciding in favour of the applicant, held that the prohibition in section 6(1) of the Act is a
97
peremptory “precondition to a trustee’s right to act as such”. The absence of the requisite
98
authorisation consequently renders any trustee act void and of no force and effect. The court
also held that neither a trustee (after having received the requisite authorisation) nor the
Master can resuscitate an act performed by an unauthorised trustee because it is legally
impossible to ratify an act that a statutory provision such as section 6(1) renders void ab initio
99
(from the outset). The court in the Simplex case held furthermore that the court itself also
has no discretionary power to validate retrospectively the contract at issue in this case be-
cause the court, if it ventured to do so, would unjustifiably assume the power to override
100
section 6(1)’s valid statutory prohibition.
101
In Kropman v Nysschen the court held an opposing view. The plaintiffs in this case alleged
that they (in their capacity as the trustees of a testamentary trust) succeeded to a claim
against the defendant through a cession (an agreement for the transfer of a right) from the
trust founder’s deceased estate. The defendant counter-argued that no proper cession oc-
curred because the Master issued the trustees with letters of authority only after approving the
deceased estate’s liquidation and distribution account and authorising the distribution of that
102
estate. According to the defendant, the plaintiffs were thus not authorised to act as trustees
in terms of section 6(1) at the earlier time when the cession purportedly took place. The court
nevertheless found in the plaintiffs’ favour and held that the court can indeed retrospectively
approve and ratify unauthorised trustees’ receipt of assets, including the cession of the claim
against the defendant at issue in the Kropman case, if doing so benefits the trust and its
103
beneficiaries. In coming to its decision, the court in the Kropman case relied, in particular,
on the fact that the legislature imposed no criminal sanction in respect of a breach of section
6(1)’s authorisation directive as well as on the absence of a provision in the Act that expressly
104
renders non-compliance with this directive void.
As the preceding discussion shows, the difference of opinion between the Simplex and
Kropman judgments can be ascribed to the two courts’ diverging views regarding the legisla-
105
ture’s purpose in enacting section 6(1). The court in the Kropman case held that an act
________________________
95 1996 (1) SA 111 (W).

96 1999 (2) SA 567 (T).
97 Simplex (Pty) Ltd v Van der Merwe 1996 (1) SA 111 (W) 112I.
98 At 113D–E.
99 At 113F–G.
100 At 114H–I.
101 1999 (2) SA 567 (T).
102 A liquidation and distribution account is compiled by an executor of a deceased estate to reflect the steps
that he or she has already taken toward the winding-up of the estate (for example, the sale of property
from the estate) as well as the steps that he or she will take to finally wind up the estate (for example, the
anticipated distribution of estate assets to the deceased’s successors). The Master must approve this
account before the executor is authorised to finalise the estate.
103 At 576F–G.
104 At 576E. These two points were also raised in argument in Simplex (Pty) Ltd v Van der Merwe 1996 (1) SA
111 (W) but were rejected by the court: 113C–E.
105 Du Toit 2001 TSAR 123 at 124.
92
The Trustee
performed by an unauthorised trustee is capable of ratification because section 6(1) was

106
enacted to protect the interests of the trust beneficiaries. The court in the Simplex case held,
on the other hand, that section 6(1) was not enacted purely for the trust beneficiaries’ benefit
but also to serve the public interest as it ensures that outsiders are provided with written
proof of trusteeship and simultaneously enables the Master to supervise the trust administra-
tion of a particular trustee in respect of the specific trust for which that trustee was authorised
107
to act as such. The Supreme Court of Appeal confirmed the correctness of the latter inter-
108
pretation in Lupacchini v Minister of Safety and Security. This case was primarily concerned
109
with an unauthorised trustee’s capacity to litigate but nevertheless established the positive
law position that an appointed but as yet unauthorised trustee lacks the legal capacity to act –
110
and hence to enter into a contract – on behalf of a trust.
The aforementioned legal position requires proper contextualisation. A first contextual con-
sideration emanates from the judgment of Rogers J in Hyde Construction CC v Deuchar Family
111
Trust and relates to trust instruments that prescribe a minimum number of trustees to be in
office and require them to act jointly in order to bind the trust contractually. In such cases,
the fact that one, more, or all of the appointed trustees is/are yet to be authorised to act as
such at the time of entering into a contract on the trust’s behalf implies, according to the legal
position stated in the Simplex and Lupacchini cases, that the purported contract is in fact null
112
and void and thus incapable of resuscitation by ratification. Rogers J however pointed out in
the Hyde Construction case that, if a trust instrument requires a minimum of, say, three
trustees acting jointly to bind a trust and there are indeed at least three trustees who hold
letters of authority from the Master, a joint decision by these three trustee is not invalid
merely because a fourth person, whom they mistakenly believed was a co-trustee, did not
possess a letter of authority. This is because the fourth person’s actions are disregarded and
the trust will, in accordance with the prescripts of the trust instrument, be bound by the
113
unanimous decision of the three trustees who were indeed properly authorised.
114
A second contextual consideration emerges from Kriel v Terblanche. In this case, a trustee
of the H Trust concluded a contract of sale with the applicant (the founder of the H Trust) in
terms of which immovable property of the applicant was sold to the trust. This contract was
concluded before the trustees of the H Trust received the Master’s authorisation. After receipt
of the requisite authorisation, registration of the transfer occurred in the name of the H Trust,
after which the trust’s trustees concluded a further agreement in terms of which the immova-
ble property was sold to the J & I Trust. The H Trust was sequestrated before the registration
of the transfer of the immovable property to the J & I Trust. The first respondent, as the
curator of the insolvent trust, authorised the sale to the J & I Trust, subsequent to which the
requisite registration was effected. The applicant instituted legal proceedings in which he
requested declaratory orders that, because the trustee of the H Trust lacked the necessary
authorisation at the time of the first sale, that contract was void ab initio. Consequently, so the
applicant contended, the registration of the transfer pursuant to this transaction, as well as
________________________
106 Kropman v Nysschen 1999 (2) SA 567 (T) 576F.

107 Simplex (Pty) Ltd v Van der Merwe 1996 (1) SA 111 (W) 112J–113B.
108 2010 (6) SA 457 (SCA) paras 9 and 18.
109 See 6.5.3.2.
110 See also Hyde Construction CC v Deuchar Family Trust 2015 (5) SA 388 (WCC) paras 41 and 42; Olivier et al
Trustreg en Praktyk 3.2.6; Wood-Bodley 2011 SALJ 233 at 239 and 245.
111 2015 (5) SA 388 (WCC).
112 At par 40.
113 At par 41.
114 2002 (6) SA 132 (NC).
93
the registration of the subsequent transfer to the J & I Trust, were similarly void. In the result,
so the applicant argued, the property still vested in him in his private capacity.
The court dealt with the applicant’s contention by determining whether the abstract theory
of the passing of ownership applies in South African law in respect of immovable property.
This theory prescribes that the transfer of ownership is not dependent on the validity of the
legal ground or iusta causa (such as a contract of sale) for the transfer. The theory therefore
permits the transfer of ownership from the transferor to the transferee even when the con-
tract in terms of which the transfer occurs is for some or other reason invalid. The abstract
theory however demands that a valid real agreement must exist between the transferor and
transferee. This real agreement lies therein that both these parties must intend for the trans-
fer of ownership to occur – the transferor and transferee must therefore have reached consen-
sus regarding the transfer of ownership from the former to the latter. The abstract theory of
the passing of ownership thus permits the acquirer of property (the transferee in the forego-
ing explanation) to in turn validly transfer ownership of that property to a third party despite
the invalidity of the legal ground (such as a contract of sale) upon which the acquirer initially
115
acquired the property.
It is settled that South African law adheres to the abstract theory of the passing of owner-
116
ship in movable property. The court in the Kriel case found that this theory is equally
117
applicable to the passing of ownership in immovable property. On the facts before the court
in the Kriel case, the trustee of the H Trust lacked the Master’s authorisation at the time of the
conclusion of the contract in terms of which the immovable property was sold to the H Trust,
but possessed the requisite authorisation at the time of the registration of the transfer of that
property in the name of the trust. The court therefore held that, despite the invalidity of the
contract of sale by reason of the trustee’s lack of authorisation, the trust founder and the
trustee nevertheless evinced the clear intention to transfer the property to the H Trust: a valid
real agreement therefore existed between the founder and the trustee. Moreover, the trustee
was indeed duly authorised at the date of registration, which rendered the registration of the
transfer valid. The ownership in the immovable property thus passed to the H Trust in terms
of the valid real agreement between the H Trust’s founder and the trust’s trustee, and that
118
ownership was subsequently validly transferred from the H Trust to the J & I Trust.
The Kriel case thus establishes something of a loophole in respect of the general rule that
any contract concluded by an unauthorised trustee is null and void. Where, as in the Kriel
case, an unauthorised trustee concludes a contract to purchase (immovable) property, the
law of property – and more specifically the abstract theory of the passing of ownership –
can, despite the contract’s invalidity by reason of the trustee’s lack of authorisation, nev-
ertheless occasion a valid transfer of ownership from the transferor (seller) to the trans-
feree (the trustee as purchaser), provided that a valid real agreement existed between
them and that the transfer of ownership was subsequently effected (for example, through
the registration of the transfer in the case of immovable property) at a time when the
trustee was duly authorised.
________________________
115 At 140D–141B. The causal theory of the passing of ownership prescribes, by contrast, that the transfer of
ownership depends on the existence and validity of the legal ground or iusta causa for the transfer.
116 At 141B–C and 142B.
117 At 148F–G. The applicability of this theory to transfers of immovable property was subsequently con-
firmed by the Supreme Court of Appeal in Legator McKenna Inc v Shea 2010 (1) SA 35 (SCA) par 21.
118 At 147J–148A.
94
The Trustee
6.5.3.2 Litigation by an unauthorised trustee

The issue regarding an unauthorised trustee’s capacity and legal standing to litigate (locus
standi in judicio) on behalf of a trust first arose for adjudication in Watt v Sea Plant Products
119
Bpk. In this case, the plaintiff sued the defendants who were the trustees of the S Trust.
However, as the defendants were not in possession of letters of authority when summons was
issued, they pleaded that their lack of authorisation caused them not to have locus standi to
defend the action brought against them. Conradie J held that, in interpreting section 6(1) of
the Act, a distinction must be drawn between contractual capacity, on the one hand, and the
capacity to litigate, on the other. In his view, and relying on the Simplex case, section 6(1)
regulates only the former, with the result that an unauthorised trustee cannot bind a trust
120
contractually or incur contractual liabilities on its behalf. However, section 6(1) does not,
according to Conradie J, regulate the capacity to litigate because locus standi is an access
mechanism that the court itself controls by determining whether a prospective litigant has a
121
sufficiently close interest in the litigation. He adjudged that the defendant trustees had a
well-defined and close interest in the administration of the S Trust and that this interest was
122
sufficient to give them locus standi. Conradie J accordingly dismissed the defendants’ plea
123
regarding their lack of locus standi.
The Supreme Court of Appeal delivered the leading judgment on point little more than a
124
decade later in Lupacchini v Minister of Safety and Security. The trust deed of the L Family
Trust at issue in this case required a minimum of two trustees to be in office at all times. The
trust’s two initial trustees were appointed and duly authorised in terms of section 6(1) of the
Act. One of these trustees resigned in June 2003 and was replaced by another trustee, C, who
was authorised by the Master to act as such in December 2004. However, in August 2004,
prior to C being authorised, the trustees decided to sue the respondent for damages arising
from what the trustees alleged was an illegal police raid at a nightclub run by the trust. The
respondent claimed that the action was a nullity by reason of C’s lack of authorisation, while
the trustees contended otherwise. A full bench of the High Court found in the respondent’s
125
favour and the trustees thereafter took the matter to the Supreme Court of Appeal.
A crucial issue that had to be determined on appeal was whether the Watt case was correct-
ly decided. Nugent JA pointed out in this regard that while Conradie J was indeed correct
when he said in that case that locus standi is determined with reference to whether a litigant
has a sufficient interest in the particular proceedings, he overlooked the fact that
the question regarding the presence or absence of such an interest can only be answered
after it has been determined whether the potential litigant is indeed legally capable of suing or
126
being sued in the first place. The true – and crucial – question is thus whether, on a proper
interpretation of section 6(1) of the Act, non-compliance with this subsection renders an
unauthorised trustee completely incapable of litigating regardless of any interest he or she
127
may have in the particular litigation. Nugent JA agreed in this regard with the interpretation
128
of the legislative purpose behind section 6(1) favoured in the Simplex case. The Judge of
________________________
119 [1998] 4 All SA 109 (C).

120 At 112i–j and 113g.
121 At 113h.
122 At 114a–c.
123 At 115f.
124 2010 (6) SA 457 (SCA).
125 Minister of Safety and Security v Lupacchini [2015] JOL 33825 (FB).
127 At par 13 read with par 16.
128 At par 16.
95
Appeal proceeded to identify four reasons for concluding that any action taken by an unau-
thorised trustee is null and void:
• the Act does not impose any criminal sanction for contravening section 6(1) and the
legislature therefore ostensibly saw no need to punish a party criminally for committing an
129
act that has no legal consequences whatsoever;
130
• the Act’s definition of a trustee in section 1 makes it clear that only authorised trustees
fall within the Act’s regulatory ambit: if non-compliance with section 6(1) does not occa-
sion nullity of the act performed and the trustee who performed the act is not criminally
sanctioned (for the reason given in the previous bullet point), trustees will in fact be en-
131
couraged to disregard the Act completely;
• the net effect of the finding in the Watt case, namely, that a lack of authorisation means
that the contractual capacity of a trustee is suspended while the capacity to litigate is not,
leads to the anomalous conclusion that an unauthorised trustee will “be capable of con-
ducting major litigation from beginning to end . . . but yet not be capable of contracting for
132
the purchase of a pen”; and
• no significant practical considerations favour the granting of locus standi to an unauthor-
133
ised trustee.
Nugent JA therefore reasoned that, if the court was to recognise trustee acts performed in
contravention of section 6(1) as valid, it will undermine the legislature’s purpose with enact-
ing the subsection. In addition, doing so will not accord with the finding in Land and Agricul-
134
tural Bank of South Africa v Parker that legal proceedings commenced by anyone who lacks
135
the capacity to act on a trust’s behalf are a nullity. The Lupacchini case has met with criti-
136
cism but it constitutes the positive law regarding the invalidity of any substantive legal act
137
(as opposed to an administrative act) performed by an unauthorised trustee.
6.5.3.3 Acts of an administrative nature

The Chief Master acknowledged that the positive law created by Simplex (Pty) Ltd v Van der
138 139
Merwe and Lupacchini v Minister of Safety and Security entails that a trustee may not
in any way deal with trust property prior to being authorised. However, the Chief Master
conceded that common sense dictates that an unauthorised trustee “must be allowed
to perform those functions that will allow him or her to obtain the Master’s authority and
140
must be allowed to maintain and conserve assets while that authority is pending”. The
former category of trustee functions presumably includes compliance with a number of
141
administrative duties that the Act imposes on a trustee. The latter category appears
________________________
129 At par 18.

130 See 1.5.2 and 6.1.
131 At par 18.
132 At par 19.
134 2005 (2) SA 77 (SCA).
136 Smith 2011 Stell LR 314 at 323–329; Wood-Bodley 2011 SALJ 233 at 239–245.
137 See 6.5.3.3.
138 1996 (1) SA 111 (W).
139 2010 (6) SA 457 (SCA).
141 De Waal 2017 TSAR 111 at 120–121 mentions the following: lodging a trust instrument and/or variations
thereto with the Master (s 4); furnishing the Master with an address for the service of notice and process
(s 5); and preserving trust documents (s 17). See 7.3.1 for discussions of these trustee duties.
96
The Trustee
142
to accord with the view expressed in Harris v Rees that even an unauthorised trustee is by
virtue of his or her fiduciary duty obliged to protect the trust’s interests against any unlawful
143
or unwarranted intrusion. This protection includes, according to the Harris case, a decision
taken in accordance with the trust instrument by a meeting of the unauthorised trustees to
144
remove “a furtive trustee” from the trustee office and to fill the resultant vacancy. However,
where a trust instrument prescribes that a particular minimum number of trustees must hold
office at all times, the requisite number of trustees must be in office (in the sense of being
appointed and having accepted the appointments) at the time that this type of action is
145
taken. De Waal therefore supports the finding in the Harris case because it underscores the
fundamental difference between a trustee’s appointment, on the one hand, and a trustee’s
146
authorisation, on the other. De Waal also favours the court’s approach in the Harris case
insofar as it shows that the absence of the Master’s authorisation does not summarily invali-
147
date each and every trustee action.
6.6 The ffurnishing

urnishing of security by a trustee
Section 6(2) and (3) of the Act renders the Master’s authorisation of a trustee in terms of
section 6(1) conditional on either the furnishing of security (Afrikaans: sekerheidstelling) by the
trustee or the trustee’s exemption (Afrikaans: vrystelling) from the furnishing of security.
These subsections also bestow extensive discretionary powers on the Master with regard to
the furnishing of security. Section 6(2) and (3) provides:
“(2) 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 perfor-
mance 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 in-
strument:
Provided that where the furnishing of security is required, the Master may, pending the furnish-
ing of security, authorize the trustee in writing to perform specified acts with regard to the trust
property.
(3) The Master may, if in his opinion there are sound reasons to do so –
(a) whether or not security is required by the trust instrument (except a court order), dis-
pense with security by a trustee;
(b) reduce or cancel any security furnished;
(c) order a trustee to furnish additional security;
(d) order a trustee who has been exempted from furnishing security in terms of a trust
instrument (except a court order) to furnish security.”
Section 6(2)(a) renders the furnishing of security by a trustee (if required) a precondition for
148
the issuing of the Master’s letter of authority to such a trustee in terms of section 6(1). The
________________________
142 2011 (2) SA 294 (GSJ).

143 At 298E–F.
144 At 298B.
145 De Waal 2017 TSAR 111 at 120.
146 Compare Hyde Construction CC v Deuchar Family Trust 2015 (5) SA 388 (WCC) paras 41 and 42 which De
Waal 2017 TSAR 111 at 118–119 criticises for taking the view that, because one of the two trustees in the
Lupacchini case lacked authorisation, only the authorised trustee was in fact in office.
147 2017 TSAR 111 at 118–119.
148 Deedat v The Master 1998 (1) SA 544 (N) 546F and 548D–E.
97
Master usually requires as security a fidelity-guarantee policy from an acknowledged insur-

ance company in terms of which the company undertakes to indemnify the trust against
149
losses incurred through a trustee’s default or delinquency. The trust usually bears all rea-
150
sonable costs incurred to obtain the necessary security.
Section 6(2)(b) allows the Master to authorise a trustee without that trustee having fur-
nished security, if the trustee has been exempted from the furnishing of security. Only the
court, the Master or the trust instrument can exempt a trustee from furnishing security. Trust
instruments regularly contain a provision exempting trustees from the furnishing of security.
Professional trustees such as trust companies or financial institutions which, through their
officials, draft trust instruments and conduct the resultant trusts’ administration, exempt
themselves as a matter of course from the furnishing of security. Even non-professional
trustees are readily exempted from the security requirement because a fidelity-guarantee
policy is not readily obtainable by private individuals, in particular, when trust administration
151
is to continue for a lengthy period. The Master may in terms of section 6(3)(d) overrule an
exemption contained in a trust instrument (except when such an exemption is granted by a
court order) and insist that the exempted trustee nevertheless furnish security. The proviso to
section 6(2) allows the Master to facilitate trust administration in instances where the furnish-
ing of security is required but it will likely take some time to procure the requisite security.
The Master may in such cases grant a trustee interim authorisation to perform specified acts
in respect of the trust property.
Section 6(3) confers wide discretionary powers on the Master to extensively regulate a trus-
tee’s furnishing of security. These powers are discretionary in nature, to be exercised if the
Master is of the opinion that there are sound reasons for doing so. The Master must therefore
apply his or her mind to the matter and, where appropriate, hear representations by interest-
ed parties such as the trust founder and trust beneficiaries. The Master is empowered to
dispense with security even if the trust instrument (other than a court order) prescribes the
furnishing of security. The Master may do so if the trust founder omitted to exempt a trustee
from furnishing security in a trust instrument and the Master is of the opinion that this omis-
sion is attributable to oversight or ignorance. The Master may also exempt a trustee if he or
she is unable to raise the required security or if the trust estate is too small to bear the cost of
152
procuring security. Conversely, the Master may insist on the furnishing of security despite
an exemption in a trust instrument (other than a court order). The Master may do so if the
value of the trust property or the intricacy of trust administration renders the trustee’s exemp-
tion from furnishing security by the trust instrument untenable. The Master may furthermore
cancel or reduce any security already furnished. This may occur when the trust property’s
value decreased over time or if the trustee satisfactorily accounts for the distribution of some
153
or all of the trust property. Finally, the Master may order a trustee to furnish additional
security. The Master may do so if the trust property’s value increased over time or if the
extent of the security that the trustee originally furnished is deemed inappropriate or inade-
154
quate.
________________________
149 Olivier et al Trustreg en Praktyk 3.2.9.1 and 3.2.9.4. The Master may require a trustee to complete Form J344
(Undertaking and bond of security), or the trustee must furnish the Master with proof of exemption from the
security requirement.
151 Ibid 3.2.9.1.
152 Law Commission Report: Review of the Law of Trusts par 6.2.
153 Ibid par 6.5.
154 Ibid.
98
The Trustee
The Act does not impose any criminal sanction on a trustee who fails to furnish security.
Section 20(2)(b) of the Act nevertheless empowers the Master to remove a trustee from office
if that trustee fails to give security or additional security to the Master’s satisfaction within two
months of having been requested to do so or within such further period as the Master per-
mits. Section 20(2)(e) also allows for trustee removal if a trustee fails to satisfactorily perform
any duty imposed on him or her by the Act or to comply with any lawful request of the
Master. The Master may also apply to the court for the removal of such an errant trustee in
terms of section 20(1) of the Act on the ground that the removal will be in the interests of the
155
trust and its beneficiaries. Any decision by the Master on the issue of security, including any
steps taken as a result of a trustee’s failure to furnish security, is, as with all other decisions
156
taken by the Master, open to judicial review in terms of section 23 of the Act. The High
Court therefore enjoys the power not only to insist on, or exempt a trustee from the furnish-
ing of security, but it also retains the final say over the Master’s decisions regarding trustee
security.
6.7 A trustee’
trustee’s fiduciary duty
A trustee is under a fiduciary duty (Afrikaans: fidusiêre plig or getrouheidsplig) from the mo-
157 158
ment he or she assumes the trustee office. The court stated in Hofer v Kevitt that a trus-
tee’s fiduciary duty bears primarily on the manner in which he or she takes charge of and
159
manages the trust property. A trustee’s fiduciary duty therefore becomes pertinent once
that trustee has been appointed as such, has accepted the appointment and has received the
Master’s written authorisation to act in the capacity of trustee with regard to the trust proper-
ty. However, the exact meaning and content ascribable to a trustee’s fiduciary duty under
160
South African law has proven elusive.
161
In Phillips v Fieldstone Africa (Pty) Ltd, a case that dealt with the liability of an employee
to his employer for secret profits made by the former out of an opportunity that arose in the
course of his employment, the court held that the existence of a fiduciary duty as well as its
nature and extent are factual matters to be deduced from a thorough consideration of the
substance of the relationship between the relevant parties and any particular circumstances
162
affecting the operation of that relationship. The court opined further that an essential
requirement for the establishment of a fiduciary duty is that one party must stand in relation
163
to another in a position of confidence and good faith which the former is obliged to protect.
164
The court in the Phillips case referenced Robinson v Randfontein Estates Gold Mining Co Ltd
where the essence of a fiduciary duty was held to be that the party entrusted with the protec-
tion of the interests of another is not allowed to make a secret profit at the other’s expense or
to place him- or herself in a position where his or her private interests conflict with this duty
________________________
155 See 6.13.5 and 6.13.6 regarding trustee removal.

156 Fesi v Trustees Elect of the Ndabeni Communal Property Trust [2018] 2 All SA 617 (SCA) par 54. See 7.2.1.4
regarding judicial review of the Master’s actions.
157 Du Toit 2007 Stell LR 469 at 470–471.
158 1996 (2) SA 402 (C).
159 At 407F.
160 Hofer v Kevitt 1996 (2) SA 402 (C) 407B. See also Du Toit 2001 TSAR 123 at 127; Du Toit 2007 Stell LR
469 at 472.
161 [2004] 1 All SA 150 (SCA).
162 At 159e–f.
163 At 159g.
164 1921 AD 168.
99
165
to the other. In English law the obligation arising from a fiduciary relationship is generally
166
known as a duty of loyalty which, according to the court in the Phillips case, is the equiva-
167
lent of a fiduciary duty in South African law.
However, an analysis of South African case law reveals that our courts have extended a
168
trustee’s fiduciary duty beyond the ambit of English law’s duty of loyalty. A trustee’s fiduci-
ary duty under South African law can therefore be construed as a single but multi-faceted duty
169
comprising a number of component duties. Which facet or facets of a trustee’s fiduciary
duty is/are important in any given instance will depend, as the court indicated in the Phillips
case, on the substance of the relationship between the relevant parties, as well as any rele-
vant circumstances affecting the operation of that relationship, as deduced from the facts of
each case.
Two considerations are therefore decisive in establishing the existence, nature and extent
of a trustee’s fiduciary duty: firstly, the primary focus of this duty is the manner in which the
170
trustee administers trust property and, secondly, trust beneficiaries have a beneficial inter-
171
est in the trustee’s administration of trust property. This being the case, it is settled law that
172
a trustee must conduct trust administration as a bonus et diligens paterfamilias (a reasona-
173
ble, prudent and careful person) with the utmost good faith and in the best interests of the
174
trust beneficiaries. It is in this light unsurprising that a trustee’s fiduciary duty has been
directly linked to, and even equated with, the duty of care, diligence and skill imposed on
175 176
trustees by the common law and the Act. However, while there is much to be said for
such an approach, it is submitted that the duty of care is merely one, although perhaps the
most important, component duty of a trustee’s general fiduciary duty. Case law reveals that
South African courts have attributed an essential fiduciary quality to a number of other trustee
duties and these duties constitute further component duties of a trustee’s general fiduciary
177
duty.
One such further duty is a trustee’s duty to act with the requisite impartiality which re-
quires of a trustee to avoid any conflict between his or her private interests and those of the
178
trust and its beneficiaries, as well as not making any undue profit from his or her trustee-
179
ship. Another duty that South African courts have endowed with a fiduciary quality is a
________________________
165 At 177. See also De Waal 2000 SALJ 548 at 558.

166 De Waal 2000 SALJ 548 at 558; Hood 2000 ELR 308 at 310–311.
167 Phillips v Fieldstone Africa (Pty) Ltd [2004] 1 All SA 150 (SCA) 167f.
168 Du Toit 2007 Stell LR 469 at 473. See also Olivier et al Trustreg en Praktyk 3.4.2.1.10.
169 Du Toit 2007 Stell LR 469 at 473. See also Hanekom v Voight 2016 (1) SA 416 (WCC) par 20; Geach Trust
Law 216.
170 Hofer v Kevitt 1996 (2) SA 402 (C) 407F; Olivier 2001 SALJ 224 at 229.
171 Jowell v Bramwell-Jones 1998 (1) SA 836 (W) 891B and 894E; Olivier 2001 SALJ 224 at 229.
172 Sackville West v Nourse 1925 AD 516 at 534; Gowar v Gowar 2016 (5) SA 225 (SCA) paras 25 and 26;
Olivier et al Trustreg en Praktyk 3.4.2.1.10.
173 Doyle v Board of Executors 1999 (2) SA 805 (C) 813B; Geach Trust Law 216.
174 Geach Trust Law 216; Olivier 2001 SALJ 224 at 229.
175 Sackville West v Nourse 1925 AD 516 at 534.
176 S 9(1) requires of a trustee, in the performance of his or her duties and the exercise of his or her powers,
to act with the care, diligence and skill that can reasonably be expected of a person who manages the af-
fairs of another. See Metequity Ltd v NWN Properties Ltd 1998 (2) SA 554 (T) 556I–J; Doyle v Board of Exec-
utors 1999 (2) SA 805 (C) 813F; De Waal 1998 TSAR 326 at 330; Olivier 2001 SALJ 224 at 229; Olivier
2002 TSAR 220 at 221; Kloppers 2006 TSAR 414 at 421. See 7.3.1.4 regarding a trustee’s duty to act with
care, diligence and skill.
177 Du Toit 2007 Stell LR 469 at 474.
178 Hoppen v Shub 1987 (3) SA 201 (C) 210A–B; Kidbrooke Place Management Association v Walton 2015 (4) SA
112 (WCC) paras 48 and 49; Hanekom v Voight 2016 (1) SA 416 (WCC) par 20.
179 African Bank Ltd v Weiner [2003] 4 All SA 50 (C) 54d–e; Geach Trust Law 217; De Waal 2000 SALJ 548 at
558. See 7.3.2.3 regarding a trustee’s duty of impartiality.
100
The Trustee
trustee’s accountability for trust administration by keeping trust property separate from his or
180
her private property and rendering a proper account of trust administration when asked to
181
do so. Yet another component duty of a trustee’s fiduciary duty identifiable from case law is
the duty to act independently in respect of trust administration and not slavishly follow the
182
lead of the trust founder, his or her co-trustees or the trust beneficiaries.
The aforementioned duties, namely, those of care, diligence and skill; impartiality; ac-
countability; and independence, are the principal components of a trustee’s general fiduciary
duty under South African law. These four duties do not constitute an exhaustive list, and the
submission that they form the essential components of a trustee’s general fiduciary duty does
183
not preclude additions to the list of component duties. The four duties highlighted above are
however the ones regularly and consistently identified by our courts as fundamentally pos-
sessing a fiduciary quality. However, the ambit of a fiduciary duty is not static and is subject
184
to change depending on the facts and circumstances of each case. These facts and circum-
stances will determine whether one, more or all of the aforementioned component duties
must inform a court’s decision when a trustee’s general fiduciary duty is at issue.
6.8 Co-
Co-trusteeship
Trust administration is often undertaken by more than one trustee. All such co-trustees
185
(Afrikaans: mede-trustees) hold a single trustee office, irrespective of their number. The trust
instrument regulates the relationships between the co-trustees. The trust instrument should in
this regard address substantive matters, such as the powers and duties of the co-trustees;
procedural matters, such as the format and regularity of trustee meetings as well as quorum
requirements for and voting procedures at such meetings; and dispute-resolution mechanisms
when the co-trustees cannot co-operate or when they find themselves deadlocked at trustee
186
meetings.
One of the essential features of South African trust law is the joint-action rule of co-
187
trusteeship. This rule prescribes that unless the trust instrument directs otherwise, co-
trustees are always required to act jointly in the performance of their duties and the exercise
188
of their powers. This rule stems from a number of fundamental characteristics of co-
trusteeship:
189
• the trustee office vests trust administration in each co-trustee individually and because
190
co-trustees hold the trustee office jointly, each individual co-trustee must necessarily par-
ticipate in trust administration along with the other co-trustees;
________________________
180 Doyle v Board of Executors 1999 (2) SA 805 (C) 813G. See 7.3.1.5 and 7.3.1.6 regarding prescripts from
the Act to ensure that a trustee takes the necessary steps to separate trust property from his or her private
property.
181 Doyle v Board of Executors 1999 (2) SA 805 (C) 815F–G; Geach Trust Law 217–218. See 7.2.1.3 and
7.3.2.5 regarding a trustee’s duty to account for trust administration to the Master, trust beneficiaries and
co-trustees.
182 Tijmstra v Blunt-MacKenzie 2002 (1) SA 459 (T) 474E–F; Land and Agricultural Bank of South Africa v
Parker 2005 (2) SA 77 (SCA) par 22. See 7.3.2.2 regarding a trustee’s duty to exercise independent
judgement and discretion.
183 Du Toit 2007 Stell LR 469 at 476; Geach Trust Law 218.
184 Howard v Herrigel 1991 (2) SA 660 (A) 678B–C; Ghersi v Tiber Developments (Pty) Ltd 2007 (4) SA 536
(SCA) 544H–545B.
186 Pace and Van der Westhuizen Wills and Trusts B15.1.1; Geach Trust Law 174.
187 See 1.2.5.
188 Nieuwoudt v Vrystaat Mielies (Edms) Bpk 2004 (3) SA 486 (SCA) paras 16 and 23; Land and Agricultural
Bank of South Africa v Parker 2005 (2) SA 77 (SCA) par 15; Thorpe v Trittenwein 2007 (2) SA 172 (SCA) par
9; Lupacchini v Minister of Safety and Security 2010 (6) SA 457 (SCA) par 2; Bonugli v Standard Bank of
South Africa Ltd 2012 (5) SA 202 (SCA) par 15.
101
• the co-trustees of an ownership trust are vested with co-ownership in the trust property
and the co-trustees must, in terms of the general rules of property law, exercise this co-
191
ownership jointly; and
192
• co-trustees share a common fiduciary duty that emanates from the single trustee office.
The joint-action rule applies not only to important matters of trust administration, such as
193
alienating or encumbering the trust property, but to all trust matters. A trustee decision
194
made or trustee action taken in contravention of this rule is invalid and unenforceable. A
trust instrument can exclude or qualify the operation of the joint-action rule, but this rarely
195
happens. Moreover, the common law requires all trustee decisions to be taken unanimously
(in other words, all the co-trustees must concur with the decision), unless the trust instrument
196
specifically provides that a majority vote suffices.
The joint-action rule, despite its fundamentality to South African trust law, can hamper ef-
fective and expeditious trust administration because it is not always practicable to obtain the
concurrence of all trustees for every trustee decision or action to be taken on a trust’s behalf.
For this reason trust instruments often designate one of the co-trustees to run the trust’s
197
affairs as the executive or managing trustee. However, unless a trust instrument bestows
particular executive powers on such an executive or a managing trustee, that trustee must still
be authorised, either expressly or impliedly, by the other trustees to act exclusively on the
198
trust’s behalf. A managing trustee is thus not automatically entitled to act unilaterally or
199
independently of the other trustees. Furthermore, a managing trustee must at all times
permit all the non-managing trustees to participate in trust administration and he or she may
200
not prevent or exclude any of them from doing so. Another way of circumventing the
strictures of the joint-action rule is for co-trustees to authorise one (or more) of their number
or a third party to act on their behalf in trust matters. In such a case the authorised co-
201
trustee(s) or third party acts as the agent of the full trustee complement. It is advisable that
the trust instrument regulates the bestowal of this type of authorisation explicitly and that the
202
trustees document the granting thereof meticulously.
________________________
191 Land and Agricultural Bank of South Africa v Parker 2005 (2) SA 77 (SCA) par 15; Jansen v Ringwood
Investments 87 CC [2013] ZAGPPHC 129 (20 May 2013) paras 21–23.
192 Gowar v Gowar 2016 (5) SA 225 (SCA) par 23.
193 Coetzee v Peet Smith Trust 2003 (5) SA 674 (T) 680F.
194 Land and Agricultural Bank of South Africa v Parker 2005 (2) SA 77 (SCA) paras 15–18; Thorpe v Trittenwein
2007 (2) SA 172 (SCA) par 14; Jansen v Ringwood Investments 87 CC [2013] ZAGPPHC 129 (20 May 2013)
paras 21–23; De Waal and Du Plessis 2014 Stell LR 343.
196 Coetzee v Peet Smith Trust 2003 (5) SA 674 (T) 678I–679B; Geach Trust Law 220; Pace and Van der
Westhuizen Wills and Trusts B15.1.1.
197 Goolam Ally Family Trust v Textile, Curtaining & Trimming (Pty) Ltd 1989 (4) SA 985 (C) 987C; Van der
Westhuizen v Van Sandwyk 1996 (2) SA 490 (W) 494B–C; MAN Truck & Bus (SA) Ltd v Victor 2001 (2) SA
562 (NC) 569G; Coetzee v Peet Smith Trust 2003 (5) SA 674 (T) 680H.
198 Van der Westhuizen v Van Sandwyk 1996 (2) SA 490 (W) 496C–H; Thorpe v Trittenwein 2007 (2) SA 172
(SCA) paras 9 and 10.
199 Goolam Ally Family Trust v Textile, Curtaining & Trimming (Pty) Ltd 1989 (4) SA 985 (C) 988G–H.
200 Tijmstra v Blunt-MacKenzie 2002 (1) SA 459 (T) 474H; Erwee v Erwee [2006] 1 All SA 626 (O) 632a–b;
Steyn v Blockpave (Pty) Ltd 2011 (3) SA 528 (FB) paras 13–16.
201 Nieuwoudt v Vrystaat Mielies (Edms) Bpk 2004 (3) SA 486 (SCA) par 23; Thorpe v Trittenwein 2007 (2) SA
172 (SCA) par 9; Moraitis Investments (Pty) Ltd v Montic Dairy (Pty) Ltd 2017 (5) SA 508 (SCA) par 23.
102
The Trustee
Even if trustees follow a trust instrument’s prescripts regarding the authorisation of one
of their number or a third party to act on their behalf, an act performed by such a trustee
or third party as the authorised agent of the full trustee complement is not necessarily
203
valid. In Thorpe v Trittenwein the seller (the first respondent) and a trust concluded a
contract for the purchase of immovable property in December 2000. T, one of the trust’s
trustees, signed the contract on the trust’s behalf. The trust instrument provided for three
trustees, and permitted any of them to delegate all or any of his powers to any person
approved by his co-trustees. The seller attempted to cancel the contract on a number of
grounds, one of which was for lack of compliance with section 2(1) of the Alienation of
Land Act. T averred in response that he had been orally authorised by his co-trustees to
enter into the contract. He additionally adduced evidence that this oral authorisation had
subsequently been ratified in writing at a meeting of all three trustees held during Octo-
ber 2003. Section 2(1) of the Alienation of Land Act provides that no alienation of land
shall 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. The Supreme Court of
Appeal held that the reference to “agent” in section 2(1) included a trustee in the position
204
of T. Consequently, although T was validly authorised by his co-trustees in accordance
with the directives contained in the trust instrument, the fact that this authority was not
given in writing meant that the sale was void from the outset due to non-compliance with
205
the Act’s prescripts on the formalities required for the alienation of land. Furthermore,
the court held that the argument that the co-trustees’ subsequent written ratification of
T’s conduct resuscitated the contract was without merit as it is trite that “[t]here can be
206
no ratification of a contract which is void ab initio”.
From the point of view of a third party who contracts with co-trustees, those trustees consti-
tute a single unit and must, subject to the provisions of the particular trust instrument, always
act jointly. Consequently, a third party must, unless otherwise directed, proceed on the
assumption that trustee powers – particularly those pertinent to binding the trust contractual-
207
ly to an outsider – must be exercised by all of a trust’s co-trustees jointly.
6.8.1 A prescribed minimum number of co-

co-trustees
A trust instrument can prescribe that a certain minimum number of trustees must hold office
at all times. Such a prescript is a “capacity-defining condition” for any action taken by the co-
208
trustees on the trust’s behalf. This means that if fewer trustees than the minimum number
specified in the trust instrument occupy the trustee office, the trustees cannot act on the
trust’s behalf because they lack the capacity to act, for want of compliance with the trust
209
instrument’s prescript regarding the number of trustees that must be in office. The trustees’
lack of capacity to act also renders subsequent ratification (after the prescribed minimum
________________________
203 2007 (2) SA 172 (SCA).

204 At paras 13–15.
205 At paras 10–11 and 13–15. This aspect of the judgment has been criticised: see Lötz and Nagel 2006
THRHR 698 at 672; Van der Linde 2012 THRHR 371 at 385. It has nevertheless been accepted as correct
in subsequent case law: see Pace and Van der Westhuizen Wills and Trusts B15.1.1 who reference Jansen
v Ringwood Investments 87 CC [2013] ZAGPPHC 129 (20 May 2013) paras 23 and 24.
206 At par 16.
209 Ibid; Steyn v Blockpave (Pty) Ltd 2011 (3) SA 528 (FB) par 32; Hyde Construction CC v Deuchar Family Trust
2015 (5) SA 388 (WCC) paras 41 and 42.
103
trustee number has been restored by the appointment of a new trustee or trustees) of any act
210
performed impossible. In the event that a trust instrument prescribes that a minimum
number of trustees must always hold office, the mere appointment of the prescribed number
of trustees is not sufficient to ensure that they have the capacity to act on the trust’s behalf: in
order to comply with such a capacity-defining condition – at least for the purpose of binding
211
the trust contractually or litigating on its behalf – there must be a minimum number of duly
appointed trustees who have been authorised by the Master in terms of section 6(1) of the
212
Act.
213
Land and Agricultural Bank of South Africa v Parker illustrates both the operation of the
joint-action rule as well as the principle that a sub-minimum number of trustees cannot
bind a trust contractually. This case concerned a family business trust that conducted
farming activities. The trust instrument required a minimum of three trustees to be in
office at all times. The trust instrument prescribed further that the three trustees could
bind the trust through a majority vote when taking trustee decisions. The trust founder
(P), his wife (J) and an attorney (S) were the initial trustees when the trust was established
in 1992, but S resigned in 1996. S was only replaced in October 1998 by a third trustee,
D, who happened to be P and J’s son. However, before D was appointed, and thus while
fewer than the prescribed minimum of three trustees were in office, P and J concluded a
number of loan agreements with the appellant. P and J entered into a final loan agree-
ment with the appellant after D’s appointment, but this occurred neither with D’s
knowledge nor with his consent. P and J bound the trust as surety and co-principal debtor
in these loan agreements. When P and J defaulted on repaying the loans, the appellant
sought to sequestrate P’s private estate as well as the trust estate. The trustees denied the
trust’s liability under the loan agreements. They averred that all of the loan agreements
(with the exception of the final one) were entered into on the trust’s behalf by only two
trustees and that those agreements were therefore never validly concluded because only
two trustees out of the prescribed three-trustee complement had the capacity to bind the
trust to the appellant. The appellant averred before the Supreme Court of Appeal that the
loan agreements were indeed valid. The appellant argued, with regard to the agreements
entered into before D’s appointment, that the two trustees who were in office at that time
could indeed bind the trust by acting jointly because in doing so they complied with the
joint-action requirement of co-trusteeship regardless of the fact that they constituted a
sub-minimum number of trustees in office. The appellant argued, with regard to the
agreement concluded after D’s appointment, that the trust instrument allowed majority
decision-making and that P and J could therefore bind the trust without requiring D’s co-
operation because the two of them constituted such a trustee majority.
continued
________________________
210 Hyde Construction CC v Deuchar Family Trust 2015 (5) SA 388 (WCC) par 40; Pace and Van der Westhuizen
Wills and Trusts B15.1.1.
211 See 6.5.3.3 regarding the possibility of the performance of some administrative acts by an unauthorised
trustee.
212 Hyde Construction CC v Deuchar Family Trust 2015 (5) SA 388 (WCC) paras 41 and 42; Geach Trust Law
184–185.
213 2005 (2) SA 77 (SCA).
104
The Trustee
The Supreme Court of Appeal rejected both of these arguments. Cameron JA (writing for a
unanimous full bench) reasoned that the appellant’s reliance on the joint-action rule was
misplaced with regard to the agreements concluded while P and J were the only trustees
in office. This is because their acting together did not alter the fact that the trust was
completely incapacitated due to non-compliance with the trust instrument’s prescript
regarding the minimum number of office-bearing trustees. The trust’s incapacity during
this time resulted from non-compliance with the capacity-defining condition regarding
the minimum trustee number and this incapacity was not cured by the joint action of the
214
sub-minimum number of trustees who held office. The aforementioned capacity-
defining condition was of course met once D was appointed as the requisite third trustee
and the trustees were fully capacitated to act on the trust’s behalf from the moment of
D’s appointment (and subsequent authorisation by the Master). However, the joint-action
rule became relevant at that time insofar as P, J and D (as the full trustee complement
prescribed by the trust instrument) had to act jointly in order to bind the trust toward the
appellant. As P and J never consulted D or obtained his consent regarding the final loan
215
agreement, this rule was clearly not complied with in regard to that agreement. As a
result, the appellant’s two arguments attempting to impose liability on the trust under the
216
loan agreements did not succeed.
The Parker case sets out the general principles regarding a trust provision requiring a pre-
scribed minimum number of trustees to hold office at all times. The trust instrument relevant
217
in Investec Bank Ltd v Adriaanse stipulated that at least three trustees were always to hold
office. The trust instrument provided further that in the event of the death or resignation of
one of them, the remaining trustees could exercise all trustee powers for the preservation and
administration of the trust’s funds until a further trustee was appointed. These powers were
curtailed only to the extent that the remaining trustees were not permitted to distribute trust
benefits or to vary the trust instrument during this period. The court accordingly held that a
sub-minimum number of trustees, following the resignation of one of the three serving trus-
tees, validly bound the trust as surety to the plaintiff because the trust instrument empowered
the trustees to execute a deed of suretyship even when fewer than the prescribed minimum
218
of three trustees were in office. A trust instrument’s directives (should it contain such
directives) on the exercise of trustee powers whilst a sub-minimum number of trustees hold
office are thus determinative to such trustees’ capacity to bind the trust contractually to
outsiders.
________________________
214 At paras 10–14. See also Lynn v Coreejes 2011 (6) SA 507 (SCA) par 9.
215 At paras 15–18.
216 The appeal nevertheless succeeded because P’s estate was indeed sequestrated earlier and this caused the
termination of his trusteeship in accordance with the trust instrument’s stipulations. P nevertheless
lodged the appeal against an earlier sequestration order granted in the appellant’s favour against the trust,
and P did so in his capacity as a trustee of the trust. However, P’s sequestration meant that he was no
longer a trustee and the trust therefore again had a sub-minimum of trustees in office when this appeal
was lodged, which meant that the trust was never properly before the court that heard the appeal against
the granting of the sequestration order. The Supreme Court of Appeal consequently reinstated the initial
sequestration order granted in the appellant’s favour: paras 39–46.
217 2014 (1) SA 84 (GNP).
218 At paras 27–32.
105
6.8.2 Practicalities associated with the joint-

oint-action rule of co-
co-trusteeship
trusteeship
6.8.2.1 Trustee meetings and decision-
decision-making by co-
co-trustees
219
Steyn v Blockpave (Pty) Ltd illustrates the importance of the interaction between the joint-
action rule and the provisions of a trust instrument regarding trustee meetings and decision-
making by co-trustees. The case also deals with the unacceptable phenomenon of co-trustees’
marginalisation of one (or more) of their number. The Steyn case sets out a number of fun-
damental aspects regarding trustee meetings and trustee decision-making:
• internally trustees resolve trust matters by taking trustee decisions:
– these internal decisions are taken by each trustee casting a vote at a trustee meeting;
and
– if the trust instrument prescribes trustee decision-making by majority vote, such a
majority vote binds all the trustees;
• externally trustees must present a unified front, even if some of them dissented when they
voted internally on a particular trust matter:
– co-trustees’ external unity takes the form of a trustee resolution signed by all the
trustees; and
– those trustees who dissented at the trustee meeting where all the co-trustees voted
regarding an internal decision are bound by the signed trustee resolution to the same
220
extent as those trustees who supported the internal decision all along.
In the Steyn case the applicants (the trustees of the DS Trust) attempted to sue the first re-
spondent for rent owed to the trust. The first respondent argued that the trustees never took a
proper decision to sue it. The applicants sought to counter this contention by providing the
minutes of a trustee meeting at which the decision to proceed against the first respondent
was supposedly taken. However, these minutes showed that only two trustees attended this
meeting. The trust’s third trustee was neither consulted nor did she in any way participate in
the meeting. Rampai J thus held that even though the trust instrument required a mere
majority vote by the trustees to bind the trust (in other words, two of the trust’s three trustees
must vote in favour of pursuing a particular course of action on the trust’s behalf), this envi-
sioned that a majority vote must have been taken at a meeting of which all of the trustees in
office were notified and in which all of them participated: all the co-trustees must have acted
221
jointly at the trustee meeting. If, at such a meeting, there was no unanimity among the co-
trustees, they had to vote on the matter and the dissenting trustee would be bound by the
majority vote. Had the trustees followed this procedure, they would have passed a valid
trustee resolution in terms of which the trust could engage in legal acts. Rampai J held that
because the trustees did not follow this procedure insofar as they marginalised the third
trustee, they never properly resolved to institute legal proceedings against the first respondent
222
and that the DS Trust was therefore never properly before the court.
Rampai J also made it clear in the Steyn case that a trust instrument can empower a trustee
223
to exercise a vote at a trustee meeting by proxy. A trustee’s physical presence at a trustee
meeting is thus not necessarily required. Even so, the absent trustee’s participation and input
________________________
219 2011 (3) SA 528 (FB). See also Van der Merwe v Hydraberg Hydraulics CC; Van der Merwe v Bosman 2010
(5) SA 555 (WCC) par 16; Geach Trust Law 220–222; Van der Linde 2012 THRHR 371 at 374.
220 At paras 19, 37 and 38.
221 At paras 14, 15, 19 and 40.
222 At paras 37–40. See also Tijmstra v Blunt-MacKenzie 2002 (1) SA 459 (T) 468H–J.
223 At par 16.
106
The Trustee
224
in the taking of all trustee decisions remains essential. The proxy may thus not vote as he or
she sees fit but is confined to conveying the input or vote of the absent trustee to the trustee
225
meeting. Depending on the trust instrument’s prescripts, the absent trustee’s input can also
be made telephonically, by electronic communication (such as email) or by a round-robin
resolution (when a pre-drafted resolution is circulated by email, signed separately by each
226
trustee and then collated to form a compositely-signed resolution). In fact, trust instruments
frequently contain a provision to the effect that a written resolution signed by all the trustees
shall have the same force and effect as if that resolution had been passed at a duly-constituted
trustee meeting convened for that purpose. Adherence to this prescript renders a trustee
resolution valid even if a particular trustee was not physically present at the trustee meeting
at which the resolution was passed but he or she nevertheless signed the resolution after-
227
wards signifying his or her concurrence therewith.
6.8.2.2 The dominant co-

co-trustee
The law requires of each co-trustee to exhibit a minimum degree of independent judgement
regarding trust affairs in general and in respect of trustee decision-making in particular.
Therefore, co-trustees may not merely slavishly follow the lead of a dominant trustee who
assumes, without the trust instrument authorising him or her to do so, exclusive control of
228
trust administration. A particular danger in this regard is that, although it may appear that
all the co-trustees legally (de iure) control the trust, the dominant trustee’s factual (de facto)
control of the trust justifies the conclusion that the trust is nothing other than the dominant
229
trustee’s alter ego. Such a conclusion has far-reaching and often perilous consequences for
230
the co-trustees as well as third parties who transact with the dominant trustee.
6.8.2.3 The passive co-

co-trustee
The joint-action rule of co-trusteeship renders a passive trustee (also called a sleeping or
231
puppet trustee) out of place in trust practice: each co-trustee is required to be at least
minimally involved in trust administration, even if only to fulfil a watch-dog function to
ensure that the other trustees do not exceed or otherwise abuse their powers of trust admin-
232
istration. It therefore follows that every trustee must at least acquaint him- or herself with
the duties and responsibilities of trusteeship; must exhibit a minimum degree of independent
judgement in trust affairs; and may not merely slavishly execute the directives of a dominant
233
co-trustee.
________________________

226 Steyn v Blockpave (Pty) Ltd 2011 (3) SA 528 (FB) par 16; Geach Trust Law 176–177.
227 Steyn v Blockpave (Pty) Ltd 2011 (3) SA 528 (FB) paras 9 and 16.
228 Hoppen v Shub 1987 (3) SA 201 (C) 217C and G.
229 Badenhorst v Badenhorst 2006 (2) SA 255 (SCA) paras 9–11.
230 See 4.2.1.2 and 7.6 regarding the alter ego trust and the abuse of the trust form.
231 See Geach Trust Law 203–204.
232 De Waal 1999 Stell LR 21 at 32; Kloppers 2006 TSAR 414 at 418; Geach Trust Law 211.
233 Hoppen v Shub 1987 (3) SA 201 (C) 217C and G; Tijmstra v Blunt-MacKenzie 2002 (1) SA 459 (T) 468H–J,
472A–B and 474E–F; Slip Knot Investments 777 (Pty) Ltd v Du Toit 2011 (4) SA 72 (SCA) par 12; Geach
Trust Law 203–205.
107
234
Slip Knot Investments 777 (Pty) Ltd v Du Toit confirms that it is not a defence for a trus-
tee to argue that he or she is a trustee “only in name”. In this case the trustees of the S
Trust – the respondent, his brother and the latter’s son – concluded a loan agreement
with the appellant on the trust’s behalf and bound themselves as sureties in the event of
the loan not being repaid. The facts indicated that the respondent’s co-trustees conducted
all of the trust’s business affairs. The respondent was requested to sign the documents
relating to the loan agreement after his co-trustees had already signed these documents.
He proceeded to sign the 75 paged document without reading it. He did so in the belief
that his signing of the document would not affect him personally and on the assumption
that his signature was required simply because he was a trustee insofar as his co-trustees
had already agreed to the terms of the loan agreement. The court of first instance was
prepared to dismiss the appellant’s application for judgment against the respondent (as
surety) on the basis that the respondent was a farmer and not a businessman and that,
although he was a trustee, he had nothing to do with the trust itself or with the loan ad-
vanced to the trust. The Supreme Court of Appeal however disagreed and, in upholding
an appeal against the court of first instance’s judgment, emphasised that the respondent
was, first and foremost, a trustee who must have known what a trust is and what the
duties and responsibilities of a trustee entail. The court thus rejected the respondent’s
averment that he was no more than a passive trustee and held that the appellant was
fully entitled to rely on the respondent’s signature on the loan agreement as a surety in
235
the same way that it could rely on his signature on that agreement as a trustee.
A trustee who simply abides by the wishes or directives of another trustee, or who merely
condones the latter’s actions – particularly when these actions are questionable – without
expressing any independent view or judgement, breaches his or her fiduciary duty to the trust
236 237
beneficiaries and may consequently be judicially removed from the trustee office.
6.8.2.4 Third parties transacting with co-

co-trustees:
trustees: the application of the
Turquand rule to trusts
238
The Turquand rule (also known as the internal management rule) is a particular feature of
239
South African company law. At common law the rule determines that a party contracting in
good faith with a company may assume that the company abided by all its internal rules and
procedures for concluding those contracts that are permitted by the company’s founding
documents. The common law rule derives from the principle that, although the public has
240
access to a company’s founding documents and a party who intends contracting with a
company is thus able to satisfy him- or herself about the existence of such company-specific
________________________
234 2011 (4) SA 72 (SCA).

235 At par 12.
237 Tijmstra v Blunt-MacKenzie 2002 (1) SA 459 (T) 472A–B and 474E–F; Du Toit 2017 TSAR 124 at 134. See
6.13.6 regarding trustee removal by the court.
238 So called with reference to the decision in Royal British Bank v Turquand (1843–1860) All ER 435 where
the rule was originally formulated.
239 A somewhat modified version of the rule is now contained in section 20(7) of the Companies Act. How-
ever, it appears that the Companies Act has not completely done away with the common law rule: Del-
port and Vorster Companies Act 100–100(2).
240 Nieuwoudt v Vrystaat Mielies (Edms) Bpk 2004 (3) SA 486 (SCA) par 19. See the establishment of the
Companies and Intellectual Property Commission in terms of s 185 of the Companies Act, and the func-
tions of establishing and maintaining a company’s register as well as making the information in this regis-
ter available to the public assigned to this Commission by s 187 of the Act. A company’s founding
documents contained in this register are thus public documents.
108
The Trustee
internal rules and procedures from these documents, it is all but impossible for such a party
241
to determine whether the company in fact complied with these rules and procedures. The
Turquand rule therefore precludes a company from escaping contractual liability to a bona fide
contracting party solely on the ground that the company failed to comply with certain internal
rules and procedures that operate as prerequisites for the conclusion of the contract between
242
the company and that contracting party.
The Supreme Court of Appeal acknowledged in Land and Agricultural Bank of South Africa v
243
Parker that the common law Turquand rule could be useful also in the trust context to
protect a party who transacted in good faith with a trust in circumstances where a trustee
denies the trust’s contractual liability to the third party by reason of some non-compliance
with the trust instrument’s prescripts on the conclusion of contracts by that trustee on the
244
trust’s behalf. High courts in fact used the Turquand rule to this end in a number of judg-
245
ments that preceded the Supreme Court of Appeal’s decision in the Parker case. These
246
earlier judgments elicited a mixed reception from commentators. The propriety and effica-
cy of the Turquand rule’s application to trusts remains uncertain. This much is evident from
247
Nieuwoudt v Vrystaat Mielies (Edms) Bpk and Van der Merwe v Hydraberg Hydraulics CC; Van
248
der Merwe v Bosman. These judgments raised the following concerns regarding the Turquand
rule’s applicability to trusts:
• it is improbable that knowledge of the contents of trust instruments can summarily be
attributed to the public (in light of the fact that trust documents are not always readily ac-
249
cessible by the public) and the principle that underpins the Turquand rule, namely, that a
person who transacts with a company is bound by the limitations contained in that com-
pany’s founding documents because those documents are available to the public, is conse-
250
quently difficult to apply to trusts;
• the ambit of a trustee’s authority to act on a trust’s behalf, and in particular the fact that co-
trustees’ authority to contract with a third party is dependent on their compliance with the
joint-action requirement, is not a matter of internal management as contemplated by the
Turquand rule, but is rather a matter of capacity with which a party who contracts with a
trustee must necessarily concern him- or herself by not merely assuming, but actually as-
certaining, that the contracting trustee, in particular one who purports to act on behalf of a
trust’s co-trustees, indeed has the required authority, either in terms of the trust instrument
or duly given to him or her by the other trustees jointly, to enter into the particular con-
251
tract;
________________________
241 In this regard the Turquand rule mitigated the doctrine of constructive notice which dictates that a person
dealing with a company is deemed to have knowledge of the contents of that company’s public docu-
ments. The current Companies Act however abolished the doctrine of constructive notice: see Davis et al
Companies 56–57.
242 Delport and Vorster Companies Act 98–99; Cilliers et al Corporate Law 191–192.
243 2005 (2) SA 77 (SCA).
244 At par 37.1.
245 MAN Truck & Bus (SA) Ltd v Victor 2001 (2) SA 562 (NC); Vrystaat Mielies (Edms) Bpk v Nieuwoudt 2003 (2)
SA 262 (O).
246 Du Toit 2004 TSAR 149; Beukes 2004 SA Merc LJ 264; Claassen January/February 2004 De Rebus 24;
Jooste 2005 SALJ 66; Kloppers 2006 TSAR 414; McLennan 2006 SA Merc LJ 329.
247 2004 (3) SA 486 (SCA).
248 2010 (5) SA 555 (WC).
249 See 5.3.
251 Ibid paras 20 and 22; Van der Merwe v Hydraberg Hydraulics CC; Van der Merwe v Bosman 2010 (5) SA 555
(WC) par 31.
109
• no legal fiction exists that ascribes knowledge of the contents of trust instruments to
outsiders: the Turquand rule is consequently difficult to apply in the absence of evidence
that an outsider had actual or constructive knowledge of a particular trust instrument’s con-
252
tent;
• The Turquand rule cannot override or circumvent statutory prescripts such as those con-
tained in the Alienation of Land Act that require any authority granted to a trustee to enter
into an agreement for the sale of immovable property on behalf of a trust’s other trustees
253
to be in writing.
The Nieuwoudt and Van der Merwe cases have, at least for the time being, ostensibly shut the
door on the applicability of the Turquand rule to trusts. Geach may therefore be correct when
he states that “in the present state of the law, it would be advisable for those dealing with
254
trusts to assume that the Turquand rule does not apply to trusts”. Third parties who transact
with trusts must therefore heed Harms JA’s warning issued in the Nieuwoudt case, namely,
that an outsider who deals with a trust must take care, in particular by always being cognisant
of the rule that co-trustees must always act jointly unless the trust instrument directs other-
255
wise.
6.9 Trust expenses and trustee remuneration

Expenses incurred by a trustee in the course of trust administration are payable from the trust
estate. Day-to-day running expenses are usually met out of the trust income, while expenses
pertaining directly to the trust’s property, such as the cost of major repairs, are charged to the
trust capital. A trustee is therefore not obliged to meet trust expenses from his or her own
pocket. However, should a trustee choose to do so, he or she is entitled to indemnification
from the trust estate, even if he or she is remunerated for being a trustee. A trustee is howev-
er entitled to such indemnification only if the expenses were properly incurred in accordance
256
with the trust instrument’s prescripts. This rule applies also in respect of legal expenses: a
trustee who acts properly in instituting or defending legal actions on behalf of a trust will be
fully indemnified for his or her out-of-pocket expenses irrespective of the outcome of the
257
litigation. However, where a trustee acted in bad faith by instituting or defending legal
actions in an unreasonable or improper manner, the trustee will be personally liable for the
258 259
costs associated with those proceedings. The court affirmed in Stander v Schwulst that,
because the issue of a trustee’s indemnification with respect to legal costs turns on whether or
not the trustee acted properly in suing or being sued, a trustee cannot approach the court in
advance of the legal proceedings for an order that the trust estate must bear the costs of those
260
proceedings.
________________________
252 Van der Merwe v Hydraberg Hydraulics CC; Van der Merwe v Bosman 2010 (5) SA 555 (WC) par 27. See also
Geach Trust Law 299; Pace and Van der Westhuizen Wills and Trusts B15.1.1.
253 Van der Merwe v Hydraberg Hydraulics CC; Van der Merwe v Bosman 2010 (5) SA 555 (WC) paras 29 and
30.
255 Nieuwoudt v Vrystaat Mielies (Edms) Bpk 2004 (3) SA 486 (SCA) par 24. See also Van der Merwe v Hydraberg
Hydraulics CC; Van der Merwe v Bosman 2010 (5) SA 555 (WCC) par 37.
256 Stander v Schwulst 2008 (1) SA 81 (C) par 38.
257 Ibid.
258 Ibid par 39.
259 2008 (1) SA 81 (C).
260 At paras 32–58.
110
The Trustee
Section 22 of the Act acknowledges that a trustee can be remunerated for conducting trust
261
administration. An independent trustee appointed by the Master is also entitled to remu-
262
neration. A trustee’s remuneration is usually determined in the trust instrument, either
expressly or by implication. If the trust instrument is silent on the matter of trustee remunera-
tion, section 22 of the Act provides that a trustee is entitled to reasonable remuneration which
263
the Master can settle in the event of a dispute. In Griessel v Bankorp Trust Bpk the court held
that, in the case of the appointment of a professional trustee such as an attorney or auditor,
the customary fee charged for trusteeship in that profession may be used as a guideline to
determine what constitutes reasonable remuneration for such a trustee, although such a
264
determination is not necessarily decisive. Similarly, if a financial institution or trust compa-
ny is appointed as trustee, the customary remuneration scale in that profession will normally
265
apply unless considerations demanding the contrary are present. The Master’s determina-
tion of reasonable remuneration in a case where the extent of such remuneration is in dispute
266
is, as with all decisions taken by the Master, subject to judicial review at the request of any
267
person who feels aggrieved by the particular decision.
6.10 Litigation by or against a trustee

A trustee is, as a general rule, the only party who has locus standi to institute legal proceed-
268
ings on behalf of a trust or to defend legal actions brought against a trust. A trustee that is a
corporation must engage in trust litigation in its own name but with the active participation of
269
its nominee in whose name the Master issued the corporation’s letter of authority. Where
co-trustees administer a trust, all the trustees must be cited and joined when they institute or
defend legal actions on the trust’s behalf, unless the full trustee complement authorised a
270
lesser number of trustees to engage in the litigation. A full trustee complement can also
ratify a decision taken by a lesser of their number to engage in legal proceedings on behalf of
271
a trust.
A trustee must engage in trust litigation in his or her official capacity and not in his or her
272
private capacity. When judgment is given against a trustee in trust litigation, any payment
that the trustee must make to the successful plaintiff will come from the trust estate because
the judgment is against the trustee in his or her official, rather than his or her private, capaci-
ty. Conversely, when judgment is given in a trustee’s favour in trust litigation, any payment
that the trustee receives from the respondent will not accrue to the trustee’s private estate but
273
will go into the trust estate. When a trustee is sued in his or her private capacity (to be held
personally liable, even for an act that he or she committed as a trustee), the trustee must not
________________________
261 See 6.3 and 6.3.1.4.

263 1990 (2) SA 328 (O).
264 At 335D–E.
265 At 335F–G. See also the Chief Master’s Directive 2 of 2017.
267 S 23 of the Act. See 7.2.1.4 regarding judicial review of the Master’s actions.
268 Pentz v Gross 1996 (2) SA 518 (C) 523B–H; Gross v Pentz 1996 (4) SA 617 (A) 625B–E. See however 8.6.2
regarding a trust beneficiary’s locus standi to institute a representative action on a trust’s behalf.
269 See 6.5.2 regarding the authorisation of a corporate trustee.
270 Mariola v Kaye-Eddie 1995 (2) SA 728 (W) 731E; Pentz v Gross 1996 (2) SA 518 (C) 525G; Rosner v Lydia
Swanepoel Trust 1998 (2) SA 123 (W) 126I–127C.
271 Hyde Construction CC v Deuchar Family Trust 2015 (5) SA 388 (WCC) paras 23–42.
272 Mariola v Kaye-Eddie 1995 (2) SA 728 (W) 731F; Rosner v Lydia Swanepoel Trust 1998 (2) SA 123 (W)
127B–C.
273 Rosner v Lydia Swanepoel Trust 1998 (2) SA 123 (W) 127B.
111
be cited in his or her official capacity and such a trustee cannot raise his or her citation in a
274
private capacity to dispute the validity of that citation.
Trust litigation is frequently undertaken in the name of the trustee of the trust and because
the trustee engages in such litigation in his or her official capacity, the trustee must be cited as
such in the legal proceedings. A trustee is therefore frequently cited with a NO after his or her
surname, indicating nomine officio (that the trustee participates in the litigation in an official
275
capacity). Where there are co-trustees, all the trustees must be joined in the litigation and all
276
the co-trustees must be cited as such. Co-trustees are therefore frequently cited with a NNO
after their surnames, indicating nomine officii (that the trustees participate in the litigation in
277
their official capacity). A trustee can also be cited without the citation referencing him or
her (or them, in the case of co-trustees) personally: such a citation does not include the
trustee’s surname but simply states the trustee or trustees of the particular trust as litigant or
278 279
litigants. This mode of citation was preferred in Desai-Chilwan v Ross because it reflects
the reality that the individuals who hold the trustee office can change from time to time. For
this reason trustees are sometimes also cited as “the trustees for the time being” to
acknowledge that the composition of the trustee office is not fixed because individual trustees
280
may vacate the office and be replaced by new trustees during a trust’s existence.
The trust has been described as sui generis (unique and of its own kind) for the purpose of
281
citation. Litigation in the name of a trust is therefore also common, despite the fact that a
282
trust is not a legal person. Our courts are prepared to interpret such a citation as “a refer-
283
ence to the trustees for the time being of the trust, whomever they may be”. A trust’s
284
citation in legal proceedings can nevertheless be amended to reflect its trustee. In Rosner v
285
Lydia Swanepoel Trust the court intimated that such an amendment has no substantive
effect on litigation but merely gives linguistic effect to the trust’s lack of legal personality.
Therefore, even if no amendment is sought, the effect of any judgment granted remains
unchanged: any amount payable by or to the trust is payable by its trustee out of or into the
286 287
trust estate. In Cupido v Kings Lodge Hotel the court held that a business trust that con-
ducts its business under a name that does not reflect its trustees may be cited in legal pro-
288
ceedings by its business name.
________________________
274 Pascoal v Wurdeman 2012 (3) SA 422 (GSJ) par 7.

275 For example, Desai-Chilwan v Ross 2003 (2) SA 644 (C).
276 Ibid par 21; Stander v Schwulst 2008 (1) SA 81 (C) par 34.2.
277 For example, Theron and Another NNO v Loubser NO 2014 (3) SA 323 (SCA).
278 For example, Raubenheimer v Trustees, Johannes Bredenkamp Trust 2006 (1) SA 124 (C).
279 2003 (2) SA 644 (C) par 28.
280 For example, Kemp, Trustees for the time being of Erf 591 Riversbend Trust v Ralbern Properties (Pty) Ltd
[1999] 3 All SA 154 (SE).
282 For example, Hyde Construction CC v Deuchar Family Trust 2015 (5) SA 388 (WCC).
283 Ibid par 47.
284 Rosner v Lydia Swanepoel Trust 1998 (2) SA 123 (W) 129C.
285 1998 (2) SA 123 (W).
286 At 128E–F. See also First National Bank of South Africa Ltd v Strachan Family Trust [2000] 3 All SA 379 (T)
383g–j.
287 [1999] 3 All SA 578 (E).
288 At 587h–i. See also First National Bank of South Africa Ltd v Strachan Family Trust [2000] 3 All SA 379 (T)
384a–e; Desai-Chilwan v Ross 2003 (2) SA 644 (C) par 22.
112
The Trustee
6.11 Breach of trust by a trustee

The fact that a trustee undertakes trust administration in an official capacity and not in a
private capacity means that any liability resulting from a trustee’s conclusion of a contract or
a trustee’s commission of a delict in the course of trust administration is incurred by the trust
and not by the trustee in his or her private capacity. Any contractual or delictual damages
payable as a result of a trustee’s conclusion of a contract or a trustee’s commission of a delict
289
are therefore met from the trust estate and not from the trustee’s private estate. A trustee
will however in certain instances incur personal liability for defaulting in trust administration.
Breach of trust (Afrikaans: trustbreuk) is the foremost of these instances.
The fact that a trustee’s office is fiduciary in nature and gives rise to a general fiduciary
290
duty, which includes a specific duty of care, diligence and skill, is fundamental to under-
standing breach of trust. The common law requires of a trustee, in complying with his or her
general fiduciary duty and the specific duty of care, diligence and skill, to administer the trust
property as a bonus et diligens paterfamilias (a reasonable, prudent and careful person). This
demands of a trustee to devote greater care to administering trust property than he or she
291
devotes to administering his or her own property. Section 9(1) of the Act confirms this
standard by requiring a trustee to perform his or her duties and exercise his or her powers
with the care, diligence and skill reasonably expected of a person who manages the affairs of
another. A trustee who fails to conduct trust administration in accordance with this standard
(and therefore fails to comply with his or her general fiduciary duty as well as the specific
duty of care, diligence and skill) commits a breach of trust. If this breach occasions patrimo-
292 293
nial (monetary or financial) loss to the trust, trust beneficiaries or third parties (such as
294
trust creditors), the trustee can incur personal liability to make good the patrimonial loss
295
caused by his or her breach of trust. A trustee who commits a breach of trust in consonance
with a non-trustee third party is a joint wrongdoer along with that third party and these
wrongdoers are jointly and severally liable for any patrimonial loss caused by their breach of
296
trust. The defences open to a trustee who has breached trust are limited: the consent (prior
to the breach) of the party who incurred the loss or that party’s ratification (after the breach)
297
of the trustee’s impugned conduct are generally the only viable defences.
Breach of trust constitutes a wrongful act on a trustee’s part and a trustee’s liability for
298
breach of trust is therefore delictual in nature. The actio legis Aquiliae, South African law’s
action for the recovery of patrimonial damages, is thus the appropriate action to institute
________________________
289 Olivier et al Trustreg en Praktyk 3.5.2 and 3.5.3.

290 See 6.7 regarding a trustee’s general fiduciary duty and 7.3.1.4 regarding a trustee’s duty to act with care,
diligence and skill.
291 Sackville West v Nourse 1925 AD 516 at 519–520 and 533–534; Jowell v Bramwell-Jones 1998 (1) SA 836
(W) 894D; Gowar v Gowar 2016 (5) SA 225 (SCA) paras 23–26.
292 Gross v Pentz 1996 (4) SA 617 (A).
294 WT v KT 2015 (3) SA 574 (SCA) par 32; REM v VM 2017 (3) SA 371 (SCA) par 20.
295 Boyce v Bloem 1960 (3) SA 855 (T) 870F–G; Gross v Pentz 1996 (4) SA 617 (A) 626D; Jowell v Bramwell-
Jones 1998 (1) SA 836 (W) 894I–895A; De Waal 2000 SALJ 548 at 559.
296 Pentz v Gross 1996 (2) SA 518 (C) 525C–D; Jowell v Bramwell-Jones 1998 (1) SA 836 (W) 881H–I and
889C–D. Joint and several liability means that each of the joint wrongdoers is individually liable for the
entire loss and the plaintiff can therefore choose against which wrongdoer he or she wishes to institute
action for the recovery of damages. If the plaintiff succeeds in claiming the totality of the damages from
one of the joint wrongdoers, that wrongdoer has recourse against the other wrongdoer in proportion to
the latter’s contribution to the plaintiff’s loss.
298 Louw v ABSA Trust Ltd [2014] ZAWCHC 159 (28 October 2014) par 17.
113
299
against a trustee who committed a breach of trust that occasioned patrimonial loss. The
Aquilian action is instituted against the trustee in his or her private capacity and not in his or
300
her official capacity. A trustee’s liability for breach of trust to the trust’s beneficiaries is
discussed in Chapter 8 and the extent to which the trust beneficiaries can hold a trustee liable
301
with the actio legis Aquiliae is analysed further in that discussion. It suffices for present
purposes to note that a trustee will typically incur delictual liability for breach of trust when he
302
or she acted imprudently in alienating trust property or in investing trust funds; sold trust
property to benefit an income beneficiary with an utter disregard for the duties imposed by
303
the trust instrument in respect of the capital beneficiaries; distributed trust property and left
insufficient assets in the trust to meet the trust’s liabilities; or incurred a liability on behalf of
304
the trust while knowing that the trust was unable to meet that liability.
Not all breaches of trust are however delictual in nature. For example, while a trustee who
fails to pay trust income and/or capital to a beneficiary when it becomes due is also in breach
of trust; the beneficiary’s remedy in such a case is not the Aquilian action but rather an action
to enforce the trust provisions and thereby compel the trustee to make payment of the partic-
305
ular trust benefit(s).
6.11.
11.1 Breach of trust by co-
co-trustees
306
In Gross v Pentz the Supreme Court of Appeal conceded that the South African legal position
regarding the liability of co-trustees for breaches of trust committed during their term of office
307
is not altogether clear. Existing authority in this regard suggests that co-trustees who breach
trust are joint wrongdoers and they are therefore jointly and severally liable for any resultant
308 309
patrimonial loss. This was indeed also what the court in the Gross case proposed. Howev-
er, the court stated this proposition for the purpose of determining the locus standi of the
310
plaintiff in this case.
De Waal suggests that case law on the joint and several liability of co-trustees for breach of
trust points strongly to the operation of the fault principle: a co-trustee will be liable for
breach of trust only if fault, even if only in the form of negligence, is attributable to him or
311
her. A so-called innocent trustee (one who did not participate in the wrongdoings of his or
her co-trustees) will therefore escape liability by virtue of the fact that he or she is not a joint
wrongdoer along with the other trustees who breached trust. Such a trustee will however not
necessarily avoid liability by claiming ignorance or inactivity regarding the activities of his or
________________________
299 Sackville West v Nourse 1925 AD 516 at 519; Boyce v Bloem 1960 (3) SA 855 (T) 865H; Jowell v Bramwell-
Jones 1998 (1) SA 836 (W) 877H.
300 Stander v Schwulst 2008 (1) SA 81 (C) par 34.3.
301 See 8.6.4.1.1.
302 Louw v ABSA Trust Ltd [2014] ZAWCHC 159 (28 October 2014) par 17, citing Sasfin (Pty) Ltd v Jessop
1997 (1) SA 675 (W) 686E–F.
303 Louw v ABSA Trust Ltd [2014] ZAWCHC 159 (28 October 2014) par 20.
304 Wunsh 1986 SALJ 561 at 578.
305 Gross v Pentz 1996 (4) SA 617 (A) 625F.
306 1996 (4) SA 617 (A).
307 At 629C.
308 Adam v Dada 1912 NPD 495 at 503; Boyce v Bloem 1960 (3) SA 855 (T) 858G; The Master v Deedat 2000
(3) SA 1076 (N) 1086F; Desai-Chilwan v Ross 2003 (2) SA 644 (C) par 28.
309 Gross v Pentz 1996 (4) SA 617 (A) 630I. See also the corresponding finding by the court a quo in Pentz v
Gross 1996 (2) SA 518 (C) 525E–526A.
310 At 630I. See also De Waal 1999 Stell LR 21 at 23 and 35.
311 1999 Stell LR 21 at 30–32. See also Geach Trust Law 211.
114
The Trustee
312
her co-trustees. Co-trustees’ collective fiduciary duty as well as the joint-action rule of co-
trusteeship oblige each co-trustee to participate in trust administration and thus to devote at
least the minimum degree of care, diligence and skill to trust administration that the law
requires. If a trustee’s ignorance and/or inactivity regarding his or her co-trustees’ trust ad-
313
ministration is attributable to the fact that he or she is a sleeping or a puppet trustee and
this ignorance and/or inactivity is causally connected to the loss resulting from the other co-
trustees’ breach of trust, the sleeping or puppet trustee will indeed be at fault and will thus
share in the liability for a breach actively committed by one or more of his or her co-
314
trustees. Such will be the case if a trustee left a trust matter entirely in the hands of his or
her co-trustees without questioning their actions in respect of that matter; stood by while a
breach of trust (of which he or she was aware) was being committed; or improperly allowed
315
trust funds to remain in the sole control of his or her co-trustees. An ignorant and/or inac-
tive trustee can of course escape liability for a breach of trust committed by his or her co-
trustees by satisfactorily explaining his or her lack of knowledge or absence of participation in
trust administration. For example, he or she may have been unaware that trust funds were
being depleted by the other trustees in an almost undetectable manner; he or she may have
been incapacitated; or he or she may have temporarily vacated the trustee office when the co-
trustees committed the breach of trust. In these instances the mere fact of co-trusteeship will
not occasion joint and several liability and an innocent trustee will not be liable for a breach
316
of trust committed by his or her co-trustees.
6.11.
11.2 Exemption from liability for breach of trust
Older trust instruments usually included provisions that exempted trustees from liability for
breaches of trust or, if a trustee was indeed held liable, instructed that the trustee may be
indemnified from the trust estate for any damages that he or she had to pay as a result of his
317
or her personal liability for breach of trust. These exemption and indemnity clauses (Afri-
kaans: vrystellings- en vrywaringsklousules) were generally valid in terms of the common law,
in particular insofar as they exempted trustees from or indemnified them against liability
resulting from ordinary negligence or dishonesty with regard to trust administration. Such
318
clauses did not however safeguard trustees against intentional wrongdoing.
Section 9(2) of the Act now provides:
“Any provision contained in a trust instrument shall be void in so far as it would have the effect of
exempting a trustee from or indemnifying him against liability for breach of trust where he fails to
319
show the degree of care, diligence and skill as required in subsection (1).”
This subsection clearly invalidates even a trust provision that purports to exempt a trustee
from or indemnify him or her against ordinary negligence or dishonesty, and it therefore
negates the validity that such a trust provision previously enjoyed in terms of the common
law. However, section 9(2) does not prohibit a trustee from seeking indemnity outside the
________________________

313 See 6.8.2.3.
314 Boyce v Bloem 1960 (3) SA 855 (T) 865G.
315 De Waal 1999 Stell LR 21 at 32–33. See also Geach Trust Law 211.
316 De Waal 1999 Stell LR 21 at 33; Geach Trust Law 211.
318 Ibid.
319 “[S]ubsection (1)” refers to s 9(1) that establishes the standard of care, diligence and skill exacted of a
trustee.
115
trust instrument, for example, by obtaining fidelity cover or professional indemnity insurance
320
from an insurance company against his or her negligence or intentional default.
6.12 The insolvency

insolvency of a trust or a trustee
12..1 The trust estate’
6.12 estate’s insolvency
321
Section 12 of the Act explicitly separates the trust estate from a trustee’s private estate. In
322
Magnum Financial Holdings (Pty) Ltd (in Liquidation) v Summerly the court held that a trust
estate is a debtor in the usual sense of the word for the purpose of the Insolvency Act and,
should a trust estate’s debts exceed its assets, that estate can be sequestrated in terms of the
323
Insolvency Act. This legal position implies that the insolvency of a trust estate does not
render the trust’s trustee personally insolvent: a trustee’s private estate is therefore unaffected
324
by the trust estate’s insolvency. However, if the insolvency of a trust estate is ascribable to
its trustee’s breach of trust, that trustee may indeed incur personal liability. For example, a
trustee who fails to pay trust creditors commits a breach of trust and, should this breach
result in the trust’s insolvency, the trust creditors may claim against the trustee personally to
325
recoup the losses they sustained as a result of the trustee’s failure to settle the trust’s debts.
6.12.2
12.2 The iinsolvency
nsolvency of a trustee
trustee’
ee’s private estate
The separation between the trust estate and a trustee’s private estate in terms of section 12 of
326
the Act ensures that, should a trustee become personally insolvent, the trust property does
327
not form part of that trustee’s insolvent private estate. Therefore the private creditors of a
trustee of an ownership trust claim against that trustee’s private estate and not against the
328
trust estate vested in the trustee in his or her official capacity. A trustee of a bewind trust is
not vested with the ownership in the trust property and such a trustee’s private creditors
consequently have no claims to the trust assets that such a trustee holds for the purpose of
329
administration on the trust beneficiaries’ behalf.
The separation of trust property from a trustee’s private property in terms of section 12 is
bolstered by sections 10 and 11 of the Act regarding steps that a trustee must take to ensure
330
that trust property remains distinct from that trustee’s private property. It stands to reason
that satisfying a trustee’s private creditors’ claims against that trustee’s private estate will be
expedited if the trustee’s private property has been kept separate and distinct from the trust
property. A trustee’s private creditors can nevertheless not direct their claims against the trust
property even if the personally insolvent trustee failed to identify trust property as separate
________________________

322 1984 (1) SA 160 (W).
323 At 163C. The court decided that, because a trust falls within the ambit of the definition of “debtor” in s 2
of the Insolvency Act, a trust is subject to sequestration in terms of that Act rather than liquidation in
terms of the Companies Act of 1973: 163H. In Melville v Busane [2012] 1 All SA 675 (ECP) paras 10–17
the court affirmed that the promulgation of the Companies Act of 2008 did not alter this position.
324 De Waal 2000 SALJ 548 at 562.
325 Stander 1999 JJS 145 at 158.
326 See 1.2.2.
327 Stander 1999 JJS 145 at 153; De Waal 2000 SALJ 548 at 562.
328 De Waal 2000 SALJ 548 at 562.
329 Stander 1999 JJS 145 at 155; Olivier et al Trustreg en Praktyk 3.6.
330 See 7.3.1.5 regarding s 10 and 7.3.1.6 regarding s 11 of the Act.
116
The Trustee
331
and distinct from his or her private property. Particularly difficult in this regard is the
instance where a trustee not only omitted to identify trust property as such but also allowed
trust property to become mixed with his or her private property in such a manner that it is all
but impossible to distinguish between them. This will happen, for example, when a trustee
acts in contravention of section 10 of the Act by depositing trust funds into his or her private
bank account: trust funds and the trustee’s private funds now become commingled into a
332
single mixed fund. In such a case, the trust’s creditors, the trust beneficiaries and the
trustee’s private creditors all enjoy proportional claims to the mixed fund in accordance with
their respective entitlements to the contents of that fund, provided that the contributions of
333
trust funds to the net balance of the trustee’s private bank account can be ascertained.
A trustee’s disregard of the separation between the trust estate and his or her private estate
can point to the conclusion that the trustee regarded and treated the trust’s property as his or
her private property and therefore that the trust is in truth that trustee’s alter ego. Should that
trustee become personally insolvent and a court finds that he or she indeed treated the trust
property as his or her own, the court can pierce the trust veneer and order that the insolvent
334
trustee’s private creditors can lay claim to the trust property.
6.13 Loss of office by a trustee

13..1 The ttermination
6.13 ermination of a trust
A trustee’s trusteeship comes to an end when a trust dissolves and a trustee therefore auto-
matically vacates the trustee office at the termination of a trust. A trust’s termination is
usually also the time when the final distribution of the trust capital (and/or undistributed trust
income) occurs and, if there is still trust property under the trustee’s control when the trust
terminates, he or she must account for it and transfer it to those entitled to it. A trust’s termi-
nation does not however cause all of a trustee’s duties to cease. For example, section 17 of
the Act obliges a trustee not to destroy trust documents before the expiry of a period of five
years from the termination of a trust unless the Master gave written permission for such
335
destruction. This particular trustee duty therefore survives a trust’s termination.
6.13.
13.2 A directive in the trust instrument
A trust instrument can prescribe that a trustee must vacate the trustee office at a stipulated
time or on the occurrence of a designated event. A trustee who was appointed for a fixed
term must thus vacate the trustee office when that term expires. A trustee who was appointed
to serve as such only for the lifetime of a particular income beneficiary must likewise vacate
the trustee office when that beneficiary dies. A trust instrument can also direct that the
serving trustees may resolve to remove one (or more) of their number from office. Such a
directive, and the manner of trustee removal it prescribes, may not however be tyrannical to
the extent that it offends public policy or the principles of ubuntu, reasonableness and fair-
336
ness.
________________________
331 Stander 1999 JJS 145 at 153.

332 Tijmstra v Blunt-MacKenzie 2002 (1) SA 459 (T) 470D, 473D–E and 474E.
333 Stander 1999 JJS 145 at 154; De Waal 2000 SALJ 548 at 563.
334 First Rand Limited v Britz [2013] JOL 29875 (GNP); De Waal 2012 Rabel J 1078 at 1091–1092 and 1098;
Geach Trust Law 504. See 7.6.2.2 regarding the piercing of a trust’s veneer upon insolvency.
335 See 7.3.1.9 regarding s 17.
117
6.13.
13.3 A trustee’
trustee’s death
A trustee’s death while holding the trustee office necessarily results in the loss of that office. If
co-trustees held the trustee office, the remaining trustees can, subject to the trust instrument’s
337
directives regarding the minimum number of trustees that must be in office, continue with
338
trust administration until a new trustee is appointed to replace the deceased trustee. If a
single trustee held the trustee office, the trust will not terminate on the death of that trustee
339
because the trust obligation continues to exist. The trust property will in all likelihood pass
to the deceased trustee’s executor as a separate estate that is not subject to the claims of the
deceased trustee’s private creditors, legatees and/or heirs. The deceased trustee’s executor
must, when a new trustee is appointed, deliver the trust property to that new trustee for him
340
or her to fulfil the trust obligation in respect of that property.
6.13.
13.4 Resignation
The common law permitted a trustee to resign (Afrikaans: bedank) before the lapse of his or
her term in office only if the particular trust instrument provided for resignation, or with the
permission of the court, or with the consent of all the beneficiaries who have legal capacity to
341
act. Section 21 of the Act now provides:
“Whether or not the trust instrument provides for the trustee’s resignation, the trustee may resign
342
by notice in writing to the Master and the ascertained beneficiaries who have legal capacity, or to
the tutors or curators of the beneficiaries of the trust under tutorship or curatorship.”
Section 21 does not override a trust instrument’s prescripts regarding a trustee’s resigna-
343
tion. The section thus seems to supplement, rather than supplant, a trust instrument’s
prescribed procedure for resignation, and a trustee may therefore resign either in terms of
344
section 21 or the trust instrument’s prescripts. Furthermore, section 21 does not subject a
trustee’s proposed resignation to approval by the Master and the trust beneficiaries. The
notification procedure prescribed by the section is just that – a trustee must notify the Master
and the beneficiaries of his or her proposed resignation, ostensibly in order to put the ma-
chinery for the appointment of a substitute trustee into operation timeously. The Act conse-
345
quently does not permit the Master to refuse acceptance of a trustee’s resignation.
Section 20(3) of the Act obliges a trustee who resigns to return his or her letter of authori-
346
ty to the Master without delay. However, conflicting authority exists regarding the exact
347
moment when a trustee’s resignation takes effect. In Soekoe v Le Roux the court opined that
a trustee has effectively resigned only once the Master removed that trustee’s name from the
letter of authority and issued a new letter of authority that does not contain the name of the
348 349
trustee who resigned. In Meijer v Firstrand Bank Ltd the court however reasoned that a
________________________
337 See 6.8.1.

338 De Waal 2009 TSAR 84 at 89–91.
339 See 1.2.6 and 4.2.2.
340 De Waal 2009 TSAR 84 at 93–94.
341 Corbett et al Law of Succession 402–403.
342 The beneficiaries with vested rights that are known to the trustees, according to the Chief Master’s
344 Van der Merwe v Hydraberg Hydraulics CC; Van der Merwe v Bosman 2010 (5) SA 555 (WCC) par 18.
346 See 6.5.1.
347 [2007] ZAFSHC 135 (29 November 2007).
349 [2012] ZAWCHC 23 (4 April 2012).
118
The Trustee
trustee’s resignation is effective once the Master acknowledged receipt of the trustee’s written
notice to resign and that compliance with the additional procedure envisaged in the Soekoe
350
case is therefore unnecessary to render a trustee’s resignation effective.
The resignation procedure envisaged in section 21 does not detract from the High Court’s
common law jurisdiction to allow a trustee to resign. Whether a trustee resigns in terms of the
trust instrument’s provisions, the section 21 procedure, or by application to the court,
De Waal suggests that his or her co-trustees must, subject to the trust instrument’s directives
351
regarding the minimum number of trustees that must be in office, continue with
352
trust administration until a new trustee is appointed to replace the trustee who resigned.
De Waal concedes that the matter is more complicated in the event of a sole trustee’s resigna-
tion and that the most practical and logical solution is for the trust property to remain
vested in the former trustee until it can be passed to a new trustee after the latter’s appoint-
353
ment.
6.13.
13.5 Removal by the Master
Section 20(2) of the Act empowers the Master to remove (Afrikaans: onthef) a trustee from
office in particular circumstances. The subsection provides:
“A trustee may at any time be removed from his office by the Master –
(a) if he has been convicted in the Republic or elsewhere of any offence of which dishonesty is an
element or of any other offence for which he has been sentenced to imprisonment without the
option of a fine; or
(b) if he fails to give security or additional security, as the case may be, to the satisfaction of the
Master within two months after having been requested thereto or within such further period as
is allowed by the Master; or
(c) if his estate is sequestrated or liquidated or placed under judicial management; or
(d) if he has been declared by a competent court to be mentally ill or incapable of managing his own
354
affairs or if he is by virtue of the Mental Health Act, 1973 (Act 18 of 1973), detained as a patient
355
in an institution or as a State patient; or
(e) if he fails to perform satisfactorily any duty imposed upon him by or under this Act or to
comply with any lawful request of the Master.”
The Master can act on his or her own volition to remove a trustee on any of the grounds
mentioned in section 20(2) or he may be requested to do so by any person with an interest in
the trust property. Trustees are of course entitled to procedural fairness in respect of any such
removal process, at least insofar as the Master should provide a trustee with adequate notice
356
as well as the reason(s) for the prospective removal. The Master’s decision to remove a
trustee in terms of the above subsection is subject to judicial review by the High Court in
________________________
350 At par 11. See also Pace and Van der Westhuizen Wills and Trusts B6.2.4.1 who support this position.
351 See 6.8.1.
352 2009 TSAR 84 at 95.
353 Ibid.
354 The Mental Health Act has since been repealed in its entirety by the Mental Health Care Act.
355 S 1 of the Mental Health Care Act defines a mentally ill prisoner as a prisoner as defined in s 1 of
the Correctional Services Act in respect of whom an order has been issued enabling the provision of
care, treatment and rehabilitation services at a designated health establishment. A state patient is
defined as a person so classified by a court in terms of s 77(6)(a)(i) or s 78(6)(i)(aa) of the Criminal Proce-
dure Act.
356 Ganie v Ganie [2011] ZAKZDHC 66 (23 December 2011) paras 45.3–45.4. See also Du Toit 2017 TSAR
124 at 136–137.
119
357
terms of section 23 of the Act. A trustee whom the Master removed from office must return
358
his or her letter of authority to the Master without delay.
6.13.
13.6 Removal by the High Court
The High Court has an inherent jurisdiction in terms of the common law to remove trustees
359
from office. Section 20(1) of the Act affirms (and therefore does not dispense with) the
court’s jurisdiction in this regard:
“A trustee may, on the application of the Master or any person having an interest in the trust prop-
erty, at any time be removed from his office by the court if the court is satisfied that such removal
will be in the interests of the trust and its beneficiaries.”
The decisive consideration for a court in deciding to remove a trustee from office is the
360 361
welfare of the trust and its beneficiaries. In Tijmstra v Blunt-MacKenzie the court enumer-
ated a number of circumstances that justify trustee removal by the court in terms of section
362
20(1) of the Act:
• a trustee removed trust funds from a safe investment with a financial institution and
363
transferred them to his or her personal account without any explanation for doing so;
• a trustee deliberately refrained, in contravention of the trust instrument’s prescripts, to
364
notify one or more of the co-trustees of an impending trustee decision;
• a trustee neglected to consult the trust instrument to ascertain the rights and duties associ-
365
ated with the trustee office;
• a trustee treated trust assets as his or her own, for example, by selling trust assets without
366
the proper approval of the other trustees as required by the trust instrument;
• a trustee expressed no independent views about trust matters but relied entirely on a
367
dominant co-trustee and approved the latter’s (wrongful) conduct; and
• a trustee allowed, without objection, grave misconduct on a co-trustee’s part regarding trust
368
administration and thus exercised no control whatsoever over the trust property.
The aforementioned grounds do not constitute an exhaustive list of trustee misconduct that
369
justifies judicial removal. To these grounds can be added advanced age, ill health or long
periods of absence on a trustee’s part that affects trust administration negatively; a conflict
between a trustee’s personal and fiduciary interests; and a trustee’s commission of any other
serious breach of trust. It is likely that a court may also remove a trustee from office on any of
________________________
357 Du Plessis v Van Niekerk 2018 (6) SA 131 (FB) par 32. See 7.2.1.4 regarding judicial review of the Master’s
actions.
358 S 20(3) of the Act.
359 Gowar v Gowar 2016 (5) SA 225 (SCA) par 27. See Sackville West v Nourse 1925 AD 516; Volkwyn v Clarke
and Damant 1946 WPD 456; Hoppen v Shub 1987 (3) SA 201 (C) regarding the common law position. See
also Du Toit 2017 TSAR 124 at 124–127.
360 Gowar v Gowar 2016 (5) SA 225 (SCA) par 32.
361 2002 (1) SA 459 (T).
362 At 460B–F and 473B–F.
363 At 474C–D.
364 At 468H–469B and 474F–I.
365 At 468H–J.
366 At 468B–H.
367 At 472A–C.
368 At 476D–477B.
369 Du Toit 2017 TSAR 124 at 133–134.
120
The Trustee
the grounds listed in section 20(2) of the Act, but removal by the Master is more expedient
370
and cost-effective in those instances.
De Waal suggests that, when a court removes a trustee from office, his or her co-trustees
must, subject to the trust instrument’s directives regarding the minimum number of trustees
371
that must be in office, continue with trust administration until a new trustee is appointed in
372
the removed trustee’s stead. In the event of a sole trustee’s judicial removal from office, the
most practical and logical solution is for the trust property to remain vested in the former
373
trustee until it can be passed to a new trustee after the latter’s appointment. A trustee who
is judicially removed from office must return his or her letter of authority to the Master with-
374
out delay.
375
Section 20(1) prescribes that the Master or anyone with an interest in a trust’s property
376
can bring a removal application. In Ras v Van der Meulen the court found that a person who
is not a trust beneficiary lacks the requisite interest to request a trustee’s judicial removal
377 378
from office. However, in Kidbrooke Place Management Association v Walton the court
pointed out that this finding in the Ras case must be evaluated in the context of the facts of
that case, in particular because it was uncertain whether the applicant in the removal applica-
tion in the Ras case was indeed a trust beneficiary. The court in the Kidbrooke Place case
therefore found that the Ras case is no bar against a non-beneficiary, for example, a co-
trustee, having the requisite interest in the trust property to give him or her legal standing to
379
bring a removal application.
The judicial removal of a trustee from office is not necessarily the appropriate relief in
every case. A court may instead decide to suspend an errant trustee rather than remove him
or her from office. Any lack of skill or expertise on the part of a serving trustee can moreover
be remedied by the court or the Master by appointing a co-trustee or an agent with the re-
quired skill or expertise, thereby leaving the former in the trustee office rather than ordering
380
such a trustee’s dismissal.
________________________
370 See 6.13.5 regarding trustee removal by the Master.

371 See 6.8.1.
372 2009 TSAR 84 at 95.
373 Ibid.
374 S 20(3) of the Act.
375 The Master v Deedat 2000 (3) SA 1076 (N) 1082H–I.
376 2011 (4) SA 17 (SCA).
377 At par 9.
378 2015 (4) SA 112 (WCC).
379 At paras 17 and 18. See also 8.4.2.2, 8.6.2 and 8.6.3 regarding the distinction between contingent and
potential beneficiaries as far as locus standi to bring an application under s 20(1) is concerned.
380 See some of the cases discussed by Du Toit 2017 TSAR 124 at 128–132.
121
7
Trust Administration
7.1 Introduction
The definition of a trust in section 1 of the Act prescribes that a trustee undertakes the admin-
istration of trust property for the benefit of the trust beneficiaries or to attain an impersonal
1
trust object. Trust administration is therefore the core function of trusteeship. A trustee
2
conducts trust administration as the holder of a fiduciary office subject to supervision and
3
control by the Master and the High Court. A trustee conducts trust administration through the
exercise of particular powers and compliance with specific duties. These powers and duties
arise from the common law, legislation (principally the Trust Property Control Act) and the
4
particular trust instrument. An exposition on the fundamentals of South African trust law
therefore necessitates a close look at the key aspects of trust administration. This chapter
addresses this important issue by analysing the public supervision and control of trustees and
trust administration; a trustee’s duties and powers in regard to trust administration; how and
why trust administration sometimes goes awry and what can be done to prevent or remedy a
trustee’s maladministration of a trust. In so doing, this chapter underscores the importance of
proper and regular trust administration.
An obvious point of departure for an exposition on trust administration is noting the four
so-called golden rules or core duties of trust administration gleaned from case law and aca-
demic commentary. This chapter focusses throughout on the following pivotal rules or duties
5
ascribed to all trustees in conducting trust administration in a proper and regular manner:
• a trustee must exercise independent judgement and discretion, except when a trustee is
6
required to apply the law or to abide by a legal prescript;
• a trustee must give effect to the clear or properly-interpreted directives contained in the
trust instrument;
• a trustee must act with the care, diligence and skill reasonably expectable of a person who
manages someone else’s affairs when he or she exercises trustee powers and performs
7
trustee duties; and
8
• co-trustees must always act jointly unless the trust instrument directs otherwise.
________________________
1 See 1.3 regarding this statutory definition of a trust.

2 See 1.2.3 regarding the fiduciary nature of the trustee office and 6.7 regarding a trustee’s fiduciary duty.
5 Cameron et al Law of Trusts 262; De Waal 2012 Rabel J 1078 at 1095–1096; Du Toit 2015 JCLS 655 at
665–666.
6 See 7.3.2.2 regarding a trustee’s duty to exercise independent judgment and discretion.
7 See 7.3.1.4 regarding a trustee’s duty to act with care, diligence and skill.
8 See 6.8 regarding the joint-action rule of co-trusteeship.
123
7.2 Public supervision and control of trustees and trust

administration
7.2.1 The Master of the High Court
The Master is a public official charged with an array of functions, duties and powers in respect
of trusts; deceased estates; insolvent estates; tutors and curators; and the administration of
9
the Guardian’s Fund. A Master is appointed by the Minister of Justice and Constitutional
Development for the area of jurisdiction of each provincial division of the High Court through-
out South Africa. The Minister of Justice and Constitutional Development also appoints a Chief
Master as an executive officer of all these Masters’ offices, and the Chief Master provides
advice and guidance to, and exercises control over, the Masters attached to all the High
Courts in the Republic. The Chief Master regularly issues directives to the Masters. These
contain guidelines that assist the Masters when they apply recent statutory and judicial devel-
opments to their core functions. Each Master’s office has personnel who assist that Master in
executing the functions, duties and powers laid down by various statutes, including the Trust
Property Control Act. This Act vests the Master with both administrative and substantive
10
powers over trustees. These include, in addition to the matters discussed immediately
11 12
hereafter, receipt of the lodgement of trust instruments; the appointment and authorisation
13 14
of trustees; and removing trustees from office.
7.2.1.1 The Master’

Master’s jurisdiction
Given that Masters’ offices are spread throughout South Africa, the question arises which
particular Master has jurisdiction over a particular trust and its trustees. Section 3 of the Act
answers this question by regulating the Master’s jurisdiction. This section lays down the
following general rules for establishing a Master’s jurisdiction:
• in respect of the trust property of a testamentary trust, jurisdiction lies with the Master in
whose office the relevant testamentary writing or a copy thereof was registered and ac-
15
cepted;
• in respect of any other trust property, jurisdiction lies with the Master in whose area of
appointment the greater or greatest portion of that property is situated, subject to the pro-
viso that a Master who has exercised jurisdiction shall continue to have jurisdiction not-
withstanding any change in the situation of the greater or greatest portion of the trust
16
property.
________________________
9 See 9.3.5 regarding the Guardian’s Fund.

11 See 5.3.
12 See 6.3.1.4.
13 See 6.5.1.
14 See 6.13.5.
15 S 8 of the Administration of Estates Act requires that a testator’s will must, after that testator’s death, be
transmitted or delivered to the Master who has jurisdiction in terms of this Act. The Master must register
the original will or a duplicate of the original will by recording it in the register of estates. If the Master is
of the opinion that the will is valid insofar as it complies with all the legal prescripts regarding a will’s va-
lidity, the Master must accept that will and the administration of the testator’s estate will commence. The
testator’s assets will then be dealt with in accordance with the directives set out in the will that the Master
has accepted. The administration of the estate will include the transfer of all or some of the testator’s
property by the executor of the testator’s estate to the trustee of any testamentary trust created in terms
of that will, for that trustee to administer that property as trust property in terms of the trust provisions
contained in the testator’s will.
16 S 3(1)(a).
124
Section 3 of the Act permits a Master who does not have jurisdiction in respect of trust prop-
erty according to the aforementioned general rules to assume jurisdiction over that trust
property, on the written application by any person with an interest in that property and with
17
the consent of the Master who has such jurisdiction. The section also provides that no act
performed by a Master who in good faith believed that he or she had jurisdiction shall be
18
invalid merely because it should have been performed by another Master. If more than one
Master has, in such erroneous belief, exercised jurisdiction in respect of the same trust prop-
erty, without prejudice to the validity of any act already performed by or under the authority
of any other Master, as soon as it becomes known to the Master concerned, that property
shall be administered or disposed of under the jurisdiction of the Master who first exercised
such jurisdiction and any authorisation or appointment of a trustee made by any other Master
19
in respect of that property shall thereupon be cancelled by that other Master.
7.2.1.2 The rreport

eporting
eport ing of irregularities
irregularities to the Master
A trustee is under a common law duty to maintain a trust’s accounting books that reflect the
20 21
state of that trust’s financial affairs. The Act does not require trust accounts to be audited
but a trust instrument can impose the duty on a trustee to subject that trust’s accounts to
regular audits. Even if a trust instrument does not expressly impose such a duty on a trustee,
it is nevertheless advisable that a trustee has at least an annual audit of the trust accounts
22
done. Section 15 of the Act provides that if, in the event of such an audit, the person con-
ducting the audit notices any irregularity regarding trust administration, he or she shall, if in
his or her opinion it is a material irregularity, report it in writing to the trustee. The trustee has
one month from the date of such a report to rectify the irregularity to the satisfaction of the
person who audited the trust accounts. If the trustee fails to rectify the irregularity, the person
who conducted the audit must report the irregularity in writing to the Master. The Master can
then take appropriate further steps against the recalcitrant trustee, in particular, by calling on
23
that trustee to account for his or her trust administration.
7.2.1.3 The Master’

Master’s power to hold a trustee accountable
The Act grants the Master an extensive power to ensure trustees’ accountability (Afrikaans:
verantwoordbaarheid) for trust administration. Section 16 of the Act is particularly important
in this regard:
“(1) A trustee shall, at the written request of the Master, account to the Master to his satisfaction
and in accordance with the Master’s requirements for his administration and disposal of trust
property and shall, at the written request of the Master, deliver to the Master any book, record,
account or document relating to his administration or disposal of the trust property and shall to
the best of his ability answer honestly and truthfully any question put to him by the Master in
connection with the administration and disposal of the trust property.
________________________
17 S 3(1)(b).
18 S 3(2).
19 S 3(3).
20 See 7.3.2.4 regarding a trustee’s duty to maintain a trust’s accounting books.
21 Theron 1991 TSAR 268 at 275; Theron 1991 SALJ 277 at 285. Pace and Van der Westhuizen Wills and
Trusts B28.1 regard the absence of a statutory audit requirement as one of a trust’s strengths.
22 Audits do however occasion additional expenses and some commentators therefore disapprove of the
compulsory auditing of trust accounts for this reason: Olivier et al Trustreg en Praktyk 9.2.6.22.
23 See 7.2.1.3 regarding a trustee’s accountability to the Master.
125
(2) The Master may, if he deems it necessary, cause an investigation to be carried out by some fit
and proper person appointed by him into the trustee’s administration and disposal of trust
property.
(3) The Master shall make such order as he deems fit in connection with the costs of an investiga-
tion referred to in subsection (2).”
The decision to order the investigation envisaged in section 16(2) lies entirely within the
Master’s discretion and, unless it is alleged that the Master exercised this discretion improper-
24
ly, the High Court has no jurisdiction to order the Master to carry out such an investigation.
Section 19 of the Act enables the Master, in the event that a trustee fails to comply with the
Master’s request to account in terms of section 16, to apply to the court for an order directing
the trustee to comply with such request.
7.2.1.4 Judicial review of the Master’

Master’s actions
Section 23 of the Act provides:
“Any person who feels aggrieved by an authorization, appointment or removal of a trustee by the
Master or by any decision, order or direction of the Master made or issued under this Act, may
apply to the court for relief, and the court shall have the power to consider the merits of any such
matter, to take evidence and to make any order it deems fit.”
25
In Fesi v Trustees Elect of the Ndabeni Communal Property Trust the Supreme Court of Appeal
26
expressed the following important principles applicable to this provision:
• any decision, order or direction of the Master made in terms of the Act is open to judicial
review by the High Court – no decision, order or direction of the Master is therefore shield-
ed or otherwise excluded from such a review;
• the fact that a court is entitled to consider the merits of any such matter, to take evidence
and to make any order that it deems fit, means that the court may rehear the dispute re-
27
garding the Master’s decision, order or direction de novo (as a new case); and
• section 23 applies not only to a Master’s decision that is reviewable because it was irregu-
28
larly taken insofar as the Master did not adhere to the demands of administrative justice,
but the section also permits a court to reconsider the substantive justification behind a
Master’s decision and thus for the court to substitute this decision entirely with its own.
7.2.2 The High Court

The High Court has the common law jurisdiction to intervene in trust administration to ensure
29
that a trustee administers a trust properly. The Act also empowers the High Court to vary
30
trust provisions; to order a trustee to comply with the Master’s request to account for the
31 32
trustee’s trust administration; to remove a trustee from office; to review any appointment,
________________________
24 Ras v Van der Meulen 2011 (4) SA 17 (SCA) par 10.

25 [2018] 2 All SA 617 (SCA).
26 At par 54.
27 See also Moore v Du Toit [2009] ZAKZPHC 66 (30 November 2009) paras 12–14.
28 The preamble to the Promotion of Administrative Justice Act describes administrative justice as any
administrative action that is lawful, reasonable and procedurally fair. Administrative justice includes, in
terms of the preamble, the right to receive (written) reasons for any administrative action taken against a
particular person.
29 Kalshoven v Kalshoven 1966 (3) SA 466 (R) 469C.
30 See 5.4.3 regarding the judicial variation of trust provisions.
31 See 7.3.3 regarding s 19 of the Act.
32 See 6.13.6 regarding judicial trustee removal.
126
authorisation or removal of a trustee from the trustee office by the Master; and to review any
other decision, order or direction of the Master made or issued in terms of the Act. The court
can, in these instances of judicial review, consider the merits of the case, take evidence, and
33
make any order that it deems fit.
7.3 A trustee’
trustee’s duties with regard to trust administration
A trustee’s duties originate from three sources: the trust instrument, statute and the common
34
law. Trustee duties imposed by the trust instrument vary from one instrument to the next
and must therefore be established from, and executed, in terms of the particular trust instru-
ment at hand. A trustee’s statutory and common law duties are discussed hereafter. In regard
to the former, the provisions of the Act that impose specific trustee duties are discussed first
and thereafter a trustee’s principal duties in terms of the common law are discussed.
7.3.1 Duties imposed by the Trust Property Control Act

7.3.1.1 Lodging the trust instrument and any variations thereto
Section 4(1) of the Act requires a trustee to lodge the trust instrument or a certified copy
thereof with the Master. Section 4(2) requires a trustee to lodge any variation of the trust
35
instrument or a certified copy thereof with the Master.
7.3.1.2 Notifying the Master of the trustee’

trustee’s address
Section 5 of the Act requires a trustee to furnish the Master with his or her address for the
service of notices and process. Furthermore, the section requires a trustee to inform the
Master in writing by registered mail within 14 days of any change of address and to simulta-
neously convey his or her new address to the Master.
7.3.1.3 Furnishing security to the Master

Section 6(2)(a) of the Act imposes a duty on a trustee to furnish security to the Master for the
due and faithful performance of his or her duties as trustee, unless the trustee has been
36
exempted from this duty.
7.3.1.4 Acting
Acting with care, diligence and skill
skill
Section 9(1) of the Act demands that a trustee acts with the requisite care, diligence and skill
37
in the performance of his or her trustee duties and the exercise of his or her trustee powers.
7.3.1.5 Opening a trust account

account
Section 10 of the Act imposes the duty on any person who receives money in the capacity of
trustee to deposit that money in a separate trust account (Afrikaans: trustrekening) at a bank-
38
ing institution or building society. This provision is peremptory. The Act does not prescribe
the type of account that a trustee must open. It is therefore within a trustee’s discretion
________________________
33 S 23 of the Act. See 7.2.1.4.

35 See 5.3 regarding the lodgement of the trust instrument.
36 See 6.6 regarding the furnishing of security by a trustee.
37 See 6.7 regarding the duty of care, diligence and skill as a component duty of a trustee’s general fiduciary
duty.
38 Tijmstra v Blunt-MacKenzie 2002 (1) SA 459 (T) 470D, 473D–E and 474E.
127
whether to open a savings, cheque or other account. A trustee’s decision in this regard will
depend on which type of account will best serve the trust’s purposes. The Act also does not
dictate whether a trust account must be opened in the name of a trust or in the name of its
39
trustee; financial institutions generally permit both these modes.
7.3.1.6 Separating trust property

property from private property: registering and
identifying trust property
40
Trust property does not form part of a trustee’s private estate. A trustee must therefore
always hold trust property in such a manner that it is identifiable as trust property and not the
trustee’s private property. In doing so, a trustee not only facilitates proper and expeditious
trust administration but also enables the effective performance of his or her duty to account
41
for trust administration. A trustee’s separation of trust property from his or her private
property also facilitates the claims of third parties against that trustee’s private estate (for
42
example, a trustee’s private creditors in the event of that trustee’s personal insolvency)
43
because the separated trust property is excluded from such claims. Section 11(1) of the Act
directs a trustee to perform a number of actions regarding the registration and identification
of trust property. A trustee’s compliance with these prescripts expedites the separation of
trust property from that trustee’s private property.
Subject to the provisions of the Financial Institutions (Investment of Funds) Act, 1984 (Act
39 of 1984), section 40 of the Administration of Estates Act, 1965 (Act 66 of 1965), and the
provisions of the trust instrument concerned, a trustee shall –
“(a) indicate clearly in his bookkeeping the property which he holds in his capacity as a trustee;
(b) if applicable, register trust property or keep it registered in such manner as to make it clear
from the registration that it is trust property;
(c) make any account or investment at a financial institution identifiable as a trust account or trust
investment;
(d) in the case of trust property other than property referred to in paragraphs (b) or (c), make such
44
property identifiable as trust property in the best possible manner.”
The measures prescribed in section 11(1) are made subject to the provisions of the repealed
Financial Institutions (Investment of Funds) Act and section 40 of the Administration of
Estates Act. The Financial Institutions (Protection of Funds) Act repealed the Financial Institu-
tions (Investment of Funds) Act in 2001. This Act now imposes certain special duties on
financial institutions that act as trustees to ensure that they keep trust property separate from
their own property and that trust property held by financial institutions does not form part of
those institutions’ own property. Section 40 of the Administration of Estates Act instructs the
executor of a deceased estate to cause the trust provisions contained in a will, or a reference
to them, to be endorsed against the title deed of immovable property bequeathed in trust.
This measure ensures that immovable testamentary trust property is readily identifiable as
such.
________________________

41 Olivier et al Trustreg en Praktyk 3.4.2.1.12. See 7.2.1.3 regarding a trustee’s accountability to the Master
and 7.3.2.5 regarding a trustee’s accountability to co-trustees and trust beneficiaries.
42 See 6.12.2 regarding the insolvency of a trustee’s private estate.
43 De Waal 2000 SALJ 548 at 562.
44 S 11(2) and (3) contains transitional provisions in respect of trust property not registered or identified as
such at the commencement of the Act.
128
The identification of trust property in either of the aforementioned cases is thus effected in
terms of the applicable statute and need not be done in terms of section 11(1) of the Act.
Section 11(1) acknowledges moreover that a trust instrument can impose other specific duties
on a trustee regarding the separation of trust property from his or her private property as well
as regarding the identification of trust property as such. If a trust instrument is silent on this
matter, the measures prescribed by section 11(1) represent the minimum steps that a trustee
must take to separate trust property from private property. These measures are peremptory
45
and a trustee must therefore implement them. Any failure by a trustee to identify and
register trust property in accordance with this subsection does not however cause such
property to become part of that trustee’s private estate. Trust property is therefore separate
property even if a trustee failed to abide by section 11(1)’s prescripts, provided it is still in
46
some way identifiable as trust property.
A trustee’s failure to maintain a functional separation between trust property and his or her
private property can signify that the trustee abused the trust and that the trust is in fact the
47
trustee’s alter ego. A court can in such a case pierce the trust’s veneer and provide a case-
48
specific remedy to cure the trustee’s abuse. A trustee’s non-compliance with the duty to
separate trust property from his or her private property can also justify that trustee’s judicial
49
removal from the trustee office.
7.3.1.7 Rectifying
Rectifying irregularities in trust administration
Section 15 of the Act requires that a trustee rectify any material irregularity regarding trust
50
administration that the auditor of trust accounts brings to his or her attention.
7.3.1.8 Rendering an account to the Master

Section 16 of the Act requires a trustee to deliver an account of his or her trust administration
51
to the Master when the latter calls on him or her to do so.
7.3.1.9 Retaining custody of trust documents

Section 17 of the Act instructs that a trustee shall not, without the written consent of the
Master, destroy any document that serves as proof of the investment, safe custody, control,
administration, alienation or distribution of trust property, before the expiry of a period of
five years from the termination of a trust. A trustee is therefore obliged to maintain a perma-
nent constructive record of trust administration not only during the trust’s existence but also
well after that trust’s termination. Compliance with this duty ensures the availability of docu-
mentary evidence regarding trust administration should any claims or inquiries arise in
respect of trust matters after a trust is terminated.
________________________
45 Tijmstra v Blunt-MacKenzie 2002 (1) SA 459 (T) 470C–D.

46 Stander 1999 JJS 145 at 153. See 6.12.2 regarding the situation where trust funds have become com-
mixed with a trustee’s private funds.
47 See 7.6.1 regarding the abuse of the trust. See also 4.2.1.2 regarding the alter ego trust.
48 De Waal 2012 Rabel J 1078 at 1094–1098; Pace and Van der Westhuizen Wills and Trusts B15.1.6. See
7.6.2 regarding the piercing of a trust’s veneer.
49 Tijmstra v Blunt-Mackenzie 2002 (1) SA 459 (T) 468B–H; REM v VM 2017 (3) SA 371 (SCA) par 20. See
6.13.6 regarding the judicial removal of a trustee from office.
50 See 7.2.1.2.
51 See 7.2.1.3.
129
7.3.2 Common law duties

The common law imposes an array of duties on a trustee regarding trust administration.
Some of the principal common law duties are discussed hereafter but these do not constitute
an exhaustive list: the common law can impose additional trustee duties depending on the
nature and extent of the administration of the trust in question.
7.3.2.1 Giving effect to the trust instrument

52
The trust instrument is a trust’s founding document or constitutive charter and a trustee is
consequently duty-bound to obtain and study the trust instrument, to interpret it properly
when required to do so, and to adhere meticulously to its terms, provisions and prescripts as
53
far as it is legally possible to do so. A trustee who fails to comply with this duty can be
54 55
removed from the trustee office by the court or incur liability for breach of trust.
To what extent are outsiders expected to comply with a trust instrument’s provisions?
56
Kollapen J stated in Investec Bank Ltd v Adriaanse that it is trite that a trustee bears the
primary responsibility to act in accordance with a trust instrument’s dictates and that one
should therefore guard against the “unintended consequence of developing a quantitative-
ly higher standard of diligence and care on the part of outsiders dealing with a trust, than
57
on the part of the trustees themselves”. This finding accords with the Supreme Court of
58
Appeal’s decision in Standard Bank of South Africa Ltd v Koekemoer that proof of actual
or constructive knowledge of the content of a trust instrument is a prerequisite for an
outsider to incur liability for trustee actions taken contrary to that instrument’s provi-
59
sions.
7.3.2.2 Exercising independent judge

judgement and discretion
A trustee is under a common law duty to exercise independent judgement and discretion in
all trust matters, but in particular in the taking of trustee decisions. This duty is one of the four
60
golden rules or core duties of trusteeship and is also a component duty of a trustee’s general
61
fiduciary duty. Du Toit notes the following essential aspects of a trustee’s duty of independ-
62
ence (Afrikaans: onafhanklikheidsplig):
• a trustee must, except when dealing with prescriptive matters of law or matters of a purely
administrative nature, always apply independent judgement when participating in trustee
decision-making, in particular, when the decision-making process involves the exercise of a
discretion;
• a trustee must formulate and express his or her own view when engaging in trustee deci-
sion-making, and this view must be free from, and unaffected by influence, pressure or
________________________
52 See 5.2 regarding a trust instrument’s constitutive nature.

53 Pace and Van der Westhuizen Wills and Trusts B15.1.3; Olivier et al Trustreg en Praktyk 3.4.2.1.1.
54 Tijmstra v Blunt-Mackenzie 2002 (1) SA 459 (T) 468H–J. See 6.13.6 regarding a trustee’s judicial removal
from office.
55 Land and Agricultural Bank of South Africa v Parker 2005 (2) SA 77 (SCA) par 14; Pace and Van der
Westhuizen Wills and Trusts B15.1.3 and B15.1.7. See 6.11 regarding breach of trust by a trustee.
56 2014 (1) SA 84 (GNP).
57 At par 14.
58 2004 (6) SA 498 (SCA).
59 At paras 11–13. See 7.4.1 regarding the Standard Bank case.
60 See 7.1.
62 2009 THRHR 637 at 641–642.
130
instruction from another, whether it is the trust founder, co-trustees, trust beneficiaries, or
an outsider;
• a trustee, having exercised independent judgement regarding trustee decision-making,
assumes ultimate responsibility for the outcomes of those decisions and their consequenc-
es for trust administration; and
• a trustee must never take a course of action or otherwise place him- or herself in a position
that will disable him or her from, or compromise him or her in, exercising independent
judgement and discretion when called upon to take a trustee decision.
This duty also implies that each trustee must scrutinise the actions of, and the decisions taken
63
by, his or her co-trustees. Each trustee must therefore at all times exhibit a minimum degree
of independent judgement regarding, and thus a minimum degree of involvement in, trust
64
affairs. It is thus unacceptable for a trustee to assume an entirely passive role regarding trust
administration by being a mere sleeping or puppet trustee, or by assuming that he or she is a
trustee only in name who is not required to involve him- or herself in substantive trust mat-
65
ters.
The test to establish whether a trustee failed to exercise the requisite independent judge-
ment and discretion is a subjective one, based on an ex post facto (retrospective) analysis of
66
that trustee’s actions in the context of the facts of the particular case. A trustee who fails to
67
abide by the duty of independence commits a breach of trust and may even be removed
68
from the trustee office by the court. Moreover, a trustee’s failure to exercise independent
judgement and discretion, in particular because that trustee slavishly followed the lead of a
69
dominant co-trustee, can point to the dominant trustee’s abuse of the trust by treating the
70
trust as his or her alter ego.
7.3.2.3 Acting impartially

A trustee is duty-bound to administer a trust in an impartial manner. A trustee’s duty of
impartiality (Afrikaans: onpartydigheidsplig), which is a sub-component of the trustee’s general
71 72
fiduciary duty, comprises at least two elements. The first element of the duty of impartiali-
ty dictates that a trustee must avoid a conflict of interest between his or her private affairs
and his or her official functions as trustee, the latter being principally to serve the interests of
73
the trust and its beneficiaries. A trustee may not therefore derive any unauthorised profit
74
from trust administration. A trustee must specifically refrain from purchasing trust property
because he or she must, as trustee, endeavour to obtain the highest price for the sale of a
trust asset whereas he or she will, as purchaser, strive to obtain the lowest purchase price for
that asset. This contraposition can readily cause a trustee not to act impartially in the interests
________________________

64 Hoppen v Shub 1987 (3) SA 201 (C) 217C and G; Geach Trust Law 222.
65 See 6.8.2.3 regarding the passive co-trustee.
67 Land and Agricultural Bank of South Africa v Parker 2005 (2) SA 77 (SCA) par 36; Pace and Van der
Westhuizen Wills and Trusts B15.1.7.
68 Tijmstra v Blunt-Mackenzie 2002 (1) SA 459 (T) 472A–C and 474C–E. See 6.13.6 regarding judicial trustee
removal.
69 See 6.8.2.2 regarding the dominant co-trustee.
70 See 7.6.1 regarding the abuse of the trust. See also 4.2.1.2 regarding the alter ego trust.
71 See 6.7.
72 Pace and Van der Westhuizen Wills and Trusts B15.1.7; Olivier et al Trustreg en Praktyk 3.4.2.1.15.
73 Hoppen v Shub 1987 (3) SA 201 (C) 210A–B; Jowell v Bramwell-Jones 2000 (3) SA 274 (SCA) 284H.
74 Hoppen v Shub 1987 (3) SA 201 (C) 210B.
131
of the trust and its beneficiaries when selling trust property to him- or herself. Binns-Ward J
75
thus held in Kidbrooke Place Management Association v Walton that the court must be ap-
76
proached to give its consent to a trustee’s purchase of immovable property from a trust. A
trustee may, on the basis of the foregoing exposition, also not borrow trust money in his or
her private capacity because a trustee may grant him- or herself a more favourable interest
rate or repayment scheme than he or she would have done in an arm’s length loan transac-
tion with an outsider. A trustee’s duty of impartiality therefore demands that a trustee must
not involve him- or herself in any conduct that can occasion unjustified self-enrichment at the
77
expense of the trust and its beneficiaries.
It is common for a trust’s trustee to also be that trust’s sole income beneficiary, with others
appointed as the trust’s capital beneficiaries. Is such a trustee in breach of his or her duty of
impartiality, and thus also of his or her general fiduciary duty, if he or she concludes a trans-
action or participates in a scheme that benefits him or her as income beneficiary more than it
78
benefits the trust’s capital beneficiaries? In Jowell v Bramwell-Jones this very allegation was
levelled at a trustee, but the court recognised that a trustee’s impartiality and hence fiduciary
duty is not necessarily compromised by virtue of the fact that a particular transaction con-
cluded by that trustee in his or her capacity as such appears to favour him or her in the
capacity of trust beneficiary while not similarly favouring the other trust beneficiaries. The
court cautioned however that transactions of this kind will be closely scrutinised and are best
79
avoided by a trustee-beneficiary. The evidence adduced in the Jowell case led the court to
conclude that the trustee’s impugned conduct was such that she indeed breached her fiduci-
80 81
ary duty. In Hanekom v Voight the court, building on the decision in the Jowell case, held
that the rule against a conflict of interest is a strict one that does not readily permit excep-
82
tions. Given this virtually absolute nature of the rule against a conflict of interest, it is unsur-
83
prising that the court concluded in Kidbrooke Place Management Association v Walton that a
trustee who breaches his or her fiduciary duty by placing him- or herself in a position where
private interests conflict with those of the trust and its beneficiaries may be judicially re-
moved from the trustee office even if the trustee undertakes the conduct that occasions the
84
conflict of interest without mala fides (bad faith) or dishonesty.
________________________
75 2015 (4) SA 112 (WCC).

76 At par 25. See also Hoppen v Shub 1987 (3) SA 201 (C) 210G.
77 Cameron et al Law of Trusts 355.
78 2000 (3) SA 274 (SCA).
79 At 284I. See also generally Hanekom v Voight 2016 (1) SA 416 (WCC).
80 At 284J–285A.
81 2016 (1) SA 416 (WCC).
83 2015 (4) SA 112 (WCC).
84 At paras 47–56.
132
Is a trustee transaction that involves a (potential) conflict of interest valid or invalid? In

85
Hoppen v Shub the court explained that such a transaction is generally not void, but
86
merely voidable. A voidable transaction is one that remains valid until a court annuls it
or otherwise sets it aside. Whether a court will indeed rescind a trustee transaction that
involves a (potential) conflict of interest depends on the circumstances of the particular
case. A court may, for example, regard a transaction that the trustee entered into openly
and in good faith (palam et bona fide) favourably and decide not to rescind it. A transac-
tion entered into with the informed consent of all the trust beneficiaries or one that, alt-
hough it involves a (potential) conflict of interest, is genuinely in the interests of the trust
87
and its beneficiaries may likewise not be rescinded. A court can in any event ratify an
88
otherwise voidable transaction that involves a (potential) conflict of interest. If a court
indeed rescinds a trustee transaction by reason of a conflict between that trustee’s private
and official interests, the trustee must return any property that he or she obtained in con-
sequence of that transaction. If such a transaction is not rescinded, the court can still
order the trustee to account to the trust beneficiaries for any profit derived from his or
89
her dealings with the particular property.
The second element of a trustee’s duty of impartiality relates to a trustee’s obligation to treat
trust beneficiaries impartially, in particular in the distribution of trust income and/or capital to
those beneficiaries. A trustee may not therefore unduly favour one beneficiary over another
when he or she exercises a discretion to allocate trust benefits to those beneficiaries. Impar-
tiality in this context does not however oblige a trustee to always treat trust beneficiaries
equally; the trustee may in appropriate circumstances make a greater monetary award to
90
those beneficiaries with the greatest financial need. For example, in Schaefer and Nagel v
91
Estate Petzall the court noted the fact that the maintenance and education needs of a testa-
tor’s two children (as testamentary trust beneficiaries) differed and the court proceeded on
the assumption that the testator intended for them to be maintained and educated as he
would have done had he still been alive. The court therefore held that the trustees, in exercis-
ing their discretion to make awards from the trust income for the maintenance and education
of the children, could differentiate between the two as the testator would probably have acted
92
according to the individual needs of each child rather than on the basis of equality.
7.3.2.4 Maintaining the trust’

trust’s accounting books
93
A trustee is expected to keep proper records of a trust’s financial affairs. A trustee does so by
maintaining the trust’s accounting books. These books generally consist of a profit-and-loss
account or income-and-expenditure account showing the results of transactions for the pre-
ceding period (usually one year) as well as a balance sheet showing the state of the trust’s
94
financial affairs at the end of the accounting period.
________________________
85 1987 (3) SA 201 (C).

86 At 210B–C.
87 At 210C–D.
88 At 210F–G.
89 Kidbrooke Place Management Association v Walton 2015 (4) SA 112 (WCC) par 55.
90 Pace and Van der Westhuizen Wills and Trusts B15.1.7. See also Klopper 1990 SALJ 702 at 705–706.
91 1966 (3) SA 769 (W).
92 At 771H–772D.
94 Geach Trust Law 404–405. See Geach Trust Law 405–415 for an exposition on the format of trust ac-
counts as well as related statements and reports.
133
7.3.2.5 Rendering an account to co-

co-trustees and trust beneficiaries
The common law permits both co-trustees and trust beneficiaries to demand an account from
a trustee regarding the state of trust administration and a trustee must render such an ac-
count by furnishing all the requisite information when called upon to do so. The duty to
95
account is also a component duty of a trustee’s general fiduciary duty. In Doyle v Board of
96
Executors the court acknowledged that a beneficiary’s right to hold a trustee accountable is
97
substantive as well as procedural: it is a right and at the same time also a remedy. The court
held that rendering an account entails a trustee explaining his or her actions and conduct
regarding trust administration by supplying the beneficiary with all relevant information on
98
the discharge of his or her trustee office. The trust beneficiary who called on a trustee to
account in the Doyle case was dissatisfied with the account that the trustee rendered because
it consisted principally of unverified and untested balances regarding the beneficiary’s capital
benefit. The court concurred with the beneficiary that this constituted insufficient accounting
and ordered the trustee to furnish the beneficiary with full, true and proper accounting, duly
supported by documentary proof of the trust’s capital as it existed at the time of the trustee’s
appointment, all realisations and reinvestments of the capital from time to time thereafter, as
well as the state of the trust’s capital at the time that the beneficiary became entitled there-
99
to.
7.3.3 Failure by a trustee to account or to perform

perform duties
If a trustee does not comply with the Master’s request for accounting in terms of section 16 of
100
the Act or a trustee fails to perform any duty imposed on him or her by the trust instrument
or by the law, section 19 of the Act allows the Master or any person with an interest in the
property of that trust to apply to the court for an order directing the trustee to comply with
such a request or to perform such a duty. Any failure by a trustee to satisfactorily perform a
duty imposed by or under the Act, or to comply with any lawful request of the Master, may
101 102
occasion that trustee’s removal from the trustee office by the Master or by the court.
7.4 A trustee’
trustee’s powers with regard to trust administration
7.4.1 The source, nature and extent of a trustee’
trustee’s powers
A trustee’s powers with regard to trust administration are determined principally by the
103
particular trust instrument and these powers consequently differ from one trust to the next.
It is settled law that a trustee can exercise only those powers bestowed by the trust instru-
104
ment. The trustee powers granted by a trust instrument are usually strictly interpreted. For
example, the power to sell trust property is not readily interpreted as also including the power
________________________
95 See 6.7.
96 1999 (2) SA 805 (C).
97 At 813D.
98 At 813H–I.
99 At 816G–H. See also Tijmstra v Blunt-MacKenzie 2002 (1) SA 459 (T) 471G–I.
100 See 7.2.1.3 regarding a trustee’s accountability to the Master.
101 S 20(2)(e). See 6.13.5.
102 S 20(1). See 6.13.6.
103 Hoosen v Deedat 1999 (4) SA 425 (SCA) par 22; Jordaan v Jordaan 2001 (3) SA 288 (C) par 25.
104 Edinburg v Mercantile Credit (Pvt) Ltd 1980 (1) SA 744 (ZR) 746G–H; Land and Agricultural Bank of South
Africa v Parker 2005 (2) SA 77 (SCA) par 10.
134
105
to mortgage or to encumber that property in any other manner. For this reason it is cus-
tomary for a trust instrument to grant a trustee wide and comprehensive powers to ensure
the proper, optimal and uninterrupted administration and disposal of the trust property, in
particular when a trust will remain operative for a lengthy period during which new and even
106
unforeseen circumstances may arise. However, trustee powers assigned by a trust instru-
ment remain subordinate to the law and cannot therefore override statutory prescripts,
107
common law rules or constitutional imperatives.
What can be done if a trustee needs to exercise a specific power in the course of trust
administration but the trust instrument does not expressly grant the trustee that power?
The first course of action in such a case is to determine whether it is possible for the par-
ticular trustee power to be read into the instrument by necessary implication in accord-
108
ance with the usual rules of construction pertinent to that instrument. If this
determination yields a positive outcome, the particular power is bestowed on the trustee
109
tacitly rather than expressly, and the trustee can proceed to exercise it. If a trust in-
strument does not confer a specific trustee power, either expressly or tacitly, the variation
110 111
of the trust instrument, either by the parties to the trust or by the court, may afford
112
the necessary relief. However, an application to court for a trust instrument’s variation
occasions expenses, delays and other inconveniences. A trust instrument’s variation by
the parties to the trust require all those parties’ co-operation, which is not always easy to
procure. These difficulties are circumvented by a properly-drafted trust instrument that
grants the trustee wide and comprehensive powers of trust administration.
A trust instrument can of course also limit a trustee’s powers. A trustee who disregards such a
limitation imposed on a trustee power and who proceeds to act beyond the scope of the
authority conferred by the trust instrument, acts ultra vires and the purported trustee action is
113
invalid. However, the effect of such an ultra vires trustee action on an outsider who was a
party to it depends on the circumstances of the particular case. In Standard Bank of South
114
Africa Ltd v Koekemoer the appellant advanced two home loans to trustees who on-lent it to
one of the trustees for the purpose of his own business ventures. The trust deed (which was in
the appellant’s possession) prohibited such on-lending and the court of first instance conse-
quently found that the trustees concluded the loan agreements with the appellant ultra vires,
rendering those agreements unenforceable. The Supreme Court of Appeal, in an appeal
________________________
105 Olivier et al Trustreg en Praktyk 3.4.3.1; Geach Trust Law 227. See, however, Potgieter v Shell Suid-Afrika
(Edms) Bpk 2003 (1) SA 163 (SCA) where the court, on the limited evidence before it, advanced a lenient
interpretation of trustees’ powers.
106 Pace and Van der Westhuizen Wills and Trusts B16.1; Olivier et al Trustreg en Praktyk 3.4.3.1.
108 Hoosen v Deedat 1999 (4) SA 425 (SCA) paras 23 and 25; Liebenberg v MGK Bedryfsmaatskappy (Pty) Ltd
2003 (2) SA 224 (SCA) par 16.
109 However, see Pascoal v Wurdeman 2012 (3) SA 422 (GSJ) par 27 where a court was not prepared, on the
evidence before it, to read particular trustee powers into a trust deed.
110 See 5.4.2 regarding the variation of trust provisions by the parties to the trust.
111 See 5.4.3 regarding the judicial variation of trust provisions.
112 Liebenberg v MGK Bedryfsmaatskappy (Pty) Ltd 2003 (2) SA 224 (SCA) paras 15 and 18. For example, see
the suggestion by De Waal 1999 TSAR 370 at 378 that s 13 of the Act permits the judicial variation of
trust provisions to expand a trustee’s powers of investment as bestowed by a trust instrument. In Conze v
Masterbond Participation Trust Managers (Pty) Ltd 1996 (3) SA 786 (C) 792D–E the court however cau-
tioned that s 13 of the Act cannot be invoked to cure a poorly-drafted trust instrument by supplementing
omissions therefrom.
113 TEK Corporation Provident Fund v Lorentz 1999 (4) SA 884 (SCA) par 28.
114 2004 (6) SA 498 (SCA).
135
against the court of first instance’s judgment, proceeded on the assumption that, had the
appellant known that the trust deed prohibited the on-lending of money, the relevant loan
115
agreements would indeed have been unenforceable. Mpati DJP however felt that the appel-
lant, as a bank that lent money to clients as part of its core business, was primarily interested
in whether the trustees had the authority to borrow money. The appellant could ascertain this
from the trust deed it had in its possession. Mpati DJP thus opined that, once the appellant
had satisfied itself regarding the trustees’ power to borrow money, it was not obliged to study
the trust deed any further in order to ascertain whether or not the trustees were empowered
to on-lend any money so borrowed. Mpati DJP therefore decided that, because the appellant
concluded the loan agreements with the trust as represented by its trustees and not with the
particular trustee to whom the money was later on-lent, the appeal had to succeed because,
given that the appellant had no actual or constructive knowledge that the trust deed indeed
prohibited the impugned on-lending, the loan agreements were validly concluded and were
116
enforceable as such.
A trustee enjoys an inherent discretion regarding the manner in which he or she exercises a
117
trustee power granted by the trust instrument. A trustee must however always exercise
trustee powers in a reasonable manner for the benefit of the trust beneficiaries or in the
118
pursuance of an impersonal trust object. Furthermore, a trustee must always exercise
119
trustee powers in accordance with the demands of his or her fiduciary office. The exercise
of a trustee’s powers is also subject to the supervision, control and intervention of the Master
120
and the High Court.
7.4.2 The delegation

delegation of trustee powers
A trustee may, depending on the provisions of the trust instrument, delegate the execution of
his or her trustee powers or the compliance with his or her trustee duties to someone else
121
(including a co-trustee), who then acts as the delegating trustee’s agent. Such a delegation is
normally temporary, not in rem suam (concerning the trustee’s own affairs), and is revocable
122
and does not require the leave of the court. Such a delegation is however impermissible if
the trustee purports to delegate the execution of his or her powers or the compliance with his
or her duties so comprehensively and absolutely that he or she is absolved from all responsi-
bility for the actions taken by his or her agent. This rule accords with the principle that trustee
decisions must be taken, and trustee discretions must be exercised, by the trustees who
ultimately assume responsibility for trust administration. A trustee can therefore, after having
taken a trustee decision or having exercised a trustee discretion, delegate the implementation
of that decision or discretion to an agent, but the trustee must still supervise the agent’s
123
activities and the trustee ultimately remains responsible for the agent’s actions.
________________________
115 At par 11.

116 At par 12.
117 Jowell v Bramwell-Jones 1998 (1) SA 836 (W) 894F; Olivier et al Trustreg en Praktyk 3.4.3.1.
119 See 1.2.3 regarding the fiduciary nature of the trustee office and 6.7 regarding a trustee’s fiduciary duty.
121 Goolam Ally Family Trust v Textile, Curtaining & Trimming (Pty) Ltd 1989 (4) SA 985 (C) 988D–E.
122 Corbett et al Law of Succession 402.
123 Jowell v Bramwell-Jones 1998 (1) SA 836 (W) 894F; Hoosen v Deedat 1999 (4) SA 425 (SCA) par 24; Coetzee
v Peet Smith Trust 2003 (5) SA 674 (T) 680I.
136
124
In Hoosen v Deedat a trustee granted a power of attorney to his daughter-in-law in terms
of which he effectively delegated his capacity, duties and powers as trustee to the latter,
to the extent that she was entitled to exercise independent judgement in respect of trust
matters, free from any control or correction by her father-in-law in his capacity as trustee.
The court, in determining whether such a delegation was legally permissible, first exam-
ined the trust deed and found in it no express authorisation for a delegation of this na-
125
ture. The court also held that the trust deed left no room for such authorisation to be
126
implied. Two considerations bolstered the court’s finding against such an implied au-
thorisation of delegation: firstly, the collective nature of the trustees’ duties and the gen-
127
eral prohibition against the delegation of a fundamental discretionary trustee power;
and, secondly, the principle, taken from the law of agency, that a trustee whose appoint-
ment was occasioned by particular personal attributes and qualities is generally not al-
lowed to comprehensively delegate his or her functions to someone who does not
128
possess the same attributes and qualities. The trust at issue in the Hoosen case was
established in the interests of the Muslim community in order to propagate and promote
the Islamic faith. The court therefore adjudged that its trustees must be “people imbued
with the spirit of Islam who could be relied upon to give effect to the objects of the
129
trust”. This requirement militated against any delegation of trustee powers to someone
who was not likewise positioned to fulfil the trust’s objects. The court therefore held that
the purported delegation was legally impermissible because the trust deed neither ex-
130
pressly nor impliedly authorised it.
131
In Van Wyk v Daberas Adventures CC the court contextualised the decision in the Hoosen
case by pointing out that:
• the Hoosen case did not concern all forms of delegation of trustee powers but only the
132
delegation of “fundamental decisions” and of a “fundamental discretionary power”;
• the Hoosen case concerned a somewhat peculiar factual scenario, namely, that of a
purported delegation by an individual trustee of his trustee capacity, duties and powers
to an outsider; the case did concern the situation more generally encountered, namely,
that of a delegation of a particular trustee power by a full trustee complement to either
133
a lesser of their number or an outsider;
• the judgment in the Hoosen case therefore does not preclude a full trustee complement
to delegate, either to a lesser of their number or an outsider, a power that is not a fun-
damental discretionary power and that does not relate to a matter that requires of the
trustees to exercise a discretion in carrying out their duties of controlling and managing
134
a trust;
continued
________________________
124 1999 (4) SA 425 (SCA).

125 At par 23.
126 At par 28.
127 At par 26.
128 At paras 26–28.
129 At par 27.
130 At par 29. See also Du Toit 2001 TSAR 123 at 130–131.
131 [2018] ZANCHC 31 (1 June 2018).
132 At par 28.
133 At par 31.
134 Ibid.
137
• the absence of a trust provision that expressly authorises the delegation of a specific
trustee decision (for example, regarding instituting or defending legal action on behalf
of the trust) is therefore not a bar against such a delegation, provided that the trust in-
135
strument does not explicitly or impliedly prohibit the delegation in question; and
this conclusion is fortified by the ordinary principles of the law of agency that permit a
full trustee complement to authorise either a lesser of their number or an outsider to act
136
on their behalf as their agent(s).
7.5 The investment of trust funds

Trust administration frequently requires of a trustee to invest trust funds, in particular if the
trust generates funds that are not immediately distributable to the trust beneficiaries. Trust
instruments consequently often empower trustees to invest trust funds. The extent of this
power and of the concomitant duty to make trust investments (Afrikaans: trustbeleggings)
137
depends on the trust instrument’s prescripts and on the circumstances of each case. A
trustee conducts trust investments subject to his or her general fiduciary duty that obligates
him or her in terms of the common law to invest trust funds as a bonus et diligens paterfamili-
138
as, a standard echoed in section 9(1) of the Act. This standard requires a trustee to devote a
higher degree of care, diligence and skill to investing trust funds than would be expected of
139
him or her when investing his or her private funds. In Sackville West v Nourse, a judgment
reported in 1925, the court held that, as a result of this stringent standard of care, diligence
and skill that the common law exacts of a trustee in investing trust funds, a trustee may not
undertake investments that can expose the trust assets to any risk whatsoever. The court thus
permitted a trustee to undertake only so-called no-risk trust investments by investing trust
140
funds in immovable property, fixed deposits as well as government and municipal stocks.
However, these investment types, although very safe with little or no risk of capital loss,
provide limited potential for growing the invested funds, with the consequent danger of the
invested funds depreciating over time and thus becoming inadequate to meet the trust bene-
ficiaries’ long-term needs.
The Supreme Court of Appeal therefore acknowledged in Administrators, Estate Richards v
141
Nichol that the Sackville West case was decided at a time when inflation had only a negligi-
ble impact on the value of monetary investments, but that inflation has become, and contin-
ues to be, a consistent factor in the contemporary investment landscape. The court therefore
conceded in the Estate Richards case that an investment previously regarded as prudent may
142
be quite imprudent today. The court thus argued that, in order to protect a trust’s capital in
modern economic times, a trustee may have to undertake trust investments that have a
potential for growth but that also hold an unavoidable element of risk. This change in invest-
ment thinking necessitates a less conservative approach to trust investments than the one
________________________
135 At par 44.

136 Ibid.
137 De Waal 1999 TSAR 370 at 371 mentions, as an example of the imposition of an implied duty to invest
trust funds, the situation where a trust generates more income than is required to meet the needs of the
trust’s income beneficiaries: in the absence of a contrary provision in the trust instrument, the trustee is
implicitly duty-bound to invest the surplus income.
139 1925 AD 516.
140 At 535.
141 1999 (1) SA 551 (SCA).
142 At 557I–J.
138
143
propounded in the Sackville West case. The Supreme Court of Appeal consequently held that
no hard and fast rule regarding trust investments was called for but that the prudence or
otherwise of a trust investment must instead be determined by carefully considering the
circumstances pertinent to the particular investment. The court nevertheless laid down as a
guideline that a prudent and diligent trustee will avoid investments of a speculative nature
and will as far as is practicable endeavour to spread trust investments over various platforms
– some with little risk and others with greater exposure to risk – in order to strike a balance
between stability and growth in the trust’s capital value on the one hand, and increasing the
144
trust’s income on the other.
The Estate Richards case does not warrant the inference that a trustee now enjoys an unfet-
tered discretion when investing trust funds. The powers of investment conferred by the trust
instrument, the trust’s operational period and the qualities and expertise of the trustee who
conducts the trust investments are all factors that must guide a trustee’s investment choic-
145
es.
7.6 A trustee’
trustee’s failure
failure to administer a trust
trust properly:
properly: the abuse of
the trust form
7.6.1 What constitutes
constitutes abuse of the trust form?
form?
A trustee’s failure to administer a trust properly will in appropriate circumstances point to the
conclusion that the trustee in fact abused the trust (or the trust form). The abuse of the trust
has become a pertinent feature of recent South African trust law jurisprudence, in particular
in the aftermath of two Supreme Court of Appeal judgments – Nieuwoudt v Vrystaat Mielies
146 147
(Edms) Bpk and Land and Agricultural Bank of South Africa v Parker – in which the courts
drew attention to the emergence of a “newer type of trust” under which trustees’ conduct of
trust affairs fell well short of compliance with the golden rules or core duties of trust admin-
148
istration to such an extent that those trustees in fact misused the trust as a legal institution.
Before attending to the abuse of the trust, the importance of distinguishing between a sham
149
trust and the situation in which the trust form is abused, must again be emphasised briefly.
The former is a “trust” that in fact never came into existence because one, more or all of the
150
requirements for its creation is/are lacking or was/were simulated by the “trust’s” creator(s).
A court will in such a case either hold that the creator(s) of the supposed “trust” intended all
along to establish another legal institution (such as a partnership) and that effect must be
given to that intention, or that the supposed “trust’s” creator(s) never intended to establish
any particular legal institution but only used the name or shape of a trust to gain some legal
151
advantage. In the latter case, it is particularly apt to refer to a sham trust because, although
the creator(s) of the supposed “trust” concluded some transaction and named the result of
that transaction a “trust” or shaped it in the form of a “trust”, a court will give effect to what
________________________
143 At 558A–C.
144 At 558H–I.
145 De Waal 1999 TSAR 370 at 376–377. See also Balden and Rautenbach 2005 JJS 91.
146 2004 (3) SA 486 (SCA).
147 2005 (2) SA 77 (SCA).
148 See 7.1 regarding these rules or duties of trust administration.
149 See 4.2.1.1 and 4.2.1.2 for more comprehensive discussions regarding this distinction.
150 See 4.2 regarding the requirements for creating a valid trust.
151 De Waal 2012 Rabel J 1078 at 1085.
139
the transaction really is (namely not a trust at all) and not to the form it purports to assume
152
(namely that of a supposed trust).
153
By contrast, the abuse of the trust form entails the acceptance that the trust at issue was
154
validly created but necessitates an acknowledgement that its trustee violated the trust’s core
155
idea insofar as the trustee failed to observe one, more or all of the golden rules or core
156
duties of trust administration. A finding that a trust has been abused can lead a court to
conclude, that such a trust is merely the alter ego of either the trust founder who instigated
the abuse or of the trustee who perpetrated the abuse (in other words, that the trust is simply
the founder or trustee acting under the guise of a trust) and thus cause that court to extend a
remedy that is appropriate on the facts of the particular case to mitigate, or to provide redress
157
for, the abuse of the trust form.
158
Badenhorst v Badenhorst provides a striking example of the abuse of the trust form by
reason of a dominant co-trustee’s non-adherence to some of the fundamental rules or
duties of trust administration. This case concerned divorce proceedings between parties
who were married out of community of property. The respondent was a farmer and the
appellant assisted him by tending to various duties related to the farming enterprise. The
respondent’s father created the J Trust for estate planning purposes after the appellant’s
and respondent’s marriage. The respondent and his brother were the J Trust’s trustees.
The respondent expanded his farming activities and he acquired a number of assets that
he registered in the name of the trust. These included two commercial properties, an
industrial property, a beach house and 50% of the shares in a company that owned an
estate agency franchise. When the appellant instituted divorce proceedings against the
respondent, she alleged that the J Trust’s assets must be taken into account for the pur-
pose of a redistribution of assets between the spouses in terms of section 7(3) to (6) of
159
the Divorce Act. This was because, so she averred, the respondent controlled the J Trust
to such an extent that it was in fact his alter ego. The court of first instance rejected the
appellant’s contention and she appealed to the Supreme Court of Appeal.
continued
________________________
152 Ibid.
153 See generally Olivier et al Trustreg en Praktyk 3.4.2.1.17–3.4.2.1.18; Pace and Van der Westhuizen Wills
and Trusts B15.1.6; Geach Trust Law 442–444; Du Toit 2015 JCLS 655 at 665–668; Van der Linde 2016
THRHR 165 at 168–171; Shipley 2016 SA Merc LJ 508 at 510–511; De Jong et al 2017 THRHR 198 at
200–203.
154 REM v VM 2017 (3) SA 371 (SCA) par 17.
155 See 1.2.1 regarding the trust’s core idea.
156 Van Zyl v Kaye 2014 (4) SA 452 (WCC) par 18; De Waal 2012 Rabel J 1078 at 1094–1096. See 7.1 regard-
ing these rules or duties of trust administration.
157 Van Zyl v Kaye 2014 (4) SA 452 (WCC) paras 21 and 22; De Waal 2012 Rabel J 1078 at 1097–1098. See
7.6.2 regarding remedying the abuse of the trust form.
158 2006 (2) SA 255 (SCA).
159 See 7.6.2.3.1 regarding the piercing of a trust’s veneer in respect of the redistribution of assets in terms of
these provisions of the Divorce Act.
140
The Supreme Court of Appeal held that the facts of the Badenhorst case were typical of an
instance where one party (the respondent) had full control of trust assets and used the
trust in question as a vehicle to conduct his business activities. The Court noted the fol-
lowing evidence as indicative of the respondent’s control of the J Trust: the respondent
and his brother were the only trustees and they had, in terms of the trust instrument, an
unfettered discretion to do with the trust assets and income as they saw fit; the respond-
ent had the right, again in terms of the trust instrument, to discharge his co-trustee and to
replace him with another; and the trust instrument allowed the respondent to be com-
160
pensated for fulfilling his duties as trustee which ensured him of a source of income.
The court noted furthermore that the extent of the respondent’s control of the trust
emerged also from the manner of his trust administration: he seldom consulted with his
co-trustee or sought his approval in conducting the trust’s affairs and he paid scant regard
to the difference between trust assets and his own assets insofar as he listed trust assets
as his personal assets for the purpose of obtaining credit facilities; described trust income
in the form of rent as his personal income; insured trust assets in his private capacity;
used the trust to finance his private property; and personally received income from the
estate agency franchise while the shares that generated that income belonged to the
161
trust. The J Trust’s administration by its trustees therefore fell well short of the funda-
mental rules or duties of trust administration: the respondent’s brother did not exercise
the requisite independence of judgement and discretion regarding trust administration
and was ostensibly an entirely passive co-trustee; the trustees did not comply with their
fiduciary duty to administer the trust with the requisite care, diligence and skill; and the
respondent effectively ousted his co-trustee from trust administration, thereby transgress-
162
ing the joint-action rule of co-trusteeship. The cumulative effect of the J Trust’s provi-
sions and the respondent’s maladministration of the trust occasioned such a serious
transgression of the fundamental rules or duties of trust administration that it necessitat-
163
ed the conclusion that the J Trust was indeed the respondent’s alter ego. This conclu-
sion underpinned the court’s ruling that the value of the trust assets must be considered
164
for the purpose of the redistribution order sought by the appellant.
7.6.2 Piercing the trust veneer

veneer (or going behind the trust form)
It is apparent from the foregoing discussion that the abuse of the trust form demands an
appropriate remedy for those parties adversely affected by the maladministration of a trust.
165
Cameron JA said in Land and Agricultural Bank of South Africa v Parker that a court may craft
such a remedy on the basis of evidence placed before it that “the trust form is a veneer that in
166
justice should be pierced”. This so-called piercing of a trust’s veneer or going behind a
167
trust’s form (as it is synonymously referred to) describes the phenomenon of a court, while
acknowledging a trust’s existence, nevertheless disregarding some of that trust’s ordinary
consequences in order to extend an appropriate remedy to a party prejudiced by a trustee’s
________________________
160 At par 10.

161 At par 11.
162 De Waal 2012 Rabel J 1078 at 1096; Du Toit 2015 JCLS 655 at 671.
163 Du Toit 2015 JCLS 655 at 669–670.
164 Badenhorst v Badenhorst 2006 (2) SA 255 (SCA) paras 10–13.
165 2005 (2) SA 77 (SCA).
166 At par 37.3.
167 REM v VM 2017 (3) SA 371 (SCA) par 17.
141
168
abuse of the trust. In order to understand this phenomenon, it is useful to consider the
common law position regarding piercing the corporate veil in the company law context
169
because the trust law equivalent of piercing the trust veneer derives therefrom. The Su-
preme Court of Appeal elucidated the legal position regarding piercing the corporate veil in
170
Cape Pacific Ltd v Lubner Controlling Investments (Pty) Ltd. Smalberger JA stated that, alt-
hough a registered company is a legal person distinct from its constituent members, a court
can in appropriate circumstances disregard a company’s separate personality in order to
impose liability elsewhere for acts ostensibly performed on the company’s behalf. A court, in
doing so, lifts or pierces the fictional veil that separates a company from its members and the
focus thus shifts from the company as a legal person to the person(s) behind the company
who control(s) its actions. Piercing or lifting the corporate veil in this sense extinguishes the
differentiation between the company and the person(s) in control thereof and enables the
court to impose personal liability on someone (such as a company director) who abused the
171
company’s legal personality. The Cape Pacific case established, in particular, that a court
can, where a company’s legal personality is abused through fraud, dishonesty or other im-
proper conduct, disregard that company’s separate existence and attribute personal liability
172
to the person(s) responsible for that abuse.
In much the same way as the abuse of a company’s legal personality may cause a court to
disregard that company’s separate legal existence and, in the words of Smalberger JA in the
173
Cape Pacific case, to “attribute liability where it should rightly lie”, the Supreme Court of
174
Appeal reasoned in WT v KT that similar principles can be, and have indeed been, trans-
planted onto the law of trusts insofar as our courts have engaged with the possibility of
175
piercing the trust veneer. The Supreme Court of Appeal provided further context to piercing
176
the trust veneer in REM v VM when it confirmed the correctness of the earlier summary of
177
the legal position on point in Van Zyl v Kaye. Binns-Ward J said in the Van Zyl case:
“Going behind the trust form (or ‘piercing its veneer’, as the concept is sometimes described) es-
sentially represents the provision by a court of an equitable remedy to a third party affected by an
unconscionable abuse of the trust form. It is a remedy that will be afforded in suitable or appropri-
ate cases . . . I consider it appropriate to describe it as an equitable remedy in the ordinary, rather
than technical, sense of the term; one that lends itself to a flexible approach to fairly and justly
address the consequences of an unconscionable abuse of the trust form in given circumstances. It is
a remedy that will generally be given when the trust form is used in a dishonest or unconscionable
178
manner to evade a liability, or avoid an obligation.”
________________________
168 No judgment has to date been reported in Afrikaans on point and our courts have therefore not devised
an Afrikaans term for piercing a trust’s veneer. It is submitted that the alternative terminology used in
Rees v Harris 2012 (1) SA 583 (GSJ) par 12, namely, to strip the “facade” of a trust, provides a handy
analogy and that an appropriate Afrikaans equivalent for piercing a trust’s veneer therefore is “om deur die
fasade van ’n trust te breek”.
169 WT v KT 2015 (3) SA 574 (SCA) par 31. S 20(9) of the current Companies Act supplements the common
law position. See Shipley 2016 SA Merc LJ 508 at 520–524 for a comparison of the positions in company
law and trust law.
170 1995 (4) SA 790 (A).
171 At 802F–H.
172 At 803H–804D.
173 At 803J–804A.
174 2015 (3) SA 574 (SCA).
175 At par 31. See Shipley 2016 SA Merc LJ 508 at 535–538 for an analysis of the similarities and differences
between veil piercing in the company law context and veneer piercing in the trust law context.
176 2017 (3) SA 371 (SCA) par 17.
177 2014 (4) SA 452 (WCC).
178 At par 22. See Nel 2014 Obiter 81 and Shipley 2016 SA Merc LJ 508 at 535–538 for analyses of the
concept of “unconscionable abuse”.
142
The potential application of this remedy has thus far presented itself in decided cases in a
number of contexts. These include instances where trustees (purportedly) incurred contractu-
al obligations on behalf of trusts; where trustees were declared insolvent; and where trustees
179
engaged in divorce proceedings. Before attending to the specifics of the application of the
piercing remedy in these instances, it is important to emphasise a semantic point regarding
this remedy: it is strictly speaking incorrect to reference piercing the corporate veil in the
context of trust law because a trust is not a legal person and therefore does not possess a
180
separate corporate personality in the way that a company does. A court, when invoking the
piercing remedy with regard to a trust, instead pierces the veil or veneer that separates the
181
trust property from the abusive trustee’s separate private property.
What are the specific remedies that a court can craft when it pierces a trust’s veneer? The
following possibilities have emerged from case law:
• imposing personal liability on a trustee for an obligation that he or she ostensibly incurred
182
on a trust’s behalf;
• ordering that a trust is bound to a transaction concluded by a trustee who acted beyond his
183
or her capacity or authority in terms of the trust instrument; and
184
• ordering that trust property must be used to satisfy a trustee’s personal liability.
The above is not an exhaustive list because our courts follow a flexible approach regarding the
piercing of a trust’s veneer. This entails a careful weighing up of the interests of the trust
beneficiaries and third parties (such as a trustee’s spouse in the instance of piercing in the
divorce context or a trustee’s private creditors in the instance of piercing in the insolvency
185
context) with the aim of reaching an equitable or just outcome in each particular case.
7.6.2.1 Piercing the trust veneer with regard to contracts concluded by

trustees
186
In Land and Agricultural Bank of South Africa v Parker the Supreme Court of Appeal, after
expressing its intense dissatisfaction with the manner in which trustees abused a trust in this
187 188
case, proffered a number of potential solutions to curb the abuse of the trust form. The
court did not however apply any of these solutions to the dispute in the Parker case because
189
the appellant never raised any of them in its arguments before the court. One of the solu-
tions proposed in the Parker case was the piercing of a trust’s veneer in appropriate instances
to permit a judicial finding “that the assets allegedly vesting in trustees in fact belong to one
or more of the trustees and so may be used in satisfaction of debts to the repayment of which
190
the trustees purported to bind the trust”.
________________________
179 De Waal 2012 Rabel J 1078 at 1098.

180 Du Toit 2015 Rabel J 852 at 871. See 1.2.6 regarding a trust’s lack of legal personality.
181 RP v DP 2014 (6) SA 243 (ECP) par 21. See also Van der Linde 2012 THRHR 371 at 377. See 1.2.2
regarding the separation between trust property and a trustee’s private property.
182 Van der Merwe v Hydraberg Hydraulics CC; Van der Merwe v Bosman 2010 (5) SA 555 (WCC) par 41; Van Zyl
v Kaye 2014 (4) SA 452 (WCC) par 21.
183 Ibid.
184 Van Zyl v Kaye 2014 (4) SA 452 (WCC) par 21; REM v VM 2017 (3) SA 371 (SCA) par 20.
185 De Waal 2012 Rabel J 1078 at 1098–1099. See also Van Zyl v Kaye 2014 (4) SA 452 (WCC) par 22, quoted
with approval by the Supreme Court of Appeal in REM v VM 2017 (3) SA 371 (SCA) par 17.
186 2005 (2) SA 77 (SCA).
187 See 6.8.1 for an exposition on this case’s facts.
188 At paras 35–37.
189 At paras 14, 18 and 38.
190 At par 37.3.
143
This proposed solution paved the way for subsequent courts to specifically consider the
circumstances in which it is appropriate for a court to pierce a trust’s veneer to ensure that
contractual obligations to which the trustees purportedly bound that trust are indeed fulfilled.
Binns-Ward J’s decision in Van der Merwe v Hydraberg Hydraulics CC; Van der Merwe v
191
Bosman is of particular importance in this regard. In this case the applicants concluded a
contract in terms of which they purchased a business from HH (a close corporation), as well
as an immovable property from the HP Trust. C and B, who were two of the HP Trust’s three
trustees and also two of its beneficiaries, represented both the close corporation and the trust
in concluding this contract. The trust deed required a minimum of three trustees to be in
office at all times and required them to act jointly. It was a disputed matter whether the
192
trust’s third trustee (its independent trustee) , S, indeed still held office at the time that the
contract was concluded, but it was common cause that C and B neither informed nor consult-
ed S regarding that contract. C and B nevertheless warranted (guaranteed) that they were duly
authorised to act on behalf of the close corporation and the trust. C and B failed to transfer
the immovable property to the applicants and, when the applicants sought a court order
compelling them to do so, C and B contended that the contract was void because the trust
was not properly represented in accordance with the trust instrument’s aforementioned
prescripts when the contract was concluded. Furthermore, C and B argued that the contract
did not comply with the formalities prescribed by section 2(1) of the Alienation of Land Act
that requires all the trustees to have acted as joint principals in concluding the contract or
alternatively requires written authorisation to have been given by all the trustees jointly for C
and B to act on the trust’s behalf. The applicants countered C and B’s averments on a number
of grounds, one of which was by requesting the court to pierce the HP Trust’s veneer and thus
hold the trust to the contract that C and B purportedly concluded on its behalf.
Binns-Ward J commenced his analysis of the applicants’ prayer for piercing by pointing out
that C and B’s consistent representation of themselves as the trust’s only trustees, coupled
with their blatant side-lining of S as the trust’s independent trustee, clearly indicated that they
193
used the trust as a vehicle to conduct their personal business. Binns-Ward J found that the
manner in which the trust was structured as well as the manner in which C and B adminis-
tered it, proved that they did not maintain the requisite functional separation between their
control of the trust as trustees and their benefitting from it as trust beneficiaries: C and B
194
therefore violated the trust’s core idea. It was particularly ironic that C and B ignored the
trust instrument’s prescripts regarding joint trustee action in concluding the contract with the
applicants but relied on their non-compliance with those very same prescripts to deny the
trust’s liability to the applicants. The judge therefore said:
“The facts of the current matter afford a classic example of an abuse of the trust form flowing di-
rectly from the conduct by [C and B] in respect of the ownership of the fixed property, with no
distinction between their responsibilities as trustees and their expectations as beneficiaries. They
195
treat the property as their own, and invoke the existence of the trust only when it suits them.”
Binns-Ward J opined moreover that it was in principle unconscionable to allow C and B to get
196
away with such behaviour. In fact, he considered this as an ideal case for the court to pierce
the trust’s veneer by either imposing personal liability on C and B to perform under the
contract or ordering the trust to perform as if C and B had validly bound it to the applicants in
________________________
191 2010 (5) SA 555 (WCC).

192 See 6.3.1.4 regarding the appointment of an independent trustee.
194 At paras 33–35. See 1.2.1 regarding the core idea of the trust.
195 At par 39.
196 Ibid.
144
197
their capacity as the trust’s trustees. Unfortunately, and much to Binns-Ward J’s exaspera-
tion, it was legally impossible for him to take this course of action. This was because piercing
the trust’s veneer is an equitable remedy that cannot override peremptory statutory provi-
sions – in this case section 2(1) of the Alienation of Land Act – that prescribe formalities for
concluding a valid contract – in this case the contract of sale of the immovable property to the
applicants. Binns-Ward J therefore reluctantly found that, because the contracting parties
failed to comply with the prescribed statutory formalities for the particular contract at issue,
198
he could not find in the applicants’ favour.
The Van der Merwe case, despite Binns-Ward J’s ruling against the applicants and the case
199
thus yielding an outcome that may be regarded as unsatisfactory or disappointing, never-
theless indicates the circumstances in which a court will typically be prepared to pierce a
trust’s veneer by holding errant trustees to contractual obligations that they purportedly
undertook on that trust’s behalf.
7.6.2.2 Piercing the trust veneer upon insolvency

insolvency
200
In Nedbank Ltd v Thorpe the applicant advanced various loans to a trust. The respondent, T,
who was a trustee and one of the trust’s beneficiaries, represented the trust in the transac-
tions with the applicant. T also bound himself in his personal capacity as surety and co-
principal debtor for the repayment of the trust’s debts. The trust defaulted on repaying these
debts and the applicant instituted action against both the trust and T. These proceedings
culminated in the applicant obtaining a judgment debt against T in his personal capacity. T
however failed to settle this debt, arguing that he could not repay it because he had neither
assets nor income. The applicant consequently sought a provisional sequestration order
against T.
The following facts regarding T’s financial position emerged: T, along with his wife and two
children, were the beneficiaries of the trust of which T was the trustee; T, although having no
immovable property registered in his name, resided in a property that originally belonged to
the trust and which was subsequently transferred from the trust to T’s wife; the trust pur-
chased a luxury motor vehicle for T’s personal use; T travelled abroad on three occasions
subsequent to the judgment debt having been granted against him, and the trust financed
these travels; the trust’s trustees (which included T) allocated a once-off payment in the
amount of R700 000 to T in a year following the judgment debt having been granted against
him but resolved in the following year not to make any further payments to T so that he
would not become a target of his creditors, especially the applicant; T was a director or
member of at least seven companies or close corporations, while the trust held the shares in
the companies of which T was a director. The applicant thus contended that, in light of the
foregoing facts, the trust was T’s alter ego; that he abused the trust form by using the trust as
a vehicle to conduct his business activities; and that the trust was simply a mechanism to
shield T’s private assets from his creditors.
Levinsohn DJP, in granting the provisional sequestration order sought by the applicant, ob-
served that “the affairs of the trust are integrally entwined with the respondent personally”.
He accordingly found that there was a real prospect of a forensic examination of the trust’s
affairs “showing that the trust is a mirage used by the respondent for his own commercial
________________________
197 At par 41.

198 At paras 41–43.
199 See Van der Linde 2012 THRHR 371 at 380–387 on the outcome of the Van der Merwe case and a number
of alternatives that the court could have considered to avoid that outcome.
200 [2008] ZAKZHC 72 (26 September 2008).
145
201
ends”. Pillay J echoed these sentiments when the final sequestration order was granted
202
almost a year later by stating that it was “apparent that it is [T] who controls the trust and
203
has access to the funds held by the trust”. This view was bolstered by the fact that the trust
204
instrument did not permit T to be removed from the trustee office; that T continued to
benefit financially from the trust despite the trustee resolution to withhold further trust in-
205
come from him; and that T’s use of the luxury motor vehicle was an example of the affluent
206
lifestyle that he enjoyed by virtue of the trust. The court thus favoured, as a consequence of
having granted the final sequestration order, a full investigation into the manner in which T
207
used the trust to shield his wealth from his private creditors. De Waal opines that the court
in the Nedbank case thus clearly foresaw, depending on the outcome of this investigation, the
possibility of going behind the trust form and likely ordering that trust assets could be used to
208
satisfy the claims of T’s private creditors.
The court did exactly that in First Rand Limited trading inter alia as First National Bank v
209
Britz. This case concerned overdraft facilities that the I Trust obtained from the applicant.
The first and second respondents, who were married in community of property, were the
trust’s trustees and they bound themselves as sureties and co-principal debtors for the trust’s
indebtedness to the applicant. The trust failed to honour its obligations to the applicant and
the latter obtained a judgment debt against the first and second respondents in both their
personal capacities and in their capacity as the I Trust’s trustees. The applicant sought to
enforce the judgment debt against the respondents by a warrant of execution. The respond-
ents contended that they had no assets that could be attached in terms of the warrant be-
cause they had earlier donated all their movable assets to another trust (the A Trust). The
respondents also averred that the immovable property in which they resided did not belong
to them because they were only renting it from yet another trust (the B Trust) to which this
property was also transferred earlier.
The applicant insisted that the veneers of these trusts should be pierced as they were mere-
ly the alter egos of the respondents who divested themselves of all their property in favour of
the trusts in an attempt to arrange their financial affairs in such a manner that their creditors’
claims would be frustrated. The applicant consequently requested the court to order that the
respondents in fact owned the A and B Trusts’ property in their personal capacities. Mabuse J
granted the order sought by the applicants, emphasising the following considerations in the
process: the A and B Trusts were typical family trusts where the founder, trustees and trust
210
beneficiaries were members of the same family; the two trusts’ trust instruments bestowed
211
wide, and at times contradictory, powers on the trustees; no evidence was placed before
the court regarding the immovable property in which the respondents resided, that a lease
agreement was ever concluded between themselves and the B Trust, or that they paid rent to
212
the trust, or that the trust paid any instalments on the bonded property; and no evidence
was placed before the court regarding the movable assets, that the A Trust in fact purchased
________________________
201 At par 50.

202 Nedbank Ltd v Thorpe [2009] ZAKZPHC 44 (16 September 2009).
203 At par 18.
204 At par 17.
205 At par 22.
206 At par 24.
207 At par 28.
208 2012 Rabel J 1078 at 1092.
209 [2013] JOL 29875 (GNP).
210 At paras 14 and 19. See 1.4.7 regarding the family trust.
146
these assets from the respondents, or that the trust ever received transfer of these assets from
213
the respondents. These facts prompted Mabuse J to find that the respondents completely
disregarded basic trust principles and that a court was in these circumstances justified in
holding that a trust’s property in fact forms part of a trust founder’s (or a trustee’s) private
estate. Mabuse J thus ordered that the movable and immovable property concerned were “the
property of, and owned by” the respondents, with the result that this property was executable
214
by the bank in satisfaction of the judgment debt.
The foregoing exposition shows that Mabuse J in all likelihood reasoned in the First Rand
case that, because the respondents abused the A and B Trusts by using these trusts as
their alter egos, the relevant movable and immovable trust property in reality formed part
215
of their private joint estate and not of the respective trust estates. If this is indeed what
the judge contemplated, it is respectfully submitted that he erred in his reasoning. This is
216
because Binns-Ward J pointed out in Van Zyl v Kaye that property that is ostensibly trust
property will vest in the private estate of another (typically the supposed trust founder)
217
only when the “trust” in question is a sham and therefore never existed as a trust. An
alter ego trust, by contrast, is a validly-created trust that is abused by its founder or trus-
tee but, as Binns-Ward J again pointed out in the Van Zyl case, the fact that a trust found-
er or trustee treated a trust as his or her alter ego does not in itself render that trust a
sham. The property of an alter ego trust therefore remains trust property and does not,
by virtue of the abuse of the trust form, vest in the trust founder’s or trustee’s private
218
estate.
Binns-Ward J therefore rightly cautioned in the Van Zyl case against erroneously using the
219
concepts “sham trust” and “alter ego trust” interchangeably or synonymously. Other
courts have regrettably become entangled in this conceptual confusion. For example,
220
Alkema J remarked in RP v DP, a case regarding the consideration of (the value of) trust
221
property for the purpose of settling an accrual claim upon divorce, that a court, when
called upon to decide whether particular property is trust property or whether it forms
part of the founder’s or trustee’s private estate, will pierce the trust veneer in favour of
the latter outcome in cases “where the trust is a sham and for all practical purposes is the
222
alter ego of the founder or trustee”. It is evident from the foregoing statement that
Alkema J drew little, if any, conceptual distinction between a sham trust and an alter ego
trust. Du Toit criticises the RP case for this lack of conceptual clarity regarding the differ-
223
ence between a sham trust and an alter ego trust. Du Toit reasons that, because some
continued
________________________
213 At par 68.

214 At par 69.
215 See also National Director of Public Prosecutions v Cunningham [2012] 4 All SA 74 (WCC) where the court
ostensibly followed a similar line of reasoning regarding the question whether trust property constituted
realisable property “held by the defendant” for the purpose of a restraint order in terms of s 14 of the
Prevention of Organised Crime Act.
216 2014 (4) SA 452 (WCC).
217 At par 15.
218 At par 29.
219 At par 28.
220 2014 (6) SA 243 (ECP).
221 See 7.6.2.3.2.
222 At par 22.
223 2015 JCLS 655 at 691 and 698.
147
courts conceptually confuse sham and alter ego trusts, they may be inclined to order the
attachment of trust assets on the basis that those assets are in fact a trust founder’s or
trustee’s private assets even though the trust at issue is an alter ego trust (valid though
224
abused) and not a sham trust (invalid). Shipley in turn criticises Du Toit’s view and ar-
gues that a court, when making a piercing order, can indeed instruct the attachment of
225
trust assets as if they were a founder’s or trustee’s private assets. Shipley relies in sup-
port of his contention on Binns-Ward J’s acknowledgment in the Van Zyl case that a pierc-
ing order may entail attaching trust assets to honour the personal indebtedness of a trust
founder or trustee who abused the trust in question. However, Shipley omits to also men-
tion Binns-Ward J’s vital qualification to this statement, namely, that such an order does
not detract from the character of those assets as assets of the trust and not of the founder
226
or trustee. Du Toit’s conceptual confusion argument does not therefore entail (as Ship-
ley appears to believe) that trust assets can under no circumstances be attached as if they
are (or are deemed to be, to use Shipley’s formulation) the founder’s or trustee’s private
assets. Du Toit instead argues, with reliance on the Van Zyl case, that this cannot be done
on the strength of the line of reasoning that Mabuse J appears to have followed in the
First Rand case, namely, that a founder’s or trustee’s abuse of an alter ego trust in reality
causes that trust’s assets to cease to be trust assets and instead to be “the property of,
and owned by” the trust founder or trustee from whose private estate they can be at-
tached to satisfy the founder’s or trustee’s personal indebtedness.
7.6.2.3 Piercing the trust veneer upon divorce

The matrimonial property system that governs a marriage determines the manner in which
matrimonial property is divided upon divorce and a court has no general jurisdiction to
227
redistribute matrimonial property as it deems fit when spouses divorce. South Africa’s
primary (or default) matrimonial property system is the marriage in community of proper-
228
ty. This system therefore automatically applies to a marriage unless the spouses chose to
229
deviate from it, usually by concluding an ante-nuptial contract. Being married in community
of property entails that, barring certain excluded assets, all of the spouses’ pre- and post-
marital assets and liabilities form part of a joint estate, irrespective of which spouse acquired
230
them. Each spouse (or his or her estate) is, as a general rule, entitled to half of the joint
231
estate when the marriage terminates.
Spouses who wish to deviate from the primary matrimonial property system can conclude
232
an ante-nuptial contract in which they elect to marry out of community of property. Mar-
riages out of community of property typically take one of two forms:
• Marriage out of community of property and out of community of profit and loss without
the accrual system (also known as marriage with a complete separation of property). This
________________________
224 At 687–688.
225 2016 SA Merc LJ 508 at 530–531 and 533.
226 Van Zyl v Kaye 2014 (4) SA 452 (WCC) paras 18 and 21.
227 Heaton 2015 International Survey 311 at 319.
228 Edelstein v Edelstein 1952 (3) SA 1 (A) 10A; Hahlo Husband and Wife 157; Heaton and Kruger Family Law
61. The patrimonial consequences of a civil marriage also apply to a civil union (s 13 of the Civil Union
Act). Similarly, s 7(2) of the Recognition of Customary Marriages Act also makes these consequences ap-
plicable to all monogamous customary marriages. Different rules apply to polygynous customary mar-
riages. See Heaton and Kruger Family Law 222–226 for a detailed discussion.
229 Hahlo Husband and Wife 372; Heaton 2015 International Survey 311 at 319.
230 WT v KT 2015 (3) SA 574 (SCA) par 26; Hahlo Husband and Wife 161–163 and 170–171. See Heaton and
Kruger Family Law 63–70 for a detailed discussion.
231 Hahlo Husband and Wife 382.
232 Heaton and Kruger Family Law 83.
148
entails that each spouse has his or her own estate and controls that estate independently of
the other spouse. A spouse’s estate comprises, barring some exceptions, all of that
spouse’s pre- and post-marital assets and liabilities. As a general rule, each spouse retains
233
his or her own estate when the marriage terminates.
• Marriage out of community of property and out of community of profit and loss with the
accrual system. The Matrimonial Property Act introduced this possibility on 1 November
1984 because the marriage with a complete separation of property often prejudices the
economically weaker spouse when the marriage terminates insofar as that spouse does not
share in the economically active spouse’s wealth. In a marriage to which the accrual sys-
tem applies, each spouse has his or her own estate and controls that estate independently
of the other spouse. A spouse’s estate generally comprises all of his or her pre- and post-
234
marital assets and liabilities. However, when the marriage terminates, the spouse whose
estate accrued the least (showed the smaller growth) during the course of the marriage has
a right to receive half of the difference between the accruals of the spouses’ respective es-
235
tates. The accrual system applies automatically to all marriages entered into out of com-
munity of property after 1 November 1984 unless the parties specifically opt to exclude
236
accrual sharing in their ante-nuptial contract.
237
The Matrimonial Property Act did not introduce the accrual system with retroactive effect.
Thus, in order to improve the position of economically vulnerable spouses who were already
married out of community of property with a complete separation of property when the
Matrimonial Property Act commenced, the legislature amended the Divorce Act by introduc-
238
ing section 7(3) to (6). These subsections allow a court, when granting a decree of divorce
and on the application of a spouse whose marriage falls within the parameters of section 7(3)
of the Act and who moreover satisfies the preconditions set by section 7(4) of the Divorce Act,
to order that the assets (or part thereof) of one spouse must be transferred to the other
spouse. Such an order is commonly referred to as a redistribution of assets order or a redis-
239
tribution order for short. Section 7(3) to (6) of the Divorce Act is the only exception to the
general rule that a court cannot redistribute the matrimonial property of divorcing spouses
240
who concluded a civil marriage.
South African courts have had to adjudicate on numerous claims that a court, when grant-
ing a decree of divorce between spouses where one of those spouses is a trust’s trustee, must
pierce that trust’s veneer by considering the trust assets (or their value) in ruling on the
division of matrimonial property. These claims are invariably based on the assertion that the
trustee-spouse abused the trust in question by treating it as his or her alter ego. The discus-
sion hereafter focusses on the legal position regarding the piercing of a trust’s veneer in the
context of divorces involving each of the three aforementioned matrimonial property sys-
tems.
________________________
233 Hahlo Husband and Wife 383. See Heaton and Kruger Family Law 90–91 for a detailed discussion.
234 See Heaton and Kruger Family Law 91–101 for a detailed discussion.
235 S 3 of the Matrimonial Property Act.
236 S 2 of the Matrimonial Property Act.
237 Heaton and Kruger Family Law 138.
238 Hahlo Husband and Wife 384; Heaton and Kruger Family Law 138.
239 Beaumont v Beaumont 1987 (1) SA 967 (A) 987G.
240 Heaton 2015 International Survey 311 at 320.
149
7.6.2.3.1 Marriages out of community of property and

and the redistribution of assets
A court can order the redistribution of assets only with regard to a divorce involving a civil
marriage (a marriage concluded in terms of the Marriage Act as opposed to a customary
marriage) as contemplated in section 7(3) of the Divorce Act. Such a marriage is one:
• entered into prior to 1 November 1984 (or 2 December 1988 in the case of a civil marriage
involving Black persons);
• in which the parties concluded an ante-nuptial contract in terms of which they elected to
marry with a complete separation of property and without the application of the accrual
system; and
• where the parties were unable to reach an agreement (commonly referred to as a “settle-
ment agreement” or a “deed of settlement”) regarding the division of their assets upon
241
divorce.
Section 7(4) of the Divorce Act requires that the court granting such a redistribution order
must be satisfied that it is equitable and just to do so because the applicant (the spouse who
applies to have some or all of the other spouse’s property redistributed in the applicant-
spouse’s favour) contributed to the maintenance or growth of the other spouse’s estate during
the course of their marriage. Such a contribution may be of a direct or an indirect nature, and
can include the rendering of services; saving of expenses; or looking after the family home
242
and providing family care. Whether the applicant indeed made such a contribution is a
factual question, while the question whether it is equitable and just to grant the redistribution
243
order is within the court’s discretion. Section 7(5) lists a number of factors that the court
may consider in determining the extent of the redistribution. This subsection expressly
provides that the court may, in addition to the factors specifically enumerated therein, con-
sider any other factor that the court deems relevant. Section 7(5) is thus correctly described as
244
affording a court a “very wide discretion” regarding the redistribution of assets.
245
Badenhorst v Badenhorst is the leading judgment on the piercing of a trust’s veneer in the
246
context of an application for the redistribution of assets. The parties were married with a
complete separation of property during 1981 and the evidence suggested that the appellant
made a substantial contribution to the growth of the respondent’s estate by assisting him
in running his farming activities and by caring for their family. The court had to determine
whether the assets of the J Trust – an inter vivos trust founded by the respondent’s father after
the appellant and respondent’s marriage and of which the respondent was a co-trustee –
could be considered for the purpose of granting an order for the redistribution of the
________________________
241 S 7(1) of the Divorce Act permits divorcing spouses to enter into such an agreement – which may be
made an order of the court – to regulate the patrimonial and other consequences of their divorce. The
spouses may thus contractually agree to deviate from the patrimonial consequences that will ordinarily
pertain to their divorce in terms of their chosen matrimonial property system. See Heaton and Kruger
Family Law 127–129 for a detailed discussion.
242 Beaumont v Beaumont 1987 (1) SA 967 (A) 997F–G.
243 Ibid 988H–J.
244 Ibid 988G–H.
245 2006 (2) SA 255 (SCA).
246 Other cases on point include Jordaan v Jordaan 2001 (3) SA 288 (C); Grobbelaar v Grobbelaar (case number
26600/98 TPD); Pienaar v Pienaar [2005] ZAWCHC 123 (1 January 2005); Maritz v Maritz [2006] JOL
16569 (T); Brunette v Brunette 2009 (5) SA 81 (SE); Zazeraj v Jordaan [2012] ZAWCHC 120 (22 March
2012).
150
247
respondent’s assets to the appellant. Combrinck AJA made this determination by applying
the following principles:
• the mere fact that assets vested in the J Trust’s trustees and did not therefore form part of
the respondent’s private estate does not per se exclude those assets from being considered
when the court determines exactly what must be taken into account when making a redis-
tribution order;
• to succeed with her claim that the trust assets must be so considered, the appellant had to
prove that the respondent controlled the trust and that, but for the trust, he would have
acquired and owned those assets in his own name;
• the appellant had to show moreover that the respondent’s control of the trust was de facto
(a matter of fact) and not necessarily de jure (a matter of law); and
• to determine whether the respondent exercised such control over the trust, the court must
consider the terms of the trust deed as well as evidence of how the respondent conducted
248
the trust’s affairs during the course of their marriage.
Combrinck AJA was satisfied with regard to both the provisions of the J Trust’s trust deed and
the manner of the respondent’s trust administration that the aforementioned test – which
249
may be called the control test – was satisfied. He thus typified the Badenhorst case’s factual
matrix as “a classic case of one party [the respondent] having full control of the assets of the
250
trust and using the trust as a vehicle for his business activities”. Combrinck AJA concluded
that the court of first instance erred in not taking the value of the trust assets into account for
251
the purpose of ordering a redistribution of assets in the appellant’s favour. He then pro-
ceeded to deal with assessing the extent of the order, and held that it would be inequitable to
grant an order that equalised the spouses’ respective estates after the divorce. This was
because, although the appellant contributed substantially to the growth of the respondent’s
estate, the respondent was the one who brought the farm that generated much of the spous-
es’ wealth into their marriage. Combrinck AJA moreover ascribed the extent to which the J
Trust accumulated assets primarily to the respondent’s business acumen. The Acting Judge of
Appeal accordingly regarded it as just and equitable to award the appellant a percentage of
the total value of the parties’ estates that took account of her contribution to the growth of the
252
respondent’s estate and made due allowance for the assets that she already possessed.
The Badenhorst case requires some contextualisation. The case firstly raised some doubt
regarding whether the court actually pierced the J Trust’s veneer by taking the value of the
trust’s assets into account when it ordered a redistribution of the respondent’s assets, or
whether the court merely exercised the discretion conferred by section 7(3) to (6) of the
253
Divorce Act. Case law on this issue conflicts. The weight of academic opinion however
________________________
247 See 7.6.1 for a comprehensive exposition on the facts of the Badenhorst case.
248 Badenhorst v Badenhorst 2006 (2) SA 255 (SCA) par 9.
249 Van der Linde 2012 THRHR 371 at 379 refers to it as “the Badenhorst test” and Du Toit 2015 JCLS 655 at
699 calls it the “but for test”.
250 At par 10.
251 At par 13.
253 In RP v DP 2014 (6) SA 243 (ECP) par 37, Alkema J identified the Badenhorst case as one in which the
trust veneer was indeed pierced, but in Van Zyl v Kaye 2014 (4) SA 452 (WCC) par 23 Binns-Ward J opined
that the Badenhorst case did not entail piercing at all because no order was made against the trust and it
was left to the respondent to decide how to make the redistribution payment ordered by the court. Binns-
Ward J, however, conceded that he might be mistaken in his view: par 24. See also De Jong et al 2017
THRHR 198 at 207–208.
151
favours the former conclusion: the Badenhorst case indeed concerned an instance of piercing
254
a trust’s veneer. Secondly, Combrinck AJA did not hold in the Badenhorst case that the
assets of the J Trust in fact vested in the respondent’s private estate by reason of his abuse of
that trust through treating it as his alter ego. Combrinck AJA instead held that the value of the
trust’s assets must be considered for the purpose of assessing the true value of the respond-
ent’s estate: the value of his estate had to be determined by adding the J Trust’s asset value
255
thereto. This outcome supports the contention that Combrinck AJA in fact pierced the
veneer of the J Trust in the Badenhorst case because an important characteristic of the pierc-
ing remedy is that it “does not detract from the character of the asset as one of the trust and
256
not that of the trustee; the existence of the trust remains acknowledged”.
The two-stage approach that Combrinck AJA followed in the Badenhorst case (by first de-
termining whether the respondent’s control of the J Trust was such that it justified piercing
the trust’s veneer and thereafter addressing the issue of the statutory redistribution of assets
257
in the appellant’s favour) suggests that a court’s power to pierce a trust’s veneer derives
from the common law and that this power exists independently of legislation (such as the
258
court’s redistribution competency in terms of the Divorce Act). Smith however proposes
that the actual exercising of the judicial power to pierce a trust’s veneer in divorce proceed-
ings depends not only on a court’s common law power to invoke the piercing remedy, but
also on matrimonial property law or divorce law permitting the aggrieved spouse to share in
any portion of the other spouse’s estate. A nexus (or link) must, according to Smith, therefore
exist between the court’s power to pierce a trust’s veneer on the one hand, and that court’s
application of the piercing remedy in the context of a particular matrimonial property law
259
system on the other. The court’s redistribution competency in terms of section 7(3) to (6) of
the Divorce Act provided this nexus in the Badenhorst case because these statutory provisions
permit a court to order that a spouse, who would otherwise have no legal entitlement to the
other spouse’s property, may indeed share in that other spouse’s property upon a court
260
making a redistribution order in the former spouse’s favour.
Combrinck AJA’s modus operandi in the Badenhorst case can in this light be explained as
261
entailing two distinct stages or processes. The first was for the court to determine whether
the value of the J Trust’s assets could in principle be added to the respondent’s estate on the
strength of the outcome of the control test regarding the respondent’s abuse of the J Trust by
treating it as his alter ego. Once this stage or process was concluded and the control test’s
application yielded an affirmative outcome, the second stage or process entailed ascertaining
whether the appellant was entitled to a redistribution of assets and, if so, the extent of the
redistribution order. The court, in engaging with the second stage or process, first had to be
________________________
254 De Waal 2012 Rabel J 1078 at 1079; Smith 2016 JJS 68 at 83–89; De Jong et al 2017 THRHR 198 at 206–
207; De Jong et al 2017 THRHR 370 at 385.
255 See also 7.6.2.2.
256 Van Zyl v Kaye 2014 (4) SA 452 (WCC) par 21. See also REM v VM 2017 (3) SA 371 (SCA) par 17.
257 Du Toit 2015 JCLS 655 at 699.
258 RP v DP 2014 (6) SA 243 (ECP) paras 29–31; YB v SB 2016 (1) SA 47 (WCC) paras 46 and 47; Shipley SA
Merc LJ 508 at 531–533.
259 2016 JJS 68 at 93. De Jong et al 2017 THRHR 198 at 199 opine, by contrast, that “the whole issue has
very little to do with the different kinds of matrimonial property systems”. These authors seemingly hold
the view that the common law power is sufficient in and of itself to permit trust assets to be considered in
determining the patrimonial consequences of the termination of a marriage irrespective of the matrimo-
nial property system that applies to that marriage: De Jong et al 2017 THRHR 370 at 385–387.
260 Smith 2016 JJS 68 at 83–89.
261 RP v DP 2014 (6) SA 243 (ECP) par 57; Du Toit 2015 JCLS 655 at 699–700; De Jong et al 2017 THRHR 370
at 377 and 386.
152
satisfied that the appellant met the criteria prescribed by section 7(4) of the Divorce Act, in
particular, that it was just and equitable to grant the order by reason of the fact that the
appellant contributed to the growth of the respondent’s estate. Once this was established, the
court had to apply the factors listed in section 7(5) to determine the extent of the redistribu-
tion order on the basis of the true value of the respondent’s estate as reflected by the value of
262
his private assets in conjunction with the value of the trust assets.
Smith argues that a further important principle emerges from the foregoing legal position,
namely, that the court’s redistribution competency in terms of section 7(3) to (6) of the
Divorce Act, whilst providing a mechanism for redistributing assets in marriages entered into
with a complete separation of property prior to the Matrimonial Property Act’s enactment,
also imposes an obligation on these spouses upon divorce. This is because section 7(3) to (6)
recognises a statutory right to adjust, and concomitantly a statutory obligation to redress, a
disparity between the spouses’ estates. This adjustment must be effected on the basis of an
accurate assessment of the true values of the spouses’ respective estates. A spouse who uses
an alter ego trust to reduce the true value of his or her private estate in reality attempts to
evade the aforementioned statutory obligation by employing the trust for an improper pur-
pose. According to Smith, this constitutes the true rationale behind piercing the veneer of
such a trust in the context of this type of marriage: section 7(3) to (6), by imposing the obliga-
tion to redress a disparity between the spouses’ respective estates, provides the nexus be-
tween compliance with the control test (as derived from the common law and which, if
satisfied, establishes that the value of the alter ego trust’s assets should in principle be added
to the value of a trustee-spouse’s private estate) and the actual consideration of the alter ego
trust’s asset value for the purpose of granting a redistribution order upon divorce (because the
alter ego trust’s abuse culminated in the evasion of a legal obligation owed to the aggrieved
263
spouse).
The control test laid down in the Badenhorst case can of course be applied to marriages
other than those identified in section 7(3) of the Divorce Act. This much is clear from case
264 265
law and academic commentary. Smith argues that, although the application of this test to
a marriage other than one contemplated in section 7(3) of the Divorce Act may prove that a
trust is indeed the alter ego of a trustee-spouse, this is not in itself sufficient for the assets of
such a trust to be considered for the purpose of dividing matrimonial property upon divorce.
This is because the same two-tiered methodology that was followed in the Badenhorst case
must also be followed regarding other matrimonial property systems insofar as compliance
with the control test must be followed by proof that the particular matrimonial property
system imposes a legal obligation on the trustee-spouse upon divorce that he or she endeav-
266
oured to evade by abusing the trust form. This conclusion necessitates the consideration of
piercing the trust veneer in marriages concluded out of community of property subject to the
accrual system as well as marriages concluded in community of property.
7.6.2.3.2 Marriages out of community of property subject to the accrual system

267
Prior to the Supreme Court of Appeal’s judgment in REM v VM doubt persisted regarding
whether the asset value of an alter ego trust could be considered in assessing the value of a
________________________
262 Smith 2016 JJS 68 at 86.

263 Ibid at 88.
264 VZ v VZ [2014] ZAGPJHC 42 (14 February 2014) paras 19 and 23; YB v SB 2016 (1) SA 47 (WCC) par 49.
265 Du Toit 2015 JCLS 655 at 699–700; Smith 2016 JJS 68 at 89; De Jong et al 2017 THRHR 370 at 389.
266 Smith 2016 JJS 68 at 89, 92–93. The Supreme Court of Appeal’s judgment in REM v VM 2017 (3) SA 371
(SCA) par 20 appears to support this conclusion: Smith 2017 SALJ 715 at 728.
267 2017 (3) SA 371 (SCA).
153
spouse’s estate for the purpose of settling an accrual claim upon divorce where the spouses
268
were married out of community of property subject to the accrual system. This uncertainty
is best illustrated by two dissonant High Court judgments. Ploos van Amstel J held in MM v
269
JM that doing so is impossible because, in his opinion, the judicial granting of a redistribu-
270
tion order in terms of section 7(3) to (6) of the Divorce Act (as in Badenhorst v Badenhorst)
differs fundamentally from satisfying an accrual claim in terms of sections 3–5 of the Matri-
monial Property Act. This is because, according to Ploos van Amstel J, a redistribution order
involves the exercise of a wide judicial discretion based on a court’s assessment of what it
271
deems equitable and just, whereas the determination of an accrual claim in terms of the
Matrimonial Property Act is conducted purely on a factual and mathematical basis without the
exercise of any judicial discretion. Ploos van Amstel J therefore opined that the Matrimonial
Property Act’s accrual dispensation does not permit a court to consider in any way whatsoev-
er assets that do not actually form part of a spouse’s estate simply because the court believes
272
it to be equitable and just to do so. Alkema J arrived at a radically different conclusion in RP
273
v DP when he held that a court’s ability to pierce a trust’s veneer derives from the common
law and thus has nothing to do with the directives contained in either the Divorce Act or the
274
Matrimonial Property Act. Alkema J therefore favoured the view that, once a court decided
to pierce a trust’s veneer in accordance with the first stage or process of the methodology
275
established in the Badenhorst case, that court can proceed to calculate either the amount of
a redistribution order or the amount of an accrual claim based on the true value of a trustee-
276
spouse’s estate.
The Supreme Court of Appeal finally settled this contradictory state of affairs in REM v
277
VM. The parties in this case had been married and divorced on three prior occasions. The
patrimonial consequences of the final divorce formed the subject-matter of the appeal. The
court of first instance held that a number of trusts were the alter egos of the appellant and
that those trusts’ assets could be considered for the purpose of assessing the respondent’s
accrual claim against the appellant. Swain JA, in addressing the appellant’s appeal against this
ruling, set out what had to be established for the respondent’s claim to succeed:
The respondent had to prove that the appellant transferred personal assets to these trusts
and dealt with them as if they were assets of these trusts with the fraudulent or dishonest
purpose of avoiding his obligation to properly account to the respondent for the accrual of his
estate and thereby evade payment of what was due to the respondent, in accordance with her
278
accrual claim.
The Supreme Court of Appeal held that the respondent did not adduce sufficient evidence
279
to meet the aforementioned requirements. Despite this outcome, the REM case neverthe-
less established the following important principles:
• it is, in principle, possible for a court to consider trust assets when it assesses an accrual
claim;
________________________
268 Judgments in which this issue was canvassed include Pringle v Pringle [2009] ZAWCHC 207 (27 March
2009); BC v CC 2012 (5) SA 562 (ECP); MM v JM 2014 (4) SA 384 (KZP); RP v DP 2014 (6) SA 243 (ECP);
YB v SB 2016 (1) SA 47 (WCC).
269 2014 (4) SA 384 (KZP).
270 2006 (2) SA 255 (SCA). See 7.6.2.3.1.
273 2014 (6) SA 243 (ECP).
274 At par 56.
275 See 7.6.2.3.1.
276 At par 57.
277 2017 (3) SA 371 (SCA).
278 At par 20.
279 Ibid.
154
280 281
• the approach adopted in RP v DP is preferable to the one taken in MM v JM insofar as a
court, when piercing a trust’s veneer in the divorce context, exercises a common law pow-
er that exists independently of legislative directives such as those contained in the Divorce
282
Act or the Matrimonial Property Act; and
• the aggrieved spouse must prove two things:
o that the trustee-spouse transferred private assets to a trust and, although on the face of
it treating those as trust assets, in reality regarded the trust as his or her alter ego; and
o that the trustee-spouse used the alter ego trust with the fraudulent or dishonest pur-
pose of evading the obligation to render a proper accounting of that spouse’s accrual
283
upon divorce.
What will the consequences be if an aggrieved spouse proves the aforementioned two
things laid down in the REM case? The judgment presents two possibilities in this regard.
Swain JA said firstly that the court can order that the trust assets be used to calculate the
284
trustee-spouse’s accrual. This possibility therefore implies that the court will take the
value of the trust’s assets into account to assess the true accrual of the trustee-spouse’s
private estate and order the trustee-spouse to meet the aggrieved spouse’s accrual claim
based upon the combined value of that spouse’s private estate and the trust estate. The
trustee-spouse will have to make this payment without having recourse to the trust as-
285
sets. The second possibility that Swain JA proffered is that the court can order that the
trust assets be used to satisfy any personal liability that the trustee-spouse has to make an
286
accrual payment to the aggrieved spouse. However, Smith takes issue with the latter
possibility. In his view, such an order is not competent where assets were properly trans-
ferred to a validly-created trust and are therefore in reality trust assets and not the trus-
287
tee-spouse’s private assets. Smith’s view in this regard is aligned to Du Toit’s standpoint
that the abuse of an alter ego trust does not cause that trust’s assets to cease being trust
assets and instead to vest in the trust founder’s or trustee’s private estate from where
288
they can be attached to satisfy the founder’s or trustee’s personal indebtedness.
Does this mean that a court can never order the attachment of trust assets to satisfy a
trustee-spouse’s personal liability to the aggrieved spouse in terms of the accrual dispen-
sation? There appears to be at least two possibilities by which a court can indeed make
such an order. The first is regarding simulated transactions that were meant to create the
impression that the trust properly acquired the particular assets while in reality that never
happened because the transaction by which the assets were supposedly transferred to the
continued
________________________
280 2014 (6) SA 243 (ECP).

281 2014 (4) SA 384 (KZP).
282 Smith 2017 SALJ 715 at 725–726. See also Heaton 2015 International Survey 311 at 323; De Jong et al
2017 THRHR 370 at 377 and 387.
283 Smith 2017 SALJ 715 at 726.
284 REM v VM 2017 (3) SA 371 (SCA) par 20.
285 Smith 2017 SALJ 715 at 723.
286 REM v VM 2017 (3) SA 371 (SCA) par 20.
287 Smith 2017 SALJ 715 at 723.
288 See 7.6.2.2.
155
trust was never intended to vest those assets in the trust. In such a case, the assets will
still vest in the private estate of the party who supposedly transferred those assets to the
trust and, if that party is the trustee-spouse, a court can order the attachment of those
289
assets from that party’s private estate even though the assets appear to be trust assets.
The second possibility is for a court to order that trust assets, although not in reality the
trustee-spouse’s private assets, are deemed to be his or her private assets and can thus be
used to satisfy that spouse’s personal liability to make an accrual payment to the ag-
grieved spouse. Shipley indicates that a court piercing a company’s corporate veil can
treat that company’s assets as if it were fictitiously those of its directors and/or share-
holders, and that there is no reason why the same principle cannot also apply in the trust
290
law context when a court pierces a trust’s veneer in divorce proceedings. However, a
court should issue such an order for the attachment of trust assets deemed to be a trus-
tee-spouse’s private assets to satisfy that trustee-spouse’s personal liability to the ag-
grieved spouse in terms of the accrual dispensation (or in terms of any other matrimonial
property dispensation) only upon being satisfied that such an attachment will not ad-
versely impact the rights of, and thus the benefits due to, the trust’s non-trustee benefi-
ciaries or the claims that third parties, such as trust creditors, have against the trust.
7.6.2.3.3 Marriages in community of property

291
In WT v KT the parties were married in community of property. The appellant’s father
created a family trust, with the appellant and his brother as co-trustees, approximately three
years prior to the appellant’s marriage to the respondent. The trust acquired an immovable
property that was registered in the trust’s name and inhabited by the appellant and the
respondent until their marriage broke down irretrievably. The appellant instituted divorce
proceedings and the respondent, although not opposing the divorce action, brought a coun-
terclaim in terms of which she alleged that the trust’s assets formed part of the spouses’ joint
estate and that the division of the joint estate must therefore occur with the inclusion of the
trust assets therein.
The respondent based her counterclaim on two main assertions, of which only one is rele-
vant here. She contended that the trust was the appellant’s alter ego because he controlled it
for his personal benefit to amass private wealth. Lamont J upheld this contention in the court
of first instance and ruled that the trust’s assets were in fact those of the appellant and hence
292
formed part of the joint estate. In doing so, Lamont J rejected the contention of the appel-
lant’s legal counsel that the principles enunciated in Badenhorst v Badenhorst with respect to
considering trust assets for the purpose of a redistribution order in a marriage concluded out
of community of property were not applicable to a marriage in community of property
because a court has no discretion regarding the division of a joint estate in a marriage in
community of property that is comparable to the discretion the Divorce Act affords a court
when making a redistribution order. Lamont J considered the absence of such a discretion
regarding the division of a joint estate as irrelevant because he opined that the control test
laid down in the Badenhorst case was not formulated on the basis of the exercise of any
statutorily-conferred discretion, but instead simply involved determining “whether or not
________________________
289 Smith 2017 SALJ 715 at 723. The court in the REM case may in fact have intended the second possibility
to be applicable only to simulated transactions insofar as it stated that “it was not established that the
transfer of assets to these trusts by the appellant was simulated with the object of cloaking them with the
form and appearance of assets of the trusts, whilst in reality retaining ownership”: par 20.
290 2016 SA Merc LJ 508 at 531.
291 2015 (3) SA 574 (SCA).
292 T v T [2014] ZAGPJHC 245 (19 September 2014).
156
assets belonged to a particular party”. Lamont J thus regarded the issue in the Badenhorst case
as identical to the one before him and he therefore handed down a judgment that accorded
293
fully with that in the Badenhorst case.
However, the Supreme Court of Appeal reversed Lamont J’s judgment. Mayat AJA reasoned
(on behalf of a unanimous full bench) that the respondent’s contention regarding the appel-
lant’s treatment of the trust as his alter ego required the court to consider the possibility of
piercing the trust’s veneer. Mayat AJA opined that the legal principles regarding piercing a
trust’s veneer had been transplanted from the company law principles regarding the piercing
of the corporate veil and that these principles accordingly apply in the event of an “uncon-
294
scionable abuse of the trust form through fraud, dishonesty or an improper purpose”.
Despite Mayat AJA’s foregoing opinion that a court can pierce a trust’s veneer in much the
same way as it can pierce a company’s corporate veil, she nevertheless held that Lamont J
had misdirected himself in the court of first instance by invoking the principles laid down in
Badenhorst v Badenhorst to this end. This is because, according to the Acting Judge of Appeal,
the Badenhorst case was decided in the context of the discretion afforded a court granting a
redistribution order in terms of section 7(3) to (6) of the Divorce Act while, by contrast, a
court has no comparable discretion regarding the division of a joint estate in a marriage
concluded in community of property. A court cannot therefore, in Mayat AJA’s opinion,
“include the assets of a third party in the joint estate” but is generally restricted to simply
295
ordering an equal division of that estate between the spouses.
The Supreme Court of Appeal’s stance in the WT case, that a discretion comparable to the
one bestowed by section 7(3) to (6) of the Divorce Act is a prerequisite for any judicial consid-
eration of the value of trust assets to determine the patrimonial consequences of a divorce,
elicited much criticism. The three co-authors of this book voiced their concerns in this regard
in three separate articles published prior to the Supreme Court of Appeal’s later judgment in
296
REM v VM. Smith pointed out that WT v KT ostensibly occasions the anomalous result that a
297
spouse, whose marriage was not one provided for in section 7(3) of the Divorce Act, is
never able to challenge the other spouse’s control of a trust during divorce proceedings so as
298
to have the trust assets taken into account for the purpose of dividing matrimonial property.
299 300
Du Toit and Van der Linde likewise lamented the fact that the WT case effectively ruled
out the consideration of trust assets to determine the patrimonial consequences of divorces
involving spouses married in community of property as well as spouses married out of com-
munity of property with the accrual system.
The Supreme Court of Appeal assuaged the aforementioned fears, at least to an extent, in
301
its subsequent judgment in REM v VM. This case confirms that a court can indeed consider
the assets (or their value) of a trust that is a trustee-spouse’s alter ego in a divorce involving a
marriage to which the accrual system applies. However, the REM case only concerned a
marriage concluded out of community of property to which the accrual system applies and
the Supreme Court of Appeal’s judgment in this case did not therefore overrule its earlier
judgment in WT v KT that the absence of a discretion similar to that provided by section 7(3)
________________________
293 At paras 30–36 (note that the paragraphs are incorrectly numbered in the judgment).
294 WT v KT 2015 (3) SA 574 (SCA) par 31.
295 At par 35.
296 2017 (3) SA 371 (SCA).
297 See 7.6.2.3.1.
298 2016 JJS 68 at 90.
299 2015 JCLS 655 at 698–699.
300 2016 THRHR 165 at 172–173.
301 2017 (3) SA 371 (SCA).
157
to (6) of the Divorce Act constitutes a fundamental obstacle to a consideration of trust assets
when a court determines the patrimonial consequences of divorce in a marriage concluded in
community of property. The finding of the court in the WT case on this point therefore con-
302
tinues to stand with full precedential force. It is hoped that the Supreme Court of Appeal will
be afforded the opportunity to revisit this aspect of the WT case on a set of facts that is more
typical of allegations of the abuse of the trust form in the divorce context. Decided cases on
point have, for the most part, dealt with trusts created during the existence of marriages and
303
not, as in WT v KT, with a trust created prior to the conclusion of a marriage. Should such a
case come before the Supreme Court of Appeal, it is hoped that the court will deviate from its
judgment in the WT case by finding that the power to pierce a trust’s veneer is derived from
the common law and that, in the divorce context, the decisive question – as established in the
REM case – is whether the trust form was abused in an unconscionable manner in order to
304
evade an obligation that matrimonial property law imposes upon divorce. It is nevertheless
conceded that the marriage in community of property poses unique challenges in terms of the
actual division of a joint estate that has been judicially revalued by the piercing of an alter ego
trust’s veneer. Commentators have, however, suggested solutions to these challenges that
305 306
either the court or the legislature can pursue to resolve this difficult issue.
7.6.2.4 Legal standing to apply for the piercing of a trust’

trust’s veneer
307
The Supreme Court of Appeal’s judgment in WT v KT is troublesome for yet another reason.
Mayat AJA held that, even if it was accepted that the appellant’s (the trustee-spouse’s) private
affairs could not be separated from those of the trust at issue in this case and that he moreo-
ver violated the joint-action rule by side-lining his co-trustee, the fact that the respondent was
neither a beneficiary of the trust nor a third party who had transacted with it, meant that the
trustees owed no fiduciary obligation to her and that she consequently had no legal standing
308
to challenge the appellant’s trust administration. Commentators voiced serious reservations
309
regarding this aspect of the case. For example, Shipley points out that Mayat AJA provided
no logical explanation for limiting locus standi regarding a piercing application only to trust
beneficiaries and third parties who transacted with a trustee. He argues that neither a third
party who contracted with a trustee (who, according to Mayat AJA, has locus standi in a
piercing application) nor a spouse in the position of the respondent in the WT case (who,
according to Mayat AJA, does not have locus standi in a piercing application) has any direct
and substantial interest in the general administration of a trust. Each of them does, however,
have a claim against the trustee – the third party against the trustee in the latter’s official
capacity in terms of the contract concluded between them and the spouse against the trustee
in the latter’s private capacity in terms of matrimonial property law. Both these claims are
materially prejudiced if that trustee unconscionably abused the trust in question to evade
liability for these claims, which state of affairs is sufficient, according to Shipley, to confer
legal standing on either person to challenge the trustee’s trust administration by requesting a
310
piercing order.
________________________
302 However, see Smith 2016 JJS 68 at 90–92; Smith 2017 JJS 1 at 2–7; De Jong et al 2017 THRHR 370 at 385
for qualifying perspectives on this point.
303 Shipley 2016 SA Merc LJ 508 at 525.
304 Smith 2017 SALJ 715 at 728.
305 Smith 2017 JJS 1 at 2–7.
306 Van der Linde 2016 THRHR 165 at 173.
307 2015 (3) SA 574 (SCA).
309 Van der Linde 2016 THRHR 165 at 171–172; Smith 2016 JJS 68 at 91; De Jong et al 2017 THRHR 370 at
381–382.
310 2016 SA Merc LJ 508 at 527–528.
158
311
The Supreme Court of Appeal fortunately heeded this criticism in REM v VM and departed
from the approach adopted in the WT case regarding legal standing to request a piercing
order. Swain JA argued that no logical or principled basis exists to distinguish, in the context
of piercing a trust’s veneer, between the locus standi of a third party who contracted with a
trustee and a spouse who, although not a beneficiary of the trust in question, advances a
patrimonial claim in divorce proceedings against a trustee-spouse. This is because, according
to Swain JA, an errant trustee’s breach of his or her fiduciary duty is not, as Mayat AJA rea-
soned in the WT case, the factor determining locus standi. The third party’s or spouse’s locus
standi is instead determined by the fact that the errant trustee’s maladministration of the trust
prejudiced their claims against the trustee. Put differently, an errant trustee who abuses a
trust endangers the enforcement of the trust’s contractual obligation to a third party as well as
that trustee’s personal obligation to his or her spouse in terms of matrimonial property law in
equal measure. A spouse who seeks a piercing order against an errant trustee-spouse in
divorce proceedings therefore stands on exactly the same footing as a third party who seeks
such an order against an errant trustee to enforce a trust’s contractual obligation. Both these
parties’ requests for piercing orders rest on the errant trustee’s unconscionable abuse of the
trust form and the danger it poses to the enforcement of their respective claims, namely, the
spouse’s matrimonial property claim and the third party’s contractual claim. Therefore, a non-
beneficiary-spouse (to whom a trustee owes no fiduciary duty), a beneficiary-spouse (to whom
a trustee owes a fiduciary duty) and a third party who contracted with a trust (to whom a
trustee may or may not owe a fiduciary duty) all have legal standing to challenge the trustee’s
312
trust administration and to request a piercing order.
________________________
311 2017 (3) SA 371 (SCA).

312 At par 20.
159
8
The Trust Beneficiary
8.1 Introduction
Trusts are, more often than not, created to benefit one or more persons or classes of persons
1 2
as trust beneficiaries. A trust without a beneficiary is thus a nullity. Any natural or legal
3
person can be a trust beneficiary. One trust can also be the beneficiary of another trust –
4
such a beneficiary-trust is called a pour-over trust. A trust founder can be a beneficiary of the
5 6
trust he or she created. A trustee can be a beneficiary of the trust he or she administers. A
7
trust beneficiary need not possess full legal capacity or contractual capacity. The trust is
therefore well-suited to managing the affairs of infants, minors or persons suffering from
mental disorders or any other incapacity.
8
In Land and Agricultural Bank of South Africa v Parker the court typified the separation of a
trustee’s control over trust property from the trust beneficiaries’ enjoyment of trust benefits
9 10 11
as the “core idea” and the “essential notion” of the South African trust. The definition of a
trust in section 1 of the Act also directs that a trustee, whether of an ownership trust or a
12
bewind trust, must administer the trust’s property for the benefit of the trust beneficiaries.
The trust beneficiary is therefore integral to the trust arrangement and any engagement with
the fundamentals of South African trust law must necessarily involve a consideration of the
trust beneficiary’s legal position. This chapter deals with the trust beneficiary’s legal position
through its exposition on the appointment of a trust beneficiary; the manner in which a trust
beneficiary acquires rights under a trust and the nature of those rights; various possibilities
regarding the devolution of trust benefits to trust beneficiaries; and a trust beneficiary’s
remedies against a trustee and third parties.
8.2 The appointment

appointment of a trust beneficiary
Trust beneficiaries are usually appointed by the trust founder in the trust instrument, either
by name or by description and either individually or as the members of a particular class. The
________________________
1 Trusts can also be created to pursue one or more impersonal objects: see 1.3 regarding the definition of a
trust in s 1 of the Act.
2 Geach Trust Law 256. See 4.2.4.
4 Geach Trust Law 53. The term “roll-over trust” is also used in this regard: Pace and Van der Westhuizen
Wills and Trusts B10.
5 See 1.5.1.
6 See 1.5.2.
8 2005 (2) SA 77 (SCA).
9 At par 19.
10 At par 22.
11 See 1.2.1.
12 See 1.3.
161
appointment of trust beneficiaries, and testamentary trust beneficiaries, in particular, as the

members of a particular class is known as a class bequest.
A’s will provides for the creation of a testamentary trust on her death, and stipulates that
her grandchildren are to be the trust’s income beneficiaries. A’s grandchildren therefore
constitute the class of beneficiaries that will receive the trust income.
A class bequest often raises the question regarding who is included as members of the
designated class. With regard to A’s testamentary trust, the question arises whether only
A’s grandchildren who are alive at her (A’s) death will be the trust’s income beneficiaries,
or whether the class also includes grandchildren born after A’s death? Because A’s trust is
a testamentary one, this question must be answered by applying a rule from the law of
testate succession.
Section 2D(1) of the Wills Act lays down a number of rules regarding the interpretation of
wills. Paragraph (c) of the subsection prescribes that any benefit bequeathed in a will to a
class of persons shall vest in those members of the class who are alive at the time of the
devolution of the benefit or who have already been conceived at that time and who are
later bon alive.
With regard to A’s testamentary trust, only those grandchildren who are alive at A’s death
(A’s death being the time of the devolution of the income benefit) and those grandchil-
dren already conceived at that time (and who are later born alive) will be the trust’s in-
come beneficiaries. Any grandchild conceived and born after A’s death will thus not share
in the trust’s income. Section 2D(1) of the Wills Act determines that the aforementioned
interpretation rule operates unless the context of the particular will indicates otherwise. If
it is therefore evident from A’s will that A probably intended grandchildren conceived and
born after her death also to benefit from the trust’s income, any such grandchildren will
be included in the class of income beneficiaries.
A trust founder can also empower a trust’s serving trustee to appoint trust beneficiaries. This
power is known, in particular in the context of the testamentary trust, as a power of appoint-
ment. However, a testator was not always permitted to empower a trustee to appoint the
beneficiaries of a testamentary trust created in terms of that testator’s will. This was by
reason of the fundamental rule of the South African common law of testate succession that a
testator must exercise his or her testamentary power (which includes the power to appoint
testamentary beneficiaries) him- or herself and that a testator cannot consequently delegate
13
this power to someone else to exercise it on the testator’s behalf. The conferral of a power of
appointment developed as an exception to this common law rule against the delegation of
14 15 16
testamentary power. Originally, only a fiduciary and a usufructuary could be the recipi-
ents of a testamentary power of appointment (to appoint those who would ultimately receive
the fideicommissary or usufructuary property) because a fiduciary and a usufructuary each
17
benefit from the property subject to a fideicommissum and a usufruct, respectively. A
________________________
13 Estate Watkins-Pitchford v Commissioner for Inland Revenue 1955 (2) SA 437 (A) 458H; Braun v Blann and
Botha 1984 (2) SA 850 (A) 856H.
15 Westminster Bank Ltd v Zinn 1938 AD 57 at 65–66.
16 Commissioner for Inland Revenue v Lukin’s Estate 1956 (1) SA 617 (A) 623A.
17 De Waal and Schoeman-Malan Law of Succession 47–48. See 9.2.1 regarding the testamentary fideicom-
missum and usufruct.
162
18
trustee derives no benefit from trust property and previously could not be the recipient of a
19
testamentary power of appointment.
20
However, in Braun v Blann and Botha the Appellate Division decided specifically with re-
gard to a testamentary private trust that our law must recognise the bestowal of the common
21
law power of appointment on a testamentary trustee. Joubert JA based this decision on the
22
development of South African trust law. However, Joubert JA restricted the power of ap-
pointment conferrable on a trustee of a testamentary private trust to a specific power of
23
appointment. This means that such a trustee’s power to appoint trust beneficiaries is re-
stricted to a discretionary selection of one or more persons from a class of potential benefi-
24
ciaries designated by the testator. Consequently, a testator may not confer a general power
of appointment – in terms of which the trustee is unrestricted in his or her selection of trust
25
beneficiaries – on the trustee of a testamentary private trust.
The following provision appears in A’s will:

“All my assets must be held in trust under the ownership and control of my trustee. I appoint
my surviving spouse, B, as the trust’s income beneficiary. My trustee must pay the trust income
annually to my surviving spouse for the remainder of her lifetime. On B’s death the trust must
terminate and any one or more of my children C, D or E will then become the trust’s capital
beneficiary or beneficiaries. My trustee is endowed with the discretion to appoint any one or
more of my children as capital beneficiary or beneficiaries.”
The trustee is empowered to appoint the trust’s capital beneficiary or beneficiaries from
the designated class of potential beneficiaries (the testator’s children C, D and E) on the
trust’s termination. One, more than one, or all of C, D or E will therefore become, within
the trustee’s discretion, entitled to trust capital when the trust terminates on B’s death. A
therefore bestowed a valid specific power of appointment on the trust’s trustee. The
power of appointment would have been invalid if A empowered the trustee to pay the
26
trust capital to anyone he or she chose.
In the Braun case, the testatrix provided for the creation of a pour-over trust on the ter-
mination of the principal trust established in terms of her will. She empowered her ad-
ministrators (trustees) to determine the extent of the pour-over trust’s capital; the trust
beneficiaries; the trust’s operational period; the trust’s essential terms and conditions; as
27
well as the identity of the trust’s trustees. Joubert JA ruled that this power exceeded the
specific power of appointment conferrable on the trustees of a testamentary private trust
28
and that it therefore constituted an invalid delegation of testamentary power.
The delegation of testamentary power is of course not problematic in regard to inter vivos
trusts. However, should a wide discretionary power akin to the one at issue in the Braun case
be bestowed on the trustees of an inter vivos trust, the purported pour-over trust may be
________________________
18 See 1.2.1 regarding the separation of a trustee’s administrative control of a trust from the trust beneficiar-
ies’ enjoyment of trust benefits.
19 Ex parte Henderson 1971 (4) SA 549 (D) 552H–553A.
20 1984 (2) SA 850 (A).
21 At 866H–867A.
22 At 866H–867A. See also 2.3.2.
24 Braun v Blann and Botha 1984 (2) SA 850 (A) 867A.
26 Ibid 49.
27 Braun v Blann and Botha 1984 (2) SA 850 (A) 856B–C.
28 At 867D–F. See also De Waal and Schoeman-Malan Law of Succession 49.
163
disallowed for want of a clear and certain trust object and thus for not meeting one of a trust’s
29
creation requirements.
What happens if a trust instrument, in addition to providing a list or class of potential

beneficiaries, also grants a trustee the discretionary power to add to these potential bene-
ficiaries any other person(s) whom the trustee may wish to appoint from time to time?
30
This happened in Watson v Cockin where an inter vivos trust benefitted the founder and
his wife together with their children as the trust’s appointed capital beneficiaries. The
trust’s income beneficiaries were defined as “the persons who shall benefit from the in-
come of the trust in terms of the discretionary powers of the trustees, and may include
the capital beneficiaries, their parents, spouses, widows, lawful issue and such other natu-
31
ral persons who the trustees may appoint from time to time”.
The trust provisions in the Watson case, at least insofar as the appointment of the income
beneficiaries is concerned, are apparently discretionary in nature. However, the question
arises whether the discretionary power given to the trustee in this case to appoint the
trust’s income beneficiaries is valid? Had the trust in the Watson case been a testamen-
tary one, this power of appointment may well be invalid because, as pointed out above, it
exceeds the limits of a specific power of appointment prescribed in Braun v Blann and
32
Botha. This is because the above-quoted extract from the trust deed at issue in the Wat-
son case left the class of potential beneficiaries wide open insofar as it granted the trus-
tees the power to add to the list of specified beneficiaries by appointing from time to time
any other natural persons whom the trustees deemed fit. This appears to be a general
(unrestricted) power of appointment regarding the trust’s income beneficiaries and, had
the trust in the Watson case been a testamentary one, it could well be adjudged as occa-
sioning a delegation of the trust founder’s testamentary power.
The trust at issue in the Watson case was however an inter vivos trust, and the above-
mentioned argument that the general power of appointment caused the class of potential
income beneficiaries not to have been established with reasonable certainty, and that the
trust therefore lacked a clear object, could hold some water if the trust’s validity was chal-
lenged on the basis that its object was inadequately defined. However, it is doubtful
whether a court will indeed invalidate an existing private trust – whether an inter vivos or
a testamentary one – in its entirety on the basis that the trust instrument grants the trus-
tee a general power of appointment. In Braun v Blann and Botha the court regarded those
provisions in the will that bestowed a general power of appointment on the principal
trust’s trustees (and thus occasioned the impugned delegation of testamentary power) as
33
invalid but nevertheless severable from the wills’ valid trust provisions. The severability
of an invalid power of appointment from the rest of the trust provisions may therefore
34
provide appropriate relief whilst ensuring that the trust is not invalidated altogether.
________________________
29 Pace and Van der Westhuizen Wills and Trusts B10. See 4.2.4 regarding the creation requirement that a
trust’s object must be defined with reasonable certainty.
30 [2016] ZAGPPHC 259 (22 April 2016).
31 At par 4.
32 1984 (2) SA 850 (A).
33 At 867C–G.
34 See also Van der Linde Ars Docendi et Scribendi 181.
164
8.3 Adiation or repudiation by a trust beneficiary

8.3.1 A testamentary trust beneficiary
A testamentary trust beneficiary is always at liberty either to adiate (accept) (Afrikaans:
aanvaar or adieër) or to repudiate (reject) (Afrikaans: verwerp or repudieër) a trust benefit. A
testamentary trust beneficiary is not required to expressly adiate: a rule of practice prescribes
that a testamentary beneficiary is deemed to have adiated in the absence of an express
35
repudiation. This rule implies that the vesting (acquisition) of a trust beneficiary’s right to
36
receive a testamentary trust benefit occurs by operation of law (ex lege) on the trust found-
er’s (testator’s) death and without the need for the beneficiary to signify expressly (for exam-
ple, in writing) his or her acceptance of the benefit to the trust’s trustee. Vesting in this
instance is however subject to the beneficiary not repudiating the benefit after the trust
37
founder’s death. A testamentary trust beneficiary’s death prior to being notified of his or her
trust benefit does not therefore prevent the right to the benefit from vesting in that benefi-
ciary’s deceased estate even though he or she never had the opportunity to adiate the particu-
lar benefit. That right, having vested automatically on the founder’s death and thus forming
part of the beneficiary’s estate from the moment of the founder’s death, will devolve on the
38
deceased beneficiary’s successors. Some courts have however expressed an opposite view.
39
Van Heerden ACJ opined in Wessels v De Jager that a testamentary beneficiary is not vested
with a right to receive a benefit on a testator’s death, but merely acquires a competence to
benefit – the right to benefit vests only on the beneficiary’s exercise of this competence
40
through his or her actual acceptance of the benefit. This standpoint in the Wessels case has
41 42
elicited support as well as criticism from commentators.
It is submitted that the first of the above standpoints is preferable insofar as South African
courts have repeatedly affirmed that delatio (the moment on which a deceased estate “falls
43
open” for devolution – typically the moment of a testator’s death) occasions the creation of
rights for the beneficiaries of that estate. The vesting of rights in terms of a will thus occurs by
operation of law in terms of the general norms of the law of succession and, unless a testa-
mentary beneficiary expressly rejects this right obtained at delatio, no need exists for that
44
beneficiary’s express acceptance. Should a testamentary trust beneficiary indeed adiate his
45
or her trust benefit expressly, the adiation will be effective from the moment of vesting.
Should a testamentary trust beneficiary on the other hand repudiate his or her trust benefit,
the repudiation will similarly be effective retroactively from the moment of vesting. It will
then be deemed as if no right ever vested in that beneficiary because the repudiation cancels
46
the right as well as its accompanying legal consequences with retrospective effect. The
________________________
35 Crookes v Watson 1956 (1) SA 277 (A) 298A.

36 See 8.4.2.1 regarding the vesting of a trust beneficiary’s right to receive a trust benefit.
37 Greenberg v Estate Greenberg 1955 (3) SA 361 (A) 364G–H. See also De Waal and Schoeman-Malan Law of
Succession 9.
38 Ex parte Webb 1952 (2) SA 541 (W) 544H–545A and 545F–546A; De Waal and Schoeman-Malan Law of
Succession 10.
39 2000 (4) SA 924 (SCA).
40 At par 6.
41 Stevens 2001 SALJ 230.
42 Sonnekus 2000 TSAR 793.
44 Commissioner for Inland Revenue v Estate Crewe 1943 AD 656 at 692; Webb v Davis 1998 (2) SA 975 (SCA)
981I; Durandt v Pienaar 2000 (4) SA 869 (C) 873I. See also De Waal and Schoeman-Malan Law of Succes-
sion 10.
46 Ibid.
165
repudiated benefit will then devolve in accordance with any alternative arrangement pre-
scribed by the will or, if no alternative testamentary devolution is possible, in terms of the law
47
of intestate succession.
8.3.2 An inter vivos trust beneficiary

An inter vivos trust beneficiary is likewise always at liberty either to accept or to reject a trust
48
benefit. The fact that an inter vivos trust deed is regarded as akin to a stipulatio alteri places
an inter vivos trust beneficiary on a different footing from his or her testamentary counterpart
regarding the acceptance of a trust benefit insofar as an inter vivos trust beneficiary is not
automatically vested with a right to receive a trust benefit upon the conclusion of the trust
contract: an inter vivos trust beneficiary must first accept the trust benefit and only on his or
her acceptance is he or she vested with a right to receive that particular benefit. An inter vivos
trust beneficiary enjoys, at best, a contingent right to benefit prior to acceptance because
vesting under an inter vivos trust is always conditional on a beneficiary’s acceptance of a
particular trust benefit and, if any other condition is attached to that benefit, also on the
49
fulfilment of that condition. On the other hand, a beneficiary under a discretionary inter
vivos trust possesses only a hope or an expectation (spes) to benefit from the trust prior to the
trustee’s exercise of the discretion in that beneficiary’s favour: vesting under a discretionary
inter vivos trust is dependent on the trustee exercising the discretion in a particular benefi-
ciary’s favour, the trustee thereafter offering a trust benefit to that beneficiary, and that
50 51
beneficiary accepting the benefit offered to him or her. However, Potgieter v Potgieter
contains statements by the Supreme Court of Appeal to the effect that an inter vivos trust
beneficiary can indeed accept a contingent right that exists for that beneficiary under the
52
trust. One implication of this standpoint is that such a beneficiary must consent to any
53
proposed variation of the trust deed. Some commentators support the idea that a benefi-
ciary’s acceptance of a contingent right under an inter vivos trust renders that beneficiary’s
54
consent a prerequisite to any variation of the trust deed whilst other commentators question
55
the correctness of this proposition.
An inter vivos trust beneficiary’s acceptance must take the form of an unequivocal expres-
sion, preferably in writing, to the trustee of the beneficiary’s wish to receive the trust benefit
56
that the trustee has offered to him or her. A parent or guardian may accept a trust benefit on
57
behalf of a minor inter vivos trust beneficiary. Acceptance by an inter vivos trust beneficiary,
as explained above, concerns only that beneficiary’s acquisition of a right to receive a particu-
lar trust benefit: every inter vivos trust beneficiary has, in addition to any right he or she may
have to receive a trust benefit, a right to demand that the trustee administers the particular
trust properly. The beneficiary enjoys this right to proper trust administration from the trust’s
58
inception and therefore even prior to his or her acceptance of a trust benefit. An inter vivos
trust beneficiary is, as far as the right to proper trust administration is concerned, in exactly
________________________
47 Ibid 14.
48 See 1.4.3 and 2.4.2.
49 See 8.4.2.1 regarding vested and contingent rights.
50 See 8.4.2.1 regarding vesting under a discretionary trust.
51 2012 (1) SA 637 (SCA).
52 At par 28.
53 Claassen 2014 Acta Juridica 243 at 262.
54 Ibid at 262–263.
55 Van Zyl Inter Vivos Trust 216. See also 5.4.2.2.4.
57 Potgieter v Potgieter 2012 (1) SA 637 (SCA) par 22.
58 See 8.4.1 regarding this right to proper trust administration.
166
the same position as a testamentary trust beneficiary because the latter beneficiary also
enjoys the same right to proper trust administration from the moment of a testamentary
59
trust’s inception. Should an inter vivos trust beneficiary decline to receive his or her trust
benefit, the repudiated benefit will devolve in accordance with any alternative arrangement
prescribed by the trust deed and, if no alternative devolution is possible, the particular asset
60
could revert to the trust founder.
8.4 The nature and extent of a trust beneficiary’s rights

8.4.1 A beneficiary’s personal right to proper trust administration
The trustee office is fiduciary in nature and a trustee is a party to a fiduciary relationship with
61
the trust beneficiaries. A trustee must consequently administer a trust in accordance with
the demands of his or her fiduciary office, and this includes a trustee’s adherence to the
62
golden rules or core duties of proper trust administration. The court opined in Doyle v Board
63
of Executors that a trustee owes, solely by reason of the fiduciary office that he or she occu-
pies, the utmost good faith to all trust beneficiaries irrespective of whether or not they are
64
vested with rights to receive trust benefits. It stands to reason that, if a trustee is subject to a
fiduciary duty, each trust beneficiary has a concomitant right to enforce this duty. Each trust
beneficiary therefore has a personal right against the trust’s trustee for proper trust admin-
65
istration in accordance with the demands of the trustee’s fiduciary office. In Pentz v Gross
66
and subsequently on appeal in Gross v Pentz the courts affirmed that every trust beneficiary,
even a contingent beneficiary, has a vested interest in a trust’s proper administration. The
fact that, according to the courts in the Gross cases, even a contingent beneficiary (and,
67
according to some commentators, also a potential beneficiary under a discretionary trust)
enjoys this personal right to proper trust administration makes it clear that this right exists
separately and independently from any vested right that such a trust beneficiary has to
68
receive a trust benefit.
A testamentary trust beneficiary’s personal right to proper trust administration arises at the
inception of the trustee office which usually occurs on the trust’s creation at the trust found-
er’s death. Likewise, an inter vivos trust beneficiary’s right to proper trust administration
arises at the inception of the trustee office which usually also occurs on the trust’s creation at
69
the conclusion of the trust contract. A trust beneficiary’s right to proper trust administration
therefore arises by operation of law; it is not dependent on the beneficiary being vested
(either ex lege in the case of a testamentary trust or on the acceptance of a trust benefit in the
case of an inter vivos trust) with a right to receive a trust benefit from the trust’s trustee.
________________________
59 See 8.4.1.
60 Cameron et al Law of Trusts 555.
61 See 1.2.3 regarding trusteeship as a fiduciary office and 6.7 regarding a trustee’s fiduciary duty.
62 See 7.1 regarding these rules or duties of proper trust administration.
63 1999 (2) SA 805 (C).
64 At 813B.
65 1996 (2) SA 518 (C) 523I.
66 1996 (4) SA 617 (A) 628I.
67 De Waal 1998 TSAR 326 at 331; Claassen 2014 Acta Juridica 243 at 263 and 266.
68 Lacob 2000 SALJ 441 at 443; Claassen 2014 Acta Juridica 243 at 255.
69 De Waal 1998 TSAR 326 at 330; Claassen 2014 Acta Juridica 243 at 265–266.
167
8.4.2 A beneficiary’s personal right to receive trust income and/or capital

A trust beneficiary can, in addition to a personal right to proper trust administration, also
have a personal right to receive a trust benefit, be it trust income and/or trust capital, from
the trust’s trustee. Whether a trust beneficiary has this right to receive a trust benefit and, if
so, what the nature of that right is, depends on the terms of the trust instrument. A trust
beneficiary’s right to receive a trust benefit may, firstly, either be vested or contingent. This
right may, secondly, be to receive trust income, or to receive trust capital, or to receive both
trust income and trust capital. The beneficiary may, thirdly, possess this right under either an
ownership trust or a bewind trust.
8.4.2.1 Vested and contingent rights

A trust beneficiary’s personal right to receive a trust benefit from the trustee may either be
vested (Afrikaans: gevestig or gewis) or contingent (Afrikaans: voorwaardelik or ongewis). The
70
term “vested” has a number of meanings:
• it refers to the fact that a beneficiary owns the personal right (in other words, the personal
71
right constitutes an asset in that beneficiary’s estate);
• it signifies that the beneficiary’s acquisition of the personal right is immediate and certain,
and that the acquisition of the right is therefore not dependent on the happening of some
uncertain future event such as the fulfilment of a condition or the occurrence of a contin-
72
gency; or
• it indicates that the beneficiary acquired the personal right (the moment of an acquisition
of a right is known as dies cedit) but that the beneficiary’s enforcement or enjoyment of
this right (the moment of enforcement or enjoyment of a right is known as dies venit) is
73
postponed until some later time.
A vested right is frequently contrasted with a contingent right in regard to the second of the
above-mentioned meanings: whereas a beneficiary’s acquisition of a vested right is immedi-
ate and certain, a contingent right will become a vested right only if some uncertain future
event indeed occurs. The term “contingent right” is, however, also open to a number of
interpretations:
• a contingent right is sometimes regarded as no right at all, but as a mere hope or an
74
expectation (spes) to receive a future benefit;
• some commentators view a contingent right as something more than a mere hope to
benefit on the basis that none of the constitutive facts of a right (in other words, those facts
required to give rise to the creation of a right) are present in a hope whereas some of these
facts are indeed present in a contingent right but it remains uncertain whether the remain-
ing constitutive facts required to complete the right (and thus to convert it into a vested
right) will ever materialise. The commentators who attribute a more substantive meaning
to a contingent right point out that:
o a trust beneficiary’s appointment as such in a trust instrument and a trustee’s obligation
to administer the trust to benefit that particular beneficiary are among the constitutive
________________________
70 Pace and Van der Westhuizen Wills and Trusts B18.

71 Jewish Colonial Trust Ltd v Estate Nathan 1940 AD 163 at 175.
72 Ibid.
73 De Waal and Schoeman-Malan Law of Succession 8; Claassen 2014 Acta Juridica 253 at 256.
74 For example, see Beira v Beira 1990 (3) SA 802 (W) where a trust beneficiary’s entitlement to trust assets
was contingent on her surviving both her parents: 806D. The court concurred with the classification of the
beneficiary’s interest under the trust as a mere spes: 807G–H and 808E.
168
facts of a right that are present in a contingent right even though the happening of
some uncertain future event is required to complete the right and thus to effect the
contingent right’s conversion into a vested right that will entitle the trust beneficiary to
75
receive a benefit;
76
o the law affords a contingent right protection whilst a mere hope to receive a benefit is
77
not legally recognised or protected; and
o a contingent right has legislative significance insofar as some statutes take cognisance
of contingent rights or interests in property: for example, section 20(2)(a) and (b) of the
Insolvency Act provides that an insolvent’s estate includes all the insolvent’s property
at the date of the sequestration of his or her estate as well as all the property acquired
by or that accrued to the insolvent during sequestration, whereas section 2 of the In-
solvency Act defines “property” in this regard to “include contingent interests in prop-
erty”:
– Stander therefore contends that a contingent right constitutes such a contingent
interest in property and that a trust beneficiary’s contingent right thus forms part of
78
that beneficiary’s estate upon his or her insolvency.
Even if the standpoint is accepted that a contingent right is something more than a hope to
benefit, the following definition of a contingent right or interest in Stern and Ruskin v Apple-
79
son is instructive:
“The term ‘contingent interest’ is used in contradistinction to a vested interest. It is something
which may ripen into a vested interest on the happening of an event, but it must be such that the
happening of the event, without more, gives the vested interest. A person cannot be said to have a
contingent interest in something which another may or may not choose to give him in the future.
There is ample authority for the view that a bare possibility of getting something in the future is not
80
a contingent interest.”
This standpoint suggests that potential beneficiaries under a discretionary trust (where the
trustee’s discretion relates to whether or not trust income and/or capital are to be distributed
81
and, if it is distributed, to which of the potential beneficiaries distribution will occur) are not
endowed with contingent rights to trust income and/or capital prior to the exercise of the
trustee’s discretion. This is because the exercise of the trustee’s discretion will not in itself
ensure that a particular beneficiary will indeed be vested with a right to receive trust income
and/or capital. Where a trustee is therefore endowed with a discretion to appoint one of A, B
or C as a trust’s income and/or capital beneficiary, the exercise of the trustee’s discretion will
not bestow a vested right to income and/or capital on all three but only on the appointed one.
The fact that two of the potential beneficiaries will not be appointed as trust beneficiaries
precludes, according to the definition of a contingent right proposed in the Stern case, the pre-
appointment interests of all three potential beneficiaries from being characterised as contin-
gent rights.
Some courts have nevertheless typified the potential beneficiaries under a discretionary
trust (where the trustee’s discretion relates to whether or not trust income and/or capital are
________________________

76 Potgieter v Potgieter 2012 (1) SA 637 (SCA) par 28. The holder of a contingent right can, for example,
prevent an impending encroachment on that right by obtaining a prohibitory interdict against the en-
croacher: Corbett et al Law of Succession 420.
78 1999 JJS 145 155.
79 1951 (3) SA 800 (W).
80 At 805D–E.
81 See 9.5.
169
to be distributed and/or to whom trust income and/or capital is to be paid) as contingent

82
beneficiaries. This modus operandi appears questionable in light of the aforementioned view
expressed in the Stern case. Some commentators explain the standpoint that designates
potential beneficiaries under a discretionary trust as contingent beneficiaries by proposing
83
that the term “contingent right” has a broad as well as a strict meaning. A contingent right in
the broad sense encompasses, according to this view, both a contingent right in the strict
84
sense as well as a hope to receive a benefit whereas a contingent right in the strict sense
denotes only a right that will operate fully and bear complete legal consequences on the
happening of some uncertain future event (at which point all the constitutive facts for the
85
creation of a fully-fledged right will be present). These commentators therefore explain our
courts’ designation of potential beneficiaries under a discretionary trust as contingent benefi-
ciaries by positing that the courts have the broad meaning, rather than the strict meaning, of
the term “contingent right”, in mind.
It is however submitted that, in order to maintain conceptual clarity, a beneficiary who
holds a contingent right in the strict sense should be referred to as a “contingent beneficiary”
whereas a beneficiary under a discretionary trust (who, in accordance with the Stern case,
86
holds a mere hope to benefit prior to the exercise of the trustee’s discretion) should be
87
referred to as a “potential beneficiary”. This distinction conforms to the standpoint that a
contingent right, in particular within the strict meaning of the term, is something more sub-
stantive or concrete than a mere hope. This characterisation of a contingent right in the strict
sense is supported by some commentators’ claim that such a contingent right attracts legal
88
protection that the law does not extended to a mere hope to receive a benefit.
The assertion that a contingent right in the strict sense is afforded legal protection that
does not always or necessarily pertain to a hope demands further investigation. The Su-
89
preme Court of Appeal’s judgment in Potgieter v Potgieter serves as a useful starting
point because Brand JA not only acknowledged the legal significance of a contingent right
in this case, but he did so with express reference to the legal protection afforded a trust
beneficiary who holds such a contingent right. In support of this acknowledgement,
Brand JA relied on the fact that a contingent beneficiary is entitled, according to the
continued
________________________
82 For example, in Gross v Pentz 1996 (4) SA 617 (A) a testator directed that his surviving spouse had to
receive trust income and that his trustees had to use the balance of the trust income, within their discre-
tion, for the maintenance and general requirements of his (the testator’s) children or to accumulate any
surplus income and add it to the trust capital. This directive clearly vested the trustees with the power to
withhold surplus trust income from the testator’s children, which rendered the children, at least as far as
this trust income was concerned, mere potential beneficiaries. The children’s rights to trust capital were
contingent on their surviving the testator’s spouse. The children were therefore contingent beneficiaries in
regard to the trust capital: 621D–E. The court typified the plaintiff (one of the testator’s children) as a con-
tingent trust beneficiary: 628I. The court therefore ostensibly conjoined the plaintiff’s status as a potential
income beneficiary with his status as a contingent capital beneficiary. See also Nkotobe v Bengu [2015]
ZAECBHC 12 (15 May 2015) par 9.
84 Ibid at 262.
85 Ibid at 257.
86 Ibid at 259–260.
87 See 1.4.6 regarding the term “potential beneficiary”.
89 2012 (1) SA 637 (SCA) par 28.
170
90
judgment in Gross v Pentz, to protect his or her interest under the trust against a trus-
tee’s maladministration. However, the legal protection afforded the contingent trust bene-
ficiary in the Gross case was based primarily on that beneficiary’s personal right to proper
91
trust administration and not on any contingent right that he had under the trust. If it is
accepted that all trust beneficiaries – therefore also potential beneficiaries under a discre-
92
tionary trust – enjoy a right to proper trust administration, is it correct to assert that the
law affords greater protection to a beneficiary who holds a contingent right in the strict
sense compared to the legal protection afforded a potential beneficiary under a discre-
tionary trust who has a mere hope to benefit prior to the exercise of the trustee’s discre-
tion?
93
Nkotobe v Bengu provides authority for the proposition that some of the remedies availa-
ble to a contingent trust beneficiary are not also available to a potential trust beneficiary.
The Nkotobe case dealt with the removal of trustees from office by the High Court in
94
terms of section 20(1) of the Act. This subsection allows “any person having an interest
in the trust property” to bring a removal application. A contingent beneficiary’s contin-
gent right under a trust should constitute a sufficient interest in trust property to make
this remedy available to such a beneficiary. This is because some of the constitutive facts
of a right that could, upon the happening of some uncertain future event, ultimately give
that beneficiary full legal entitlement to a trust benefit, are already present and it is argu-
able that these constitutive facts confer an “interest in the trust property” on a contingent
beneficiary as demanded by section 20(1) of the Act. In Nkotobe v Bengu the court distin-
guished between contingent beneficiaries and potential beneficiaries, and opined that the
latter, unlike the former, do not possess locus standi to bring a removal application in
terms of section 20(1) because their “interest” lay merely in their possible appointment
as trust beneficiaries through the exercise of the trustees’ discretion. The court regarded
this “interest” as insufficient to constitute the “interest in the trust property” required by
section 20(1) to vest potential beneficiaries with locus standi to bring a removal applica-
95
tion. It therefore appears from the Nkotobe case that the legal protection afforded a con-
tingent trust beneficiary is indeed greater than the protection afforded a potential
beneficiary under a discretionary trust because not all the remedies available to the for-
mer are also available to the latter.
8.4.2.2 The right to trust income

If a trust instrument makes an out-and-out and unconditional award of trust income to a
particular trust beneficiary, that beneficiary obtains a vested personal right against the trustee
to claim payment of the trust income when it is due. A testamentary trust beneficiary obtains
this right upon the creation of the trust at the moment of delatio, whereas an inter vivos trust
96
beneficiary obtains this right upon the acceptance of his or her income benefit.
________________________
90 1996 (4) SA 617 (A) 628I.

91 Claassen 2014 Acta Juridica 243 at 262–263.
92 See 8.4.1 regarding the right to proper trust administration. See also generally Coetzee May 2007 De
Rebus 24.
93 [2015] ZAECBHC 12 (15 May 2015).
94 See 6.13.6 regarding trustee removal by the High Court.
95 At paras 13–15.
96 See 8.3.
171
The following trust provision appears in A’s will:

“I appoint B as the income beneficiary to 50% of the annual trust income. The first payment of
income to B must occur two years after my death and then on a yearly basis thereafter for a
period of ten years.”
This provision bestows a personal right on B to claim from the trustee payment of 50% of
the annual trust income during the stipulated ten-year period. This right vests in B on A’s
death – dies cedit therefore occurs on A’s death and the personal right constitutes an asset
in B’s estate from the moment of vesting. B can, however, only enforce this right by
claiming payment of 50% of the trust income when the income becomes due and dis-
tributable, namely, two years after A’s death and then annually thereafter for the next
decade – dies venit therefore occurs at these later times. Should B die at any time after
A’s death but prior to the end of the combined two-year waiting and ten-year payment
period, the vested personal right to receive trust income will, in the absence of trust pro-
visions to the contrary, devolve on B’s successors and they can claim payment of the
trust income for the remainder of the period. This vested right also forms part of B’s es-
tate in the event of B’s insolvency during this time.
If a trust instrument provides that an income beneficiary’s acquisition of a personal right to
claim payment of trust income from the trustee is not immediate but instead contingent or
conditional on the occurrence of an uncertain future event, the right to trust income will vest
in that beneficiary only if the contingency happens or the condition is fulfilled.
“I appoint B as the trust’s income beneficiary. The trust income must however be accumulated
for a period of ten years after my death and B will become entitled to the trust income only if
the trust generates a total net income of at least R5 million over the accumulation period.”
This provision does not bestow a vested right to trust income on B when A dies – dies
cedit does not therefore occur on A’s death. This is because A prescribed a condition that
must be fulfilled in order for a right to trust income to vest in B, namely, that the trust
must generate net income of at least R5 million over the ten-year accumulation period. It
is uncertain at the time of the trust’s creation on A’s death whether or not this goal will be
attained. B therefore holds a contingent right (in the strict sense) to trust income during
97
the accumulation period. If the trust indeed yields net income of at least R5 million after
ten years, the condition in regard to B’s acquisition of a personal right to claim trust in-
come will have been fulfilled and B will be vested with that right at the end of the accu-
mulation period; moreover, B can enforce the personal right at that time – dies cedit and
dies venit will thus occur for B at the end of the accumulation period. If, on the other
hand, the trust fails to generate the prescribed amount of net trust income after ten years,
the condition in regard to B’s acquisition of a personal right to claim trust income will not
have been fulfilled and no such right will vest in B. B’s contingent right will not have been
converted into a vested right and B will not be entitled to receive any trust income. The
trust income will then devolve in terms of any alternative arrangement stipulated in A’s
98
will or, in the absence of any such alternative testamentary devolution, in terms of the
law of intestate succession. Should B die at any time during the accumulation period, no
right to trust income will form part of B’s deceased estate and no such right will devolve
on B’s successors. According to Stander, B’s contingent right to trust income will form
99
part of B’s estate in the event of B’s insolvency during the accumulation period.
________________________
97 See 8.4.2.1 regarding a contingent right.

98 See 8.5 regarding possible alternative devolutions.
99 Stander 1999 JJS 145 at 155. See also 8.4.2.1.
172
If a trust instrument endows a trustee with a discretion to appoint an income beneficiary from
a group or class of potential beneficiaries, the right to trust income will vest in the appointed
beneficiary only once the trustee exercises the discretion in that beneficiary’s favour.

“I direct that the trust income must be accumulated for a period of ten years after my death.
My trustee is endowed with a discretion to appoint either B or C as the trust’s income benefi-
ciary at the end of the ten-year period.”
This provision bestows on the trustee a discretion to appoint a single income beneficiary
from the two potential beneficiaries that A identified in the will. In this scenario, a benefi-
ciary acquires a vested personal right against the trustee to claim payment of the trust
income only if the trustee exercises the discretion in that beneficiary’s favour. Therefore,
neither B nor C obtains a vested right to trust income on A’s death. According to the defi-
100
nition of a contingent right advanced in Stern and Ruskin v Appleson, B and C also do
not hold contingent rights (in the strict sense) to the trust income during the accumulation
period. Should either B or C die during the accumulation period, no right to trust income
will form part of the deceased’s estate and no such right will devolve on the deceased’s
successors. Moreover, no right to trust income will form part of B or C’s respective estates
101
in the event of either of them becoming insolvent during the accumulation period. If
the trustee exercises the discretion in B’s favour at the end of the accumulation period, an
enforceable right to trust income will vest in B at that time – dies cedit and dies venit will
thus occur for B upon the trustee’s exercise of the power of appointment in B’s favour.
The following provision appears in an inter vivos trust deed:

“The trustee must pay annually the full amount of the trust income to any one of the trust
founder’s four children. The trustee is endowed with the discretion to determine which one of
the four children will become entitled to the trust income in any given year. The payment of
trust income must continue for a period of ten years after the creation of the trust.”
This provision bestows on the trustee a discretion to appoint annually a single income
beneficiary from the founder’s four children – the children therefore constitute the class
of potential beneficiaries designated in the trust instrument. In this scenario, a beneficiary
acquires a vested personal right against the trustee to claim payment of trust income in a
particular year only if the trustee exercises the discretion in that beneficiary’s favour, the
trustee offers that year’s income to that beneficiary, and that beneficiary accepts the offer
of the trust income. A beneficiary’s acceptance in this scenario does not operate as an
acceptance of any future offer of income that may be made to him or her during the stip-
ulated ten-year period: a beneficiary’s acceptance of the trustee’s offer of trust income is
effective only in the year in which the offer is made and, if the trustee selects the same
beneficiary in a later year, the trustee must make a new offer of trust income to that ben-
102
eficiary and the beneficiary must accept that offer anew.
________________________
100 1951 (3) SA 800 (W). See 8.4.2.1 regarding the Stern case.
101 Stander 1999 JJS 145 at 151 and 155–156.
102 Van Zyl Inter Vivos Trust 189.
173
8.4.2.3 The right to trust capital

8.4.2.3.1 A capital beneficiary under an ownership trust
If a trust instrument makes an out-and-out and unconditional award of trust capital to a trust
beneficiary, that beneficiary obtains a vested personal right against the trustee to claim
delivery of the trust capital when it is due. A testamentary trust beneficiary obtains this right
upon the creation of the trust at the moment of delatio, whereas an inter vivos trust benefi-
103
ciary obtains this right upon acceptance of his or her capital benefit. Such a vested right is,
however, not necessarily immediately enforceable – a beneficiary’s right to trust capital
usually becomes enforceable only when the income beneficiary’s right to trust income ceases
which normally (but not necessarily) happens when the trust terminates.

“I appoint my surviving spouse, B, as the trust’s income beneficiary and our only child, C, as
the trust’s capital beneficiary. My spouse must receive trust income for the remainder of her
lifetime. The trust must terminate on the death of my spouse, at which time my trustee must
deliver the trust capital to C.”
This provision bestows a personal right on C to claim delivery of the trust capital from the
trustee. This right vests in C when A dies – dies cedit therefore occurs on A’s death and
the personal right constitutes an asset in C’s estate from the moment of vesting. C can,
however, enforce this right by claiming delivery of the trust capital only when the capital
becomes due and distributable, namely, when the trust terminates on B’s death. This is
because B’s income benefit will cease when she dies – dies venit for C therefore occurs on
B’s death and the resultant termination of the trust. Should C die at any time between A
and B’s respective deaths, the vested personal right to receive trust capital will, in the
absence of trust provisions to the contrary, devolve on C’s successors and they can claim
delivery of the trust capital on the trust’s termination. This vested right also forms part of
C’s estate in the event of C’s insolvency during the period between A and B’s respective
deaths.
If a trust instrument provides that a capital beneficiary’s acquisition of a personal right to

claim payment of trust capital from the trustee is not immediate but rather contingent or
conditional upon the occurrence of an uncertain future event, the right to trust capital will vest
in that beneficiary only if the contingency happens or the condition is fulfilled.

“I appoint my surviving spouse, B, as the trust’s income beneficiary. My spouse must receive
trust income for the remainder of her lifetime. The trust must terminate on the death of my
spouse and I appoint as the trust’s capital beneficiaries only those of our four children who sur-
vive my spouse.”
This provision does not bestow a vested right to a share of the trust capital on any of A
and B’s four children when A dies – dies cedit does not therefore occur for any of the four
children on A’s death. This is because A prescribed a condition that must be fulfilled in
order for a right to a share of the trust capital to vest in each of the four children, namely,
that a child must be alive when B dies. It is uncertain at the time of the trust’s creation on
continued
________________________
103 See 8.3.
174
A’s death which (if any) of A and B’s four children will survive B. Each of the four children
therefore holds a contingent right (in the strict sense) to a share of the trust capital while
104
B is alive. The condition of survivorship in regard to a particular child’s acquisition of a
personal right to claim a share of the trust capital will be fulfilled if that child is indeed
alive when B dies. Each surviving child will, on B’s death, therefore be vested with a per-
sonal right to claim a proportional share of the trust capital; moreover, each surviving
child can enforce the personal right at that time – dies cedit and dies venit will thus occur
for each surviving child on B’s death. If, on the other hand, a particular child predeceases
B, the condition in regard to that child’s acquisition of a personal right to claim a share of
the trust capital will not have been fulfilled. That child’s contingent right cannot convert
into a vested right and no right to claim a share of the trust capital will form part of that
child’s deceased estate to devolve on his or her successors. The deceased child’s share of
the trust capital will instead devolve in terms of any alternative arrangement stipulated in
105
A’s will or, in the absence of any such alternative testamentary devolution, in terms of
the law of intestate succession. According to Stander, a child’s contingent right to trust
capital will form part of his or her estate in the event of that child’s insolvency during the
106
period between A and B’s respective deaths.
If a trust instrument endows a trustee with a discretion to appoint a capital beneficiary from a
group or class of potential beneficiaries, the right to trust capital will vest in the appointed
beneficiary only once the trustee exercises the discretion in that beneficiary’s favour.

spouse, at which time my trustee must appoint either our daughter, C, or our son, D, as the
trust’s capital beneficiary.”
This provision bestows on the trustee a discretion to appoint a single capital beneficiary
from the two potential beneficiaries that A identified. In this scenario, a beneficiary ac-
quires a vested personal right against the trustee to claim delivery of the trust capital only
if the trustee exercises the discretion in that beneficiary’s favour. Neither C nor D there-
fore obtains a vested right to trust capital when A dies. According to the definition of a
107
contingent right advanced in Stern and Ruskin v Appleson, C and D also do not have
contingent rights (in the strict sense) to the trust capital during the remainder of B’s life-
time. Should either C or D predecease B, no right to trust capital will form part of the
deceased’s estate and no such right will devolve on the deceased’s successors. Moreover,
no right to trust capital will form part of C or D’s respective estates in the event of either
108
of them becoming insolvent during the period between A and B’s respective deaths. If
the trustee exercises the discretion in C’s favour when B dies, an enforceable right to trust
capital will vest in C at that time – dies cedit and dies venit will thus occur for C upon the
trustee’s exercise of the power of appointment in C’s favour.
________________________
104 See 8.4.2.1 regarding a contingent right.

105 See 8.5 regarding possible alternative devolutions.
106 Stander 1999 JJS 145 at 155. See also 8.4.2.1.
107 1951 (3) SA 800 (W). See 8.4.2.1 regarding the Stern case.
108 Stander 1999 JJS 145 at 151 and 155–156.
175
8.4.2.3.2 A capital
capital beneficiary under a bewind trust
A capital beneficiary under a bewind trust normally acquires a vested personal right to claim
transfer of the trust property to him or her. This personal right is usually exercisable against
the trust founder in the case of an inter vivos trust and against the executor of the trust found-
er’s deceased estate in the case of a testamentary trust. The beneficiary obtains a real right,
namely, that of ownership, in the trust property once that property is transferred to him or
her. The beneficiary’s real right is of course subject to the trustee’s administration of the trust
property for the beneficiary’s benefit.
109
An example of a bewind trust is found in Schaumberg v Stark where a testator’s will
provided:
“I bequeath my entire estate . . . to my wife . . . and declare at the same time that my estate
110
shall be managed as a whole for my heiress by . . . [my] . . . trustee.”
The testator’s wife was also entitled to the income from the deceased estate during the
remainder of her lifetime. The estate was to devolve on the children of the testator and
his wife on the wife’s death. The court had to establish the nature of the interests held by
the testator’s wife and their children under the trust. The court found that the appoint-
ment of a trustee is not in itself indicative of a trust founder’s intention that ownership in
the trust’s property must vest in that trustee. The court found that the testator’s dominant
intention, ascertained from the wording of his will, was to vest his entire estate in his
wife, with the necessary implication that he intended her to acquire ownership of all the
111
estate assets subject to the trustee’s administration of those assets for her benefit. In
112
Commissioner, South African Revenue Service v Dyefin Textiles (Pty) Ltd the court adhered
to this characterisation of a bewind trust when it said that this type of trust is one where
the trust founder makes a direct gift or bequest to a beneficiary but vests the control of
113
the trust assets in a trustee or administrator.
8.5 The devolution of trust benefits to trust beneficiaries

Trust benefits devolve to a trust’s beneficiaries in accordance with the prescripts of the trust
instrument. A number of legal rules are nevertheless pertinent to the devolution of trust
benefits. These rules pertain to the substitution of trust beneficiaries, the accrual of trust
benefits among co-beneficiaries and the acceleration of trust benefits.
8.5.1 Substitution
A trust instrument can provide for the substitution of trust beneficiaries in two ways, namely,
through direct substitution (Afrikaans: direkte substitusie) and fideicommissary substitution
(Afrikaans: fideikommissêre substitusie). Direct substitution occurs when an appointed (insti-
tuted) trust beneficiary is substituted by another beneficiary in the case where the former
cannot or does not want to receive a trust benefit. A testamentary trust beneficiary who
predeceases the trust founder or who is for some reason disqualified from benefitting from
________________________
109 1956 (4) SA 462 (A).

110 At 466E.
111 At 468C–G.
112 2002 (4) SA 606 (N).
113 At 611G. See also Du Toit 2011 TSAR 540.
176
114
the founder’s will, cannot receive a benefit from a trust created in terms of that will. A trust
115
beneficiary who repudiates a trust benefit does not want to receive that benefit. The trust
instrument can provide for an alternative devolution of the trust benefit that the appointed
beneficiary cannot or does not want to receive.

spouse. I appoint our daughter, C, as the trust’s capital beneficiary upon the trust’s termination.
If C predeceases my spouse or repudiates the trust capital at the trust’s termination, my neph-
ew, D, will become entitled to the trust capital.”
In the above provision, C is the appointed capital beneficiary and D is C’s direct substitute
in respect of the capital benefit. Direct substitution therefore creates an either/or scenar-
io: either the appointed beneficiary becomes legally entitled to the trust benefit or, if the
appointed beneficiary is unable or unwilling to do so, the trust benefit diverts to the direct
116
substitute.
Testamentary direct substitution can also occur by operation of law in terms of section 2C(2)
of the Wills Act. This subsection provides that if a testator’s descendant, whether as a mem-
ber of a class or otherwise, would have been entitled to a testamentary benefit if he or she
had not predeceased the testator, had not been disqualified from inheriting, or had not after
the testator’s death repudiated the benefit, such a benefit shall, subject to what is provided in
117
section 2C(1), devolve per stirpes to the descendants of that descendant, unless the context
118
of the will indicates otherwise.
Fideicommissary substitution occurs when an initial beneficiary, called the fiduciary or fi-
duciarius, is substituted by a successive beneficiary, called the fideicommissary or fideicom-
missarius, upon the lapse of a stipulated time period or the fulfilment of a prescribed
119
condition.
The following bewind trust provision appears in A’s will:

“I bequeath my entire estate to my surviving spouse, B. My trustee must administer the estate
for my spouse for the remainder of her lifetime. The estate must pass to our son, C, on my
spouse’s death. My trustee must administer the estate for C until he reaches the age of twenty
five, at which time the trust will terminate and C will gain full control over the estate.”
In the above provision, a fideicommissum is incorporated in the trust institution with B as
the fiduciary and C as the fideicommissary in respect of the trust estate. Fideicommissary
substitution therefore creates a first/second scenario: the fiduciary receives the trust ben-
efit first and the fideicommissary is the second taker of the benefit at the time when the
120
fiduciary’s right to the benefit ceases.
________________________
114 See De Waal and Schoeman-Malan Law of Succession 116–125 and Jamneck et al Law of Succession 113–
123 regarding disqualification from inheritance.
115 See 8.3 regarding the repudiation of trust benefits.
165 regarding testamentary direct substitution.
117 See 8.5.2 regarding s 2C(1) of the Wills Act.
169 regarding s 2C(2) of the Wills Act.
179 regarding the testamentary fideicommissum.
177
8.5.2 Accrual (the ius accrescendi

accrescendi)
scendi)
The right of accrual (ius accrescendi) (Afrikaans: reg van aanwas) is the right of a beneficiary to
claim proportionally a benefit that a co-beneficiary cannot or does not want to receive. The
121
right of accrual is a feature of testamentary succession and accrual thus operates primarily
in regard to testamentary trusts, but there appears to be no reason why it cannot also operate
in respect of inter vivos trusts. Whether or not accrual operates in a trust beneficiary’s favour
depends on the provisions of the trust instrument. A trust instrument can expressly prescribe
that accrual must or must not operate.

spouse. I appoint our son, B, and our daughter, C, as the trust’s capital beneficiaries upon the
trust’s termination. If either B or C predeceases my spouse or repudiates his or her share of the
trust capital at the trust’s termination, that share must accrue to the other capital beneficiary.”
This provision expressly instructs that the half share of a capital beneficiary who cannot
or does not want to receive trust capital at the trust’s termination must accrue to the oth-
er capital beneficiary in order for the latter beneficiary to receive the trust capital in its
entirety.
If the trust instrument is not clear on whether or not accrual must take place, certain indica-
tions (conjecturae) in the trust instrument must be considered. The method of joinder of co-
122
beneficiaries is an important indication in this regard. The different methods of joinder are:
• joinder by the thing (asset) only (joinder re tantum): co-beneficiaries are appointed to the
same benefit in different provisions of a trust instrument without the allocation of a specif-
ic share in the trust benefit to each beneficiary:
The following trust provisions appear in A’s will:

“Clause 1: I award trust income to B.
Clause 2: I award trust income to C.”
B and C are joined re tantum in respect of the trust income. This method of joinder gives
rise to a presumption (or inference) in favour of accrual unless the trust instrument and
the surrounding circumstances point to the contrary. Therefore, if B cannot or does not
want to receive half of the trust income on A’s death, that half will accrue to C and C will
receive all the trust income.
________________________
184 regarding the common law position on testamentary accrual.
122 De Waal and Schoeman-Malan Law of Succession 200–202; Jamneck et al Law of Succession 183–184.
178
• joinder by the thing and the words (joinder re et verbis): co-beneficiaries are appointed to
the same benefit in the same provision of the trust instrument without the allocation of a
specific share in the trust benefit to each beneficiary:

“Clause 1: I award trust income to B and C.”
B and C are joined re et verbis in respect of the trust income. This method of joinder gives
rise to a presumption (or inference) in favour of accrual unless the trust instrument and
the surrounding circumstances point to the contrary. Therefore, if B cannot or does not
want to receive half of the trust income on A’s death, that half will accrue to C and C will
receive all the trust income.
• joinder by the words only (joinder verbis tantum): co-beneficiaries are appointed to the
same benefit in the same provision of the trust instrument with the allocation of a specific
share in the trust benefit to each beneficiary:

“Clause 1: I award trust income to B and C in the ratio 1:3.”
B and C are joined verbis tantum in respect of the trust income. This method of joinder
gives rise to a presumption (or inference) against accrual because the allocation of specif-
ic shares to particular beneficiaries suggests that a beneficiary should not receive more
than his or her allocated share. Therefore, if B cannot or does not want to receive one
quarter of the trust income on A’s death, that quarter will not accrue to C because C’s
allocation is expressly restricted to three quarters of the trust income. The presumption
(or inference) against accrual in the case of joinder verbis tantum is, however, not auto-
matic, but remains dependent on the trust founder’s probable intention regarding the
operation of accrual. If the trust instrument and the surrounding circumstances therefore
point to an intention that accrual must operate notwithstanding the utilisation of joinder
123
verbis tantum, accrual will be permitted.
Section 2C(1) of the Wills Act prescribes statutory accrual in favour of a testator’s surviving
spouse when a descendant of the testator repudiates a testamentary benefit. This subsection
therefore also applies when a trust beneficiary who is a descendant of the testator repudiates
a testamentary trust benefit. The subsection reads as follows:
“If any descendant of a testator, excluding a minor or mentally ill descendant, who, together with
the surviving spouse of the testator, is entitled to benefit in terms of a will renounces his right to
receive such a benefit, such benefit shall vest in the surviving spouse.”
This subsection supersedes the common law rules explained above. When this subsection
applies, repudiation by a trust beneficiary (who is a descendant of the testator) of the right to
share in a trust benefit results in the repudiated share vesting only in the testator’s surviving
124 125
spouse (or spouses) and not proportionally in all the other co-beneficiaries to that benefit.
________________________
123 Lello v Dales 1971 (2) SA 330 (A); Griessel v Bankorp Trust Bpk 1990 (2) SA 328 (O).
124 See Moosa v Harneker 2017 (6) SA 425 (WCC) and Moosa v Minister of Justice 2018 (5) SA 13 (CC) regard-
ing the application of s 2C(1) of the Wills Act with regard to polygamous Muslim marriages.
125 See De Waal and Schoeman-Malan Law of Succession 203 and Jamneck et al Law of Succession 166–169
regarding s 2C(1) of the Wills Act.
179
8.5.3 Acceleration of trust benefits

Acceleration of benefits (Afrikaans: vervroeging van voordele) concerns the question whether a
capital beneficiary can claim the trust capital before the time set in the trust instrument for
capital distribution. Trust instruments frequently provide for distributing trust capital to the
capital beneficiaries when the trust terminates on the occurrence of a specific event such as
the death of a person; the attainment of a particular age by a trust beneficiary; or a fixed date
set in the trust instrument. Can a capital beneficiary claim the trust capital before the time set
in the trust instrument for capital distribution in the event that the income beneficiary repudi-
ates the trust income at the trust’s creation or, having accepted the trust income at the trust’s
creation, subsequently repudiates it? Put differently, can a trust’s capital benefit accelerate in
favour of the capital beneficiary in the event that the income beneficiary repudiates the
income benefit at the trust’s creation or at any time thereafter but prior to the time set in the
trust instrument for capital distribution?
This question is, in the absence of indications to the contrary in the trust instrument, usual-
ly answered in the affirmative when an ownership trust is at hand and a right to trust capital
vested in the capital beneficiary but the beneficiary’s enforcement of that right is suspended
only because the income beneficiary has an intervening right to receive trust income.
The following ownership trust provision appears in A’s will:

“I appoint my surviving spouse, B, as the trust’s income beneficiary and our only child, C, as
the trust’s capital beneficiary. My spouse must receive trust income for the remainder of her
lifetime. The trust must terminate on the death of my spouse and my trustee must pay the trust
capital to C at that time.”
This bequest makes an out-and-out and unconditional award of trust capital to C. C there-
126
fore acquires a vested right to the trust capital when the trust is created on A’s death.
However, B’s intervening right to receive the trust income precludes C from immediately
enforcing the right to trust capital by claiming the capital benefit when A dies. C’s en-
forcement of the right to trust capital (dies venit) is therefore suspended until B’s right to
receive trust income ceases on B’s death. Should B in this scenario repudiate the income
benefit on A’s death or at any time prior to her own death, C’s vested right to trust capital
will normally accelerate and C can immediately claim delivery of the trust capital without
127
having to wait until B’s eventual death.
The question regarding the acceleration of benefits is, in the absence of indications to the
contrary in the trust instrument, usually also answered in the affirmative when a bewind trust
is at hand and a right to trust capital has not yet vested in the ultimate capital beneficiary
because the income beneficiary has an intervening right to receive trust income from the trust
estate that is vested in the income beneficiary.
The following bewind trust provision appears in A’s will:

“I bequeath my entire estate to my surviving spouse, B. My trustee must administer the estate
for my spouse and I appoint my spouse as the income beneficiary in respect of all the income
generated by the trustee’s administration of the estate. My trustee must pay the estate income
annually to my spouse for the remainder of her lifetime. The estate must pass to our son, C, on
my spouse’s death.”
continued
________________________
126 See 8.4.2.3.1.

127 Louw v FWKP Albrecht Trust 1998 (3) SA 1048 (C) 1054G.
180
This bequest makes an out-and-out and unconditional award of trust income and capital
to B on A’s death. B’s rights in respect of the trust estate preclude C from being vested
with a right to that estate when A dies. C’s entitlement to the trust estate is suspended
until B’s entitlement to the trust estate and the income generated thereby terminates on
128
B’s death. Should B in this scenario repudiate the income and capital benefits on A’s
death or at any time prior to her own death, C’s capital benefit will normally accelerate
and C will immediately acquire a vested and enforceable right to the trust estate without
129
having to wait until B’s eventual death.
The question regarding the acceleration of benefits is more difficult to answer when a trust
130
instrument provides for direct substitution in the event that a capital beneficiary cannot or
does not want to receive the capital benefit.

spouse. I appoint our daughter, C, as the trust’s capital beneficiary on my spouse’s death. If C
predeceases my spouse, is disqualified from benefitting or repudiates the trust capital at the
trust’s termination, my nephew, D, will become entitled to the trust capital.”
It can be argued, on the one hand, that the appointment of D as C’s direct substitute in
the event that C cannot or does not want to receive the capital benefit on B’s death
demonstrates that A intended the identity of the actual capital beneficiary (whether C or
D) to be determined only on B’s death and that no acceleration of the capital benefit is
thus possible in the event that B repudiates the income benefit on the creation of the trust
131
when A dies or at any time prior to her own death. Some courts support this view, in
particular, in instances where capital beneficiaries are appointed under class bequests –
the danger in permitting the acceleration of capital benefits when class bequests are at
hand is that some future members of the beneficiary class may be deprived of their bene-
fits if those benefits are distributed prior to the time set in the trust instrument for capital
132
distribution. It can be argued, on the other hand, that the provision for D’s direct substi-
tution of C is no bar against the acceleration of C’s capital benefit in the event that B re-
pudiates the income benefit on the creation of the trust when A dies or at any time prior
to her own death. This is because A’s primary intention was to bestow the capital benefit
on C (the appointed beneficiary) and not on D (the direct substitute, who is to receive the
benefit only in the event that the appointed beneficiary cannot or does not want to bene-
133
fit from the trust capital). Some courts support this view, and it appears to be the ap-
134
proach also favoured by most commentators. However, the answer to this question
ultimately remains one of interpretation of the particular trust instrument to establish the
135
trust founder’s intention regarding the acceleration of benefits.
________________________
128 See 8.4.2.3.2.

129 Louw v FWKP Albrecht Trust 1998 (3) SA 1048 (C) 1054H.
130 See 8.5.1 regarding direct substitution.
131 Ex parte Alberts 1944 TPD 187; Landby v De Wet 1959 (1) SA 15 (N).
132 Hirschsohn v Horn 1990 (1) SA 769 (C).
133 Ex parte Marais 1953 (4) SA 620 (T); Louw v FWKP Albrecht Trust 1998 (3) SA 1048 (C).
134 Corbett et al Law of Succession 155. See also the analysis of the jurisprudence on point by Cronjé and
Roos Law of Succession 232–235.
135 Louw v FWKP Albrecht Trust 1998 (3) SA 1048 (C) 1055H–I.
181
8.6 The remedies of trust beneficiaries

8.6.1 The classification
classification of beneficiary rem
remedies
emedies
The remedies afforded trust beneficiaries in terms of South African law can be classified in
the following ways:
• in terms of the distinction between statutory remedies and common law remedies: the
former are bestowed by the Act whereas the latter do not originate in legislation;
• in terms of the distinction between administrative and substantive remedies: the statutory
remedies afforded trust beneficiaries are principally of an administrative nature whereas
the common law remedies are mostly substantive in nature insofar as these are aimed at
making good any loss suffered or deficit occasioned as a result of a trustee’s maladmin-
istration of trust property, or recovering any trust property that a trustee disposed of erro-
neously or unlawfully; and
• as far as substantive remedies are concerned, in terms of the distinction between direct
136
actions and representative actions: in Gross v Pentz the court used the term “direct ac-
tions” to denote those actions that a trust beneficiary brings in his or her own right to rem-
137
edy losses or deficits that he or she sustained as a trust beneficiary, whereas the term
“representative actions” was used to denote actions brought on behalf of a trust, for exam-
ple, to nullify a transaction entered into by the trustee and then to recover trust property
acquired by a third party through that transaction, or to recover damages from a third par-
138
ty for any loss that the third party caused to the trust.
8.6.2 A trust beneficiary’s locus standi

Corbett CJ stated the general rule in Gross v Pentz that a trust beneficiary has locus standi to
institute a direct action against a trustee but that only a trustee has legal standing to institute a
139
representative action on behalf of a trust. The Chief Justice nevertheless acknowledged that
an exception to this general rule exists in the law regarding the executorship of deceased
estates insofar as an errant executor, in other words, one whose own delinquent conduct in
respect of a deceased estate is impeached, will not sue him- or herself for any loss suffered by
the estate as a result of his or her delinquency. The Privy Council affirmed this exception in
140
Beningfield v Baxter, a case taken on appeal to the Privy Council from the Supreme Court of
141
Natal. Corbett CJ termed this the “Beningfield exception” in the Gross case and held that this
exception must also apply to a trust beneficiary because an errant trustee, just like an errant
executor, will not sue him- or herself for the recovery of damages or the return of trust prop-
erty where the damage or the loss of trust property was the result of that trustee’s delinquen-
142
cy. A trust beneficiary therefore has locus standi to bring a representative action if the
trustee is precluded from suing on behalf of the trust by reason of either his or her own
delinquency or because the trustee is for some other reason, for example, the existence of a
143 144
conflict of interest, prevented from suing on the trust’s behalf.
________________________
136 1996 (4) SA 617 (A).

137 At 625F.
138 Ibid.
139 At 625B–C and 625G–H.
140 (1886) 12 AC 167 (PC).
141 A final appeal against any South African court’s judgment could be made to the Privy Council in Great
Britain until 1950.
142 Gross v Pentz 1996 (4) SA 617 (A) 628G–H.
143 Bafokeng Tribe v Impala Platinum Ltd 1999 (3) SA 517 (BHC) 549A–C.
144 See also Standard Bank of South Africa Ltd v July [2018] ZASCA 85 (31 May 2018) for further confirmation
of these principles.
182
Furthermore, Corbett CJ opined in Gross v Pentz that a contingent trust beneficiary possess-
es locus standi to bring a representative action for the recovery of damages on behalf of a
trust. The Chief Justice found that, while such a beneficiary does not (as yet) enjoy any vested
right to the trust’s future income and/or capital, that beneficiary nevertheless enjoys a vested
145
interest “in the proper administration of the trust”. Corbett CJ, however, emphasised that,
in order to sustain a direct action, a beneficiary must possess a vested right to a trust bene-
146
fit. Thus a contingent beneficiary does not possess locus standi to bring a direct action
147
against a trustee. In Nkotobe v Bengu potential beneficiaries under a discretionary trust were
also denied locus standi to bring an application for the removal of trustees in terms of section
148
20(1) of the Act. This subsection prescribes that only the Master or someone with an “inter-
est in the trust property” can bring a removal application. The court held in the Nkotobe case
that the potential beneficiaries’ interests under the discretionary trust lay merely in their
possible selection as trust beneficiaries through the exercise of the trustees’ discretion and
that this interest is not the same as the interest in trust property required in terms of section
20(1) of the Act to vest them with locus standi to bring a removal application. The nature and
extent of a trust beneficiary’s right(s) under a trust therefore have a direct bearing on that
beneficiary’s locus standi to bring some administrative and substantive actions against a
149
trustee.
8.6.3 Administrative remedies in terms of the Trust Property Control Act

150
The Master performs an array of functions with regard to trusts and trustees. These func-
tions are predominantly administrative in nature but the Act also bestows more substantive
interventionist powers on the Master, for example, to hold a trustee accountable and to
remove a trustee from office. The Master’s administrative and interventionist functions bear
directly on a trust beneficiary’s administrative remedies:
• section 18 of the Act instructs the Master to release a copy of any document relating to
trust property to a trustee, a trustee’s surety, a trustee’s representative, or any person who
151
in the Master’s opinion has a sufficient interest in such a document: this provision there-
fore enables a trust beneficiary (as someone with an interest in a trust document) to obtain
a copy of the trust instrument lodged with the Master and to acquaint him- or herself with
the content thereof, in particular with the trust instrument’s prescripts regarding the trus-
tee’s management of the trust property;
• section 19 of the Act determines that, should a trustee fail to account to the Master for his
or her (the trustee’s) trust administration or fail to perform any duty imposed on him or
her by the trust instrument, or by the law, the Master or any person with an interest in the
trust property may apply to the court for an order directing the trustee to account or to
152
perform the relevant duty: this provision therefore creates a mechanism for a trust bene-
ficiary (as someone with an interest in the trust property) to enforce a trustee’s general
obligation to perform all duties as required by the trust instrument and the law;
________________________
145 Gross v Pentz 1996 (4) SA 617 (A) 628I–J. See 8.4.1 regarding a trust beneficiary’s personal right to proper
trust administration.
146 At 626H–I.
147 [2015] ZAECBHC 12 (15 May 2015).
149 See 8.4.2.1 for a discussion on the Nkotobe case.
150 See 7.2.1 regarding the Master’s role in respect of trustees and trust administration.
151 See 5.3 regarding access to trust documents.
152 See 7.3.3 regarding failure by a trustee to account or to perform duties.
183
• section 20(1) of the Act stipulates that the High Court may, on application by the Master or
any person with an interest in the trust property, remove a trustee from office if the court
153
is satisfied that such a removal will be in the interests of the trust and its beneficiaries:
this provision allows a trust beneficiary (as someone with an interest in the trust proper-
154
ty) to approach the court, or to request the Master to do so, for the removal of an errant
trustee.
The Act also provides a trust beneficiary with a remedy in respect of decisions and actions
taken by the Master. Section 23 allows any person (not only one with an interest in trust
property) who feels aggrieved by an authorisation issued by the Master in terms of section
155 156
6(1) of the Act, an appointment of a trustee by the Master in terms of section 7 of the Act,
157
or a removal of a trustee by the Master in terms of section 20(2) of the Act, or by any
decision, order or direction of the Master made or issued in terms of the Act, to apply to the
High Court for relief. Section 23 requires the court to consider the merits of the matter, to
158
take evidence, and then to make any order the court deems fit.
8.6.4 Substantive remedies in terms of the common law

8.6.4.1 Remedies against the trustee
8.6.4.1.1 Aquilian action for breach of trust
A trust beneficiary’s principal substantive remedy against an errant trustee is a delictual claim
for the recovery of damages where the beneficiary sustains patrimonial (financial) loss be-
cause the trustee mismanaged the trust. Where a trustee therefore fails to meet the standard
of care, diligence and skill in respect of trust administration required by the common law as
159
well as section 9(1) of the Act, that trustee commits a delict, namely, breach of trust, and a
trust beneficiary can hold the trustee personally liable for any resultant patrimonial loss that
the beneficiary sustains. This will happen when a trustee, for example, misappropriates trust
assets; or disposes of or invests such assets in a manner not authorised by the trust instru-
ment; or where a trustee administers a trust negligently or carelessly, and the trustee’s delin-
160
quent conduct occasions patrimonial loss for a trust beneficiary. A trust beneficiary can
161
institute the actio legis Aquiliae against the trustee in these circumstances. The Aquilian
action is a general delictual action for the recovery of patrimonial damages. A trust benefi-
ciary can institute this action to recover the actual patrimonial loss he or she sustained as well
162
as any future patrimonial loss he or she will sustain as a result of a trustee’s breach of trust.
A trust beneficiary must satisfy all the requirements of Aquilian liability in order to achieve
success with the actio legis Aquiliae against an errant trustee. The beneficiary must therefore
show that:
• the trustee committed a positive act or omitted to act in circumstances where it was
required of him or her to act;
________________________

154 See, however, Nkotobe v Bengu [2015] ZAECBHC 12 (15 May 2015).
157 See 6.13.5 regarding trustee removal by the Master.
158 See 7.2.1.4 regarding judicial review of the Master’s actions.
159 See 7.3.1.4 regarding a trustee’s duty of care, diligence and skill and 6.7 regarding this duty as a compo-
nent duty of a trustee’s general fiduciary duty.
161 See generally Sackville West v Nourse 1925 AD 516; Boyce v Bloem 1960 (3) SA 855 (T). See also 6.11
regarding breach of trust by a trustee.
162 Corbett et al Law of Succession 420; De Waal and Schoeman-Malan Law of Succession 182.
184
• the trustee’s act or omission was wrongful;

• fault, either intent or negligence, exists on the trustee’s part;
• the beneficiary sustained patrimonial loss; and
• the beneficiary’s loss is not too remote, in other words, that a sufficiently close causal
connection exists between the trustee’s act or omission, on the one hand, and the loss that
the beneficiary sustained, on the other.
The requirement that the plaintiff must prove that he or she sustained patrimonial loss by
reason of the trustee’s breach of trust makes the actio legis Aquiliae available only to a trust
beneficiary with a vested right to a trust benefit. This is because only such a beneficiary will
be able to demonstrate that the trustee’s breach of trust occasioned patrimonial loss through
163
a diminution of the trust benefit to which that beneficiary is entitled. If the beneficiary
succeeds with this delictual action, the court will award damages to place the beneficiary in
164
the position he or she would have been in had the trustee not committed a breach of trust.
The actio legis Aquiliae for the recovery of patrimonial damages in this regard is thus a direct
action that a trust beneficiary institutes in his or her own right to remedy a loss or deficit that
165
he or she sustained. The Appellate Division’s judgment in Gross v Pentz provides authority
for the proposition that a trust beneficiary can also institute the actio legis Aquiliae against an
errant trustee in circumstances where the trust, rather than the beneficiary him- or herself,
sustained patrimonial loss as a result of the trustee’s breach of trust, but where the trustee’s
delinquency deters him or her from pursuing such an action. If the beneficiary succeeds with
this delictual action, the court will order that the damages are paid to the trust in order to
restore the trust to the position that it would have been in had the trustee not committed a
breach of trust. The actio legis Aquiliae for the recovery of patrimonial damages in this regard
is thus a representative action that a trust beneficiary institutes on behalf of a trust to remedy
166
a loss or deficit that the trust sustained. This action is, according to Gross v Pentz, also
167
available to a contingent trust beneficiary.
8.6.4.1.2 An action based on unjustified enrichment

A trustee is under a common law duty of impartiality that precludes him or her from unduly
168
profiting from trust administration. If a trustee indeed profits through improper dealings
with the trust property, a trust beneficiary can institute an action based on unjustified en-
169
richment against that trustee. South African law does not recognise a general enrichment
170
action – a trust beneficiary will therefore have to institute one of the specific enrichment
actions (also called condictiones) recognised under South African law against the errant trus-
tee. For example, the condictio furtiva can be instituted to recover trust property that a trustee
171
has stolen. In order to succeed with any specific action based on unjustified enrichment, it
is generally required that the defendant must have been unjustifiably enriched at the plain-
172
tiff’s expense. This requirement suggests that any action brought by a trust beneficiary
________________________
163 Pentz v Gross 1996 (2) SA 518 (C) 523A; Gross v Pentz 1996 (4) SA 617 (A) 626H.
164 Corbett et al Law of Succession 419–420; De Waal and Schoeman-Malan Law of Succession 182.
165 Gross v Pentz 1996 (4) SA 617 (A) 625F.
166 At 626G.
167 At 628I–629A.
168 See 7.3.2.3 regarding a trustee’s duty to act impartially.
169 Cameron 1999 ELR 341 at 356.
170 Laco Parts (Pty) Ltd t/a ACA Clutch v Turners Shipping (Pty) Ltd 2008 (1) SA 279 (W) par 22.
172 Laco Parts (Pty) Ltd t/a ACA Clutch v Turners Shipping (Pty) Ltd 2008 (1) SA 279 (W) par 22.
185
against a trustee based on the latter’s unjustified enrichment is a direct action that the benefi-
ciary institutes in his or her own right to remedy his or her impoverishment through a dimi-
nution in the trust benefit to which he or she is entitled.
8.6.4.1.3 Other remedies against a trustee

A number of other remedies are available to a trust beneficiary against an errant trustee:
• an action for the piercing of a trust’s veneer when a beneficiary was prejudiced by a
trustee’s unconscionable abuse of a trust through treating trust property as if it constituted
173
part of that trustee’s private property;
• an action to enforce the trust provisions, in particular, to compel the trustee to deliver a
174
trust benefit to the beneficiary when that benefit becomes due and distributable; and
• a prohibitory interdict to restrain a trustee from disposing of trust property in a manner not
175
authorised by the trust instrument.
8.6.4.2 Remedies against third parties

A third party who knowingly assists a trustee in committing a breach of trust is a joint wrong-
doer with that trustee, and a beneficiary with a vested right to a trust benefit can hold such a
176
third party personally liable through a direct action for breach of trust. The errant trustee
and the third party are jointly and severally liable for any patrimonial loss that the beneficiary
177
sustained. A beneficiary without a vested right to a trust benefit can claim the aforemen-
tioned relief on behalf of the trust through a representative action because the trustee’s and
the third party’s joint and several liability will in all likelihood deter the trustee from pursuing
relief on the trust’s behalf.
A trust beneficiary has a claim based on unjustified enrichment against any third party (in-
cluding a co-beneficiary) to whom the trustee erroneously transferred a trust asset or paid
trust money to which that beneficiary is entitled. The condictio indebiti is the appropriate
178
direct action available to the impoverished beneficiary. The condictio indebiti permits a
successful plaintiff to recover either the property erroneously transferred or its value from the
179
person who received the property without cause (sine causa). Furthermore, a trust benefi-
ciary can oblige a third party to restore trust property that the third party received from the
trustee in an unauthorised manner if the beneficiary can show that the third party had
knowledge that the trustee’s disposal of the property occurred in breach of the trust
________________________
173 See 7.6.2 regarding the piercing of a trust’s veneer.

174 Gross v Pentz 1996 (4) SA 617 (A) 625F–G; Corbett et al Law of Succession 420; De Waal and Schoeman-
Malan Law of Succession 182.
175 De Waal and Schoeman-Malan Law of Succession 182. Corbett et al Law of Succession 420 suggest that
even a beneficiary without a vested right to a trust benefit enjoys locus standi to request such a prohibito-
ry interdict.
177 Jowell v Bramwell-Jones 1998 (1) SA 836 (W) 881H–I and 897I–898A. Joint and several liability means that
each of the joint wrongdoers is individually liable for the beneficiary’s entire loss and that the beneficiary
can therefore choose against which wrongdoer he or she wishes to proceed. If the beneficiary succeeds in
claiming the totality of the damages from one of the joint wrongdoers, that wrongdoer has recourse
against the other wrongdoer in proportion to the latter’s contribution to the beneficiary’s loss.
178 Gross v Pentz 1996 (4) SA 617 (A) 625F–G; Corbett et al Law of Succession 420; Cameron 1999 ELR 341 at
356.
179 Visser v Hull 2010 (1) SA 521 (WCC) par 22.
186
180
provisions. The beneficiary can invoke the common law doctrine of notice to this end. The
beneficiary, in order to succeed with such a claim for restitution, must show that the third
party acquired the trust property with the actual knowledge that the trustee acted contrary to
181
the trust provisions in disposing of it. Some commentators are of the view that a beneficiary
can also compel a third party who acquired trust property gratuitously from a trustee (for
example, by way of donation) to restore that property even if the third party was unaware
182
that the disposition occurred in breach of the trust provisions. Other commentators main-
tain that an action based on unjustified enrichment – presumably to recover the value of the
183
disposed property – is more appropriate in this instance.
8.7 Successive beneficiaries and long-

long-term trust dispositions
The rule against perpetuities in Anglo-American law prevents the tying-up of property in long-
term or perpetual trusts by limiting the time within which interests under a trust must vest.
South African law does not have a rule against perpetuities and a trust can therefore remain
184
operative indefinitely under our law. Section 8(1) of the Immovable Property (Removal or
Modification of Restrictions) Act imposes a limitation on the operational effectiveness of any
restriction on the alienation of immovable property imposed by means other than a fidei-
commissum. Any such restriction is limited in terms of this subsection to the time of vesting of
a right to such property or its proceeds in the third successive beneficiary.
Restrictions of the kind envisaged in section 8(1) are, however, not frequently encountered
with trusts; on the contrary, trust founders usually vest trustees with wide powers to deal with
the trust property, including the power to alienate it. Even if restrictions are imposed on a
trustee’s power to alienate immovable trust property, section 8(2) provides that, subsequent
to the lifting of the restriction in terms of section 8(1), the immovable property concerned or
its proceeds remains in all other respects subject to the trust. Section 8 of the Immovable
Property (Removal or Modification of Restrictions) Act does not therefore establish a rule
against perpetuities in South African trust law, but merely limits the operational effectiveness
185
of any restriction on the alienation of immovable trust property.
Some commentators question the prudence of permitting long-term or perpetual trusts
because these trusts can have negative socio-economic consequences as social and economic
conditions change over time. These commentators advance, in particular, the potentially
detrimental effect of these trusts on trust beneficiaries’ interests as a potent reason for re-
186
stricting trusts’ duration.
________________________
180 Van der Merwe and Rowland Erfreg 353; De Waal and Schoeman-Malan Law of Succession 182. The
doctrine of notice is encapsulated in the Roman law maxim nemo ex suo delicto meliorem suam condi-
tionem facere potest, which means that no one may defeat another’s right for his or her own benefit if he
or she knows of that right’s existence.
181 Cameron 1999 ELR 341 at 357.
183 Van der Merwe and Rowland Erfreg 353.
185 Ibid.
186 Van der Merwe and Rowland Erfreg 631–638; Olivier et al Trustreg en Praktyk 4.4.
187
9
The Trust in Practice
9.1 Introduction
The trust, perhaps more so than most of its legal counterparts, lends itself to wide-ranging
applications in diverse circumstances. The Supreme Court of Appeal affirmed this truism in
1
Land and Agricultural Bank of South Africa v Parker when it said that the trust’s greatest virtue
is its flexibility and its greatest advantage is its relative lack of formality in creation and
2
operation. Although the Supreme Court of Appeal concurred in the Parker case with the
3
standpoint that the trust is an “all-purpose institution”, it also acknowledged that the trust
institution was designed primarily to protect those who are vulnerable or weak and to
4
safeguard the interests of those who are absent or deceased. It is in this light not surprising
that the trust is a popular tool in the hands of the legal and/or commercial practitioner who
looks after the financial interests of his or her clients.
No exposition on the fundamentals of South African trust law is therefore complete without
considering the trust’s utility in legal and commercial practice. This chapter provides a brief
explanation regarding the practical importance of the various types of trusts identified and
discussed in earlier chapters. This explanation focusses on the trust’s primary design as
identified in the Parker case, namely, as an instrument for the protection and safeguarding of
the financial interests of others. The chapter concludes with a look at a number of
miscellaneous practical trust matters.
9.2 The testamentary ownership trust

9.2.1 The advantages of a testamentary ownership trust over a
testamentary usufruct or fideicommissum
The trust is one of many testamentary institutions that a testator can use to dispose of his or
her property upon death. In fact, the testamentary trust is an extremely popular and
5
frequently-used institution to this end. A testator who wishes to benefit successive
beneficiaries in his or her will can either use a usufruct, fideicommissum or trust to do so. A
usufruct (Afrikaans: vruggebruik) is a personal servitude that gives the usufructuary the right to
use the bare owner’s property and to receive any fruits (proceeds) produced by that property,
6
subject to the obligation to eventually return that property to the bare owner. A
fideicommissum is an institution in terms of which a person (the fideicommittens) bequeaths
________________________
1 2005 (2) SA 77 (SCA).

2 At par 23.
3 Ibid.
4 At par 19.
5 Du Toit 2004 Obiter 336 at 349.
6 De Waal and Schoeman-Malan Law of Succession 164; Jamneck et al Law of Succession 179.
189
property to a particular beneficiary (the fiduciary or fiduciarius) subject to the prescript that,
after a particular time period has elapsed or a particular condition has been fulfilled, the
7
property must pass to a further beneficiary (the fideicommissary or fideicommissarius).
Testators frequently use these institutions for the economic protection of dependants (such as
surviving children and/or spouses) or to shield future generations from financial adversity.
However, the following are some of the trust’s principal advantages over the other two
institutions:
Usufruct and Fideicommissum Trust

The usufruct and fideicommissum are both The trust is a flexible institution that
operationally rigid and have little inherent permits a trustee to exercise wide powers,
flexibility. These institutions do not permit including those of a discretionary nature,
either the usufructuary or the fiduciary to bestowed by the trust instrument to
control the usufructuary or fideicommissary administer the trust property optimally.
property with powers, including the exercise Although a testamentary ownership trust’s
of discretions, which approximate the trustee is only the bare owner of the trust
10
powers of a full owner. A ususfructuary does property, this trustee is frequently vested
not own the usufructuary property and must with comprehensive powers of control that
11
moreover use it in such a way that it retains approximate those of a full owner. A trust
8
its essential qualities. A fiduciary, despite is thus better suited to cope with changing
owning the fideicommissary property when circumstances over time, including changes
that property is vested in him or her, cannot in the financial fortunes as well as the
freely alienate or burden that property and health, educational and other needs of its
must furthermore use it in such a way that beneficiaries than a usufruct or
9 12
its essential qualities remain intact. The fideicommissum.
usufruct and fideicommissum are thus not
well suited to contend with changes in the
personal circumstances of the various
beneficiaries under these institutions.
A usufructuary and fiduciary must maintain Trust beneficiaries are not obliged to
the usufructuary and fideicommissary maintain trust property. The duty to
property, and must do so at their own maintain trust property rests on the trustee,
13
expense. but he or she meets maintenance expenses
from the trust fund and not from his or her
14
own pocket.
continued
________________________
7 De Waal and Schoeman-Malan Law of Succession 147–148; Jamneck et al Law of Succession 169. See also
2.4.1.
8 De Waal and Schoeman-Malan Law of Succession 164; Jamneck et al Law of Succession 179.
9 De Waal and Schoeman-Malan Law of Succession 154; Jamneck et al Law of Succession 176–177.
10 See 1.5.2 regarding an ownership trust’s trustee’s bare ownership of the trust property.
11 See 7.4 regarding trustee powers with regard to trust administration.
13 Ibid 8.3.2–8.3.3.
14 See 6.9 regarding the meeting of expenses for the upkeep of trust property.
190
Usufruct and Fideicommissum Trust

The usufruct and fideicommissum both hold The trust instrument of a testamentary
the danger that the usufructuary or fiduciary ownership trust can empower the trustee to
may die at a time when either the bare withhold trust capital from the trust’s
owner of the usufructuary property or the capital beneficiary in the event that the
fideicommissary is unsuited to acquire full income beneficiary dies at a time when the
ownership and control of that property. The capital beneficiary is not yet sufficiently
bare owner or fideicommissary may, for knowledgeable and skilled to acquire full
example, be a minor at the time of the ownership and control of the trust capital.
usufructuary’s or fiduciary’s death and may
therefore lack the knowledge and skill to
manage the property without the assistance
of a knowledgeable and skilful parent or
15
guardian.
16
A usufructuary incurs income tax liability A discretionary testamentary ownership
for all income received from the trust permits the trustee to allocate trust
usufructuary property and a usufruct can income in accordance with the needs of the
17
have adverse capital gains tax and estate individual income beneficiaries, thus
18 19
duty implications for the bare owner. A spreading income tax liability between the
fideicommissum likewise can have adverse trust and those beneficiaries. The trustee’s
capital gains tax and estate duty discretion, if exercised prudently, can also
20
implications for the fideicommissary. mitigate or even negate an income or
21
capital beneficiary’s estate duty liability.
9.2.2 Particular applications of the testamentary ownership trust

9.2.2.1 Preserving the trust capital and generating trust income
The testamentary ownership trust is traditionally used to preserve the trust capital for the
benefit of the trust’s capital beneficiaries. These beneficiaries are more often than not the
testator’s descendants and/or other blood relatives. The trust is simultaneously used to
generate trust income which the trustee allocates to the income beneficiaries to meet their
financial needs. These beneficiaries are typically the testator’s spouse, children and/or other
blood relatives. The testamentary ownership trust thus meets the financial needs of a
testator’s surviving spouse, descendants and/or other blood relatives without burdening them
22
with the trust property’s control and management.
________________________
15 See Olivier et al Trustreg en Praktyk 8.3.2–8.3.3 for some of the difficulties that can arise from a
usufructuary’s or fideicommissary’s minority.
16 Income tax (Afrikaans: inkomstebelasting) is levied in terms of the Income Tax Act on the income that an
individual received during a particular year of assessment.
17 Capital gains tax (Afrikaans: kapitaalwinsbelasting) is levied in terms of the Income Tax Act on the
proceeds generated by the disposal of specific types of assets.
18 Estate duty (Afrikaans: boedelbelasting) is levied in terms of the Estate Duty Act on the value of a deceased
person’s estate.
20 Ibid 8.3.3.
21 Ibid 8.4.2.
22 De Waal 1999 TSAR 370 at 372; De Waal and Schoeman-Malan Law of Succession 166.
191
9.2.2.2 Providing for parents’ simultaneous

simultaneous deaths
deaths
Parents, in particular those with minor children, often make specific testamentary provision
for how their property must be dealt with in the event of their simultaneous deaths or in the
event that the one parent dies shortly after the other. They usually provide that, in such an
event, their property must be held in a testamentary ownership trust in favour of their minor
23
children (and/or other dependants). The trust’s trustee is then charged with using the trust
income to tend to the trust beneficiaries’ maintenance, educational, health and other needs,
whilst preserving the trust’s capital until these beneficiaries reach adulthood or otherwise
24
qualify to receive the trust capital.
9.2.2.3 Caring for persons with limited capacity

The testamentary ownership trust is ideal for holding property received from a testator’s
estate to care for the testator’s minor children, other minor dependants or persons who are of
limited capacity or otherwise incapable of managing their own affairs. It is best practice for
testamentary beneficiaries who lack legal capacity to act or who are otherwise impaired in the
management of their own affairs as well as beneficiaries who should be protected against
their own financial inexperience or injudiciousness to receive their testamentary benefits in
trust so that a responsible trustee can manage and preserve those benefits for them. A trust
created for the care of minors or incapacitated persons is called a special trust.
Section 1 of the Income Tax Act contains a dual definition of a special trust for the purpose
of the Act. The first type is one for certain special persons described in part (a) of the
definition and the second type, referred to in part (b) of the definition, pertains to a
testamentary trust for minors. The significance of the distinction between a special trust
and an ordinary trust for the purpose of the Income Tax Act is that the tax rate of the two
types of trusts differs insofar as the rate for an ordinary trust is fixed while the rate for a
special trust is determined on a sliding scale and is akin to the more beneficial rate
applicable to natural persons.
A trust for a special person in terms of part (a) of the Income Tax Act’s definition is a trust
created either by contract or by will solely for the benefit of one or more persons who has
or have a disability as defined in section 6B(1) of the Income Tax Act. This definition refers
to “a moderate to severe limitation of any person’s ability to function or perform daily
activities as a result of a physical, sensory, communication, intellectual or mental
impairment, if the limitation has lasted or has a prognosis of lasting more than a year and
is diagnosed by a duly registered medical practitioner in accordance with criteria
prescribed by the Commissioner [for the South African Revenue Service]”.
This definition of a special trust provides furthermore that more than one special person of
the same family can benefit from a single special trust. This provision comes with the
proviso that, upon the death of the last of these special persons, such a trust shall be
deemed not to be a special trust in respect of the years of tax assessment ending on or
after the date on which all such persons are deceased.
continued
________________________
23 Du Toit 2004 Obiter 336 at 353–354.

192
A trust for a special person in terms of part (b) of the Income Tax Act’s definition allows for
any testamentary trust to qualify as a special trust where at least one of the trust
beneficiaries is under 18 years of age on the last day of a particular year of tax assessment.
This means that each testamentary trust where the testator has relatives (such as his or her
surviving spouse and his or her descendants) as beneficiaries will qualify as a special trust
for income tax purposes if only one of these relatives is still a minor on the last day of a
particular year of assessment. Section 1 of the Income Tax Act defines a spouse in broad
terms to include a party to either a civil marriage or a customary union, a religious union,
25
and a same-sex or heterosexual union that is intended to be permanent.
9.3 The inter vivos ownership trust

9.3.1 Receiving bequests and maintenance awards
Estate owners frequently create inter vivos ownership trusts that are kept dormant so that
they can later receive testamentary or other bequests from the estate owners themselves or
26
from others. Channelling bequests into an inter vivos ownership trust instead of into an
estate owner’s private estate ensures that the private estate does not dramatically increase in
value. The trust is thus used to limit or even avoid the estate duty liability that will be due in
27
respect of the estate upon the estate owner’s death. The Appellate Division confirmed in
28
Kohlberg v Burnett that a testamentary bequest to an existing inter vivos trust is indeed valid.
However, that trust’s trustee is, in his or her official capacity, the true recipient of the bequest
to the trust and must administer the bequeathed property for the benefit of the trust
29
beneficiaries.
An inter vivos ownership trust can also be created for the specific purpose of receiving a
maintenance award payable to a surviving spouse from a deceased spouse’s estate. Section
2(1) of the Maintenance of Surviving Spouses Act awards such a maintenance claim to a
surviving spouse insofar as he or she is unable to meet his or her maintenance needs from his
or her own means and earnings. Section 2(3)(d) provides that the executor of the deceased
spouse’s estate can conclude an agreement regarding the surviving spouse’s maintenance
claim with the surviving spouse and the deceased’s heirs and legatees who have an interest in
such an agreement. This agreement can include the creation of an inter vivos trust and the
resultant transfer of assets, or a right in those assets, from the deceased spouse’s estate to the
trust in order for the trustee to administer those assets, or the right in those assets, to meet
30
the surviving spouse’s maintenance claim.
9.3.2 Freezing or pegging an estate’s

estate’s value
An inter vivos ownership trust is frequently used in estate planning to freeze or peg an estate’s
value during an estate owner’s lifetime. An estate owner looking to purchase assets that have
a potential for financial growth over time may be wary of the increase in the value of his or
her private estate that such a purchase will occasion in the long run and the adverse estate
duty implications that such an increase in his or her private estate’s value may yield upon his
________________________
25 See Pace and Van der Westhuizen Wills and Trusts B21.1.1.2 for a detailed discussion on the special trust.
See Geach Trust Law 465 regarding a special trust’s capital gains tax implications.
27 See also 9.3.2.
28 1986 (3) SA 12 (A).
29 At 24J–25A and 25F–26B.
30 See also Sonnekus 1990 TSAR 491 at 506.
193
or her death. Such an estate owner can instead create an inter vivos ownership trust and
instruct its trustees to purchase and manage those assets for the estate owner’s benefit. An
estate owner can likewise sell growth assets to an existing inter vivos trust on loan account. A
loan account (Afrikaans: leningsrekening) is created when a trust founder or someone else
lends money or assets to a trust and the trust is in turn indebted to the lender in the amount
borrowed, or to the value of the assets acquired, from the lender. An estate owner who uses
an inter vivos ownership trust to purchase growth assets or who sells growth assets to a trust
on loan account ensures that asset growth occurs in the trust and not in his or her private
estate, thus freezing or pegging the value of his or her private estate and avoiding the adverse
31
tax consequences attendant on a large estate upon death. For such a strategy to be effective,
it is vital to ensure that none of the trust assets will be regarded as deemed property of the
32
deceased at the time of his or her death in terms of s 3(3)(d) of the Estate Duty Act.
33
In Raath v Nel the respondent, as the director of and sole shareholder in a company, sold
all his shares and his loan account in the company as well as all his other business assets to
an inter vivos trust. The trust was established, on the advice of the respondent’s auditor, for
estate planning and estate duty purposes. The respondent, his wife and his auditor were the
trust’s trustees. Majiedt JA had no principled objection to this particular application of the inter
vivos trust and he regarded it as “perfectly legitimate” insofar as it made use of the trust as “a
34
convenient and useful tax and estate planning vehicle”. He, however, echoed the caution
35
sounded by Harms JA in Nieuwoudt v Vrystaat Mielies that condemned the creation of a trust
for estate planning purposes or to escape the constraints of corporate law, but where
36
everything else remained “as before”. Majiedt JA opined that the facts of the Raath case
pointed to the conclusion that the respondent, by transferring growth assets to the inter vivos
trust, sought to attain the legitimate advantage of a reduction in estate duty through freezing
or pegging the value of his private estate but also impermissibly sought to retain the control,
37
and the advantages incidental to the ownership, of the trust assets. Such a stratagem clearly
falls foul of the caution sounded in the Nieuwoudt case.
9.3.3 Caring for persons with limited capacity

The inter vivos ownership trust, like its testamentary counterpart, is ideally suited to the
management and preservation of property on behalf of minors and/or other persons of
38
limited capacity or those otherwise incapable of managing their own affairs.
9.3.4 Providing a safeguard against insolvency and personal indebt

indebtedness
debtedness
Anglo-American law is familiar with the protective trust or spendthrift trust that provides a
safeguard against a trust beneficiary’s insolvency or personal indebtedness. The beneficiary is
usually entitled to benefit from such a trust during his or her lifetime, but the trust instrument
prescribes that the beneficiary’s right to benefit will cease if he or she becomes insolvent or if
________________________
31 Geach Trust Law 472. Loan accounts can, however, be used to circumvent or avoid tax liability and s 7C
of the Income Tax Act thus imposes measures to prevent an estate owner from avoiding estate duty and
donations tax liability by transferring assets to a trust on an interest-free or low interest-bearing loan
account: see Geach Trust Law 472–475 for a discussion on s 7C.
33 2012 (5) SA 273 (SCA).
34 At paras 13 and 14. See also Rudman v Road Accident Fund 2003 (2) SA 234 (SCA).
35 2004 (3) SA 486 (SCA) paras 16 and 17.
36 See 7.6.1 regarding this caution in the Nieuwoudt case.
37 Raath v Nel 2012 (5) SA 273 (SCA) par 14.
38 See 9.2.2.3 regarding the testamentary ownership trust’s application for this purpose.
194
his or her personal indebtedness exceeds a prescribed limit. South African law is amenable to
such a protective trust arrangement, in particular, because our law accepts that a trust’s object
is not unlawful merely because that trust protects a trust beneficiary against the claims of his
39
or her creditors.
A court, when called upon to adjudicate on such a protective trust, will nevertheless
scrutinise each particular instance closely to ensure that it does not violate the spirit and
purport of the law of insolvency, in general, and of the Insolvency Act, in particular. This is
because it is improper to allow a beneficiary the use and enjoyment of trust benefits while at
the same time denying that beneficiary’s creditors all claims against the beneficiary’s
40
beneficial interest under the trust. The following three principles can be distilled from Ruskin
41
v Sapire regarding a protective trust’s operational effectiveness:
• the trust instrument must direct that the trust beneficiary will completely and absolutely
forfeit his or her trust benefit in the event of that beneficiary’s insolvency or if his or her
personal indebtedness exceeds a prescribed limit;
• the trust instrument must provide for a gift-over of the benefit forfeited by the beneficiary
in favour of another person or class of persons; and
• the aforementioned gift-over may take the form of a discretionary power conferred on the
trustee to award the forfeited benefit to the spouse and/or children of the beneficiary who
42
forfeited the benefit.
9.3.5 Receiving damages awarded to a minor

Damages awarded to a successful minor plaintiff are customarily paid to the minor’s parent or
guardian. However, the parent or guardian may not possess the knowledge and skill to
administer such a monetary award properly. Where a real danger exists that the parent or
guardian may mismanage the award or where the parent or guardian lacks the knowledge
and skill to administer the award properly, the minor plaintiff’s attorney should consider
creating an inter vivos ownership trust in order for the trustee to receive the award and
43
administer it on behalf of and for the benefit of the minor. A court can also order the
44
creation of such a trust. In Dube v Road Accident Fund, damages in the amount of R3 million
were awarded to a minor from the Road Accident Fund. Fisher AJ ordered that a trust be
created to receive this monetary award so that a trustee could administer it on behalf of and
for the benefit of the minor. Fisher AJ advanced the following reasons for the judicial creation
of a trust in this case:
• it is common for the courts, either on application by a litigant or of their own volition, to
order that moneys payable to minors must be administered by persons other than those
45
minors’ parents or guardians;
• the courts, in carrying out their function as the upper-guardian of all minors, generally
accept that a minor’s parent or guardian has the power and the obligation to manage the
minor's financial affairs, but this does not mean that a court will invariably order that
________________________
39 Stander 1999 JJS 145 at 161–162.

40 Ibid at 158–159.
41 1966 (2) SA 306 (W).
42 See also Roothman January 1992 De Rebus 61 at 63.
43 Olivier et al Trustreg en Praktyk 8.5.2.5.8. For example, see Road Accident Fund v Arendse 2003 (2) SA 490
(SCA); Lochner v MEC for Health and Social Development, Mpumalanga 2014 JDR 34 (GNP).
44 2014 (1) SA 577 (GSJ).
45 At par 13.
195
monetary awards due to a minor must be paid to a parent or guardian without first having
regard to the circumstances under which such funds are likely to be administered and
46
applied;
• it is the court’s function, whenever a minor is awarded a large sum of money, to satisfy
itself that the person(s) to whom payment of the award is released will serve the minor’s
best interest in administering the award – this includes assessing the motivations,
qualifications and ability of a parent or guardian to administer the funds properly in the
47
event that it is proposed that the payment be made to such a parent or guardian;
• some of the factors that could militate against a parent or guardian receiving payment of a
monetary award made to a minor are: a conflict between the parent’s or guardian’s duty to
maintain the minor and the duty to administer the minor’s money; the fact of co-
guardianship by more than one guardian; a parent’s or guardian’s lack of education or
acumen in relation to financial matters; a poor relationship between the parent or guardian
and the minor; a poor relationship between parents or co-guardians; the parent or guardian
having insufficient funds to meet his or her own financial obligations; the parent or
guardian having been criminally convicted; any mental or physical illness on the parent’s
or guardian’s part; the parent’s or guardian’s insolvency; the lack of a family support
structure; the parent’s or guardian’s geographical distance from the minor; and a lack of
48
independence on the parent’s or guardian’s part;
• in circumstances such as those described above the creation of a trust to receive the
damages awarded to the minor is appropriate insofar as the trust is a protective and
flexible vehicle for administering such an award whilst also facilitating greater inclusivity
regarding the administration of the award than curatorship in terms of the Administration
49
of Estates Act or the payment of the award into the Guardian’s Fund in terms of the same
Act. This is because a trust permits the minor’s parent(s), guardian(s) and/or other
50
appropriately interested persons to actively participate in administering the award.
The court formulated a detailed order regarding the content of such a trust’s trust instrument
51
so as to ensure that the minor’s interest is optimally protected. De Waal views the decision
in the Dube case as a timely reminder that one of the fundamental considerations for creating
52
a trust is, as pointed out in Land and Agricultural Bank of South Africa v Parker, the protection
of the vulnerable and the weak, and that the trust instrument of a trust created to receive
53
damages due to a minor must evince this protective characteristic pertinently.
9.3.6 Facilitating divorce settlements

A divorce can involve dividing substantial marital assets between the divorcing spouses as
well as the one spouse paying a sizeable amount of maintenance to the other spouse and/or
the children born from the divorcing spouses’ marriage. If the irretrievable breakdown of the
spouses’ marriage is such that they at first cannot arrive at an amicable settlement regarding
________________________
46 At par 18.
47 At par 19.
48 At par 20.
49 The Guardian’s Fund (Afrikaans: Voogdyfonds) is administered by the Master. It receives funds that are
paid to the Master on behalf of various persons such as minors, persons incapable of managing their own
affairs and unborn heirs or legatees. The Master administers the moneys paid into the Guardian’s Fund in
the interests of these persons.
50 At par 22.
51 At par 26.
52 See 9.1.
53 2014 Annual Survey 953 at 966–967.
196
the division of assets and/or the payment of maintenance, the creation of an inter vivos
ownership trust, often mandated in the divorce decree, can facilitate reaching such a
settlement insofar as it provides the peace of mind that the trust’s trustee will, upon the
transfer of marital assets or a monetary sum to the trust in terms of the settlement, see to the
maintenance needs of a former spouse and/or the children born from the dissolved marriage,
54
while at the same time preserving the trust property for these beneficiaries’ future benefit.
9.4 The bewind trust

Bewind trusts can be created inter vivos or mortis causa. However, these find limited
55
application in practice and their use is greatly overshadowed by that of ownership trusts.
The principal constraint on the practical utility of the bewind trust, in particular insofar as it is
usable as a protective device, is that a bewind trust’s minor capital beneficiary (in whom the
56
trust capital vests subject to the trustee’s powers of administration) can halt the trustee’s
administrative control over the trust property as soon as that beneficiary attains the age of
57
majority. This is because South African law does not permit a trust founder to prohibit a
fully-competent trust beneficiary in whom the trust property vests from controlling and
disposing of that property. If the founder purports to do so, the prohibition on the
beneficiary’s power of control and disposal constitutes a nudum praeceptum (a nude and
therefore an ineffective prohibition) as soon as that beneficiary attains full legal capacity by
58
reaching the age of majority. For such a prohibition to remain effective beyond the
beneficiary’s adulthood, the founder must stipulate that any attempt by the adult beneficiary
to oust the trustee and to assume control of the trust property will result in a termination of
59
his or her right to that property and in a gift-over of the property to another. However, there
appears to be no logical reason why a founder would want to deprive a beneficiary of his or
her entitlement to property in this way, particularly if the founder decided on using the trust
institution to benefit that beneficiary but also to protect him or her against financial
inexperience or injudiciousness after having attained adulthood. The ownership trust
circumvents this difficulty by not vesting the trust property in the trust’s capital beneficiary
and that beneficiary attaining the age of majority therefore does not entitle him or her to
assume control of the trust property. The ownership trust is thus better suited than the bewind
trust to achieving the objective of protecting beneficiaries against financial inexperience or
60
injudiciousness after having attained the age of majority.
The bewind trust’s primary applications in legal and commercial practice are as an
investment trust through which multiple investors pool their financial resources for a specific
61
purpose or as an economic empowerment trust that vests the ownership in the trust
property in a designated group (as trust beneficiaries) as demanded by statutorily-imposed
codes of conduct, but allows the trust’s trustee to administer that property on the
62
beneficiaries’ behalf to achieve the relevant empowerment objective(s).
________________________
54 Olivier et al Trustreg en Praktyk 8.5.2.5.9. See also Welch’s Estate v Commissioner, South African Revenue
Service 2005 (4) SA 173 (SCA) par 2.
55 De Waal 2000 SALJ 548 at 561.
56 See 8.4.2.3.2 regarding the capital beneficiary’s position under a bewind trust.
58 Aronson v Estate Hart 1950 (1) SA 539 (A) 552; Kernick April 2008 De Rebus 50.
59 Olivier et al Trustreg en Praktyk 5.4.4.2; Kernick April 2008 De Rebus 50.
60 Ibid 5.4.4.3.
61 Ibid.
62 Pace and Van der Westhuizen Wills and Trusts B4.2.2.1.
197
9.5 The discretionary trust

A trust instrument can empower a trustee to appoint a trust’s actual income and/or capital
beneficiaries from a group or class of potential beneficiaries designated by the trust founder
and also to allocate an income and/or capital benefit to each such appointed beneficiary. This
trustee power is known, in particular with regard to a testamentary trust, as a power of
appointment and it is by definition discretionary in nature. A trust in terms of which this
63
power is granted to a trustee is therefore called a discretionary trust. The discretionary trust
is an important and popular tool in estate and financial planning, in particular, because a
power of appointment affords a trustee considerable flexibility regarding the award of trust
benefits to beneficiaries in accordance with each beneficiary’s needs and expectations,
thereby enabling the trustee to protect trust beneficiaries’ interests on an individual and
personal basis.
A trustee’s powers under a discretionary trust can relate to:

• the withhold-question: the trustee can decide whether or not to make an award of
trust income and/or capital (and, if no award is made, to let the undistributed
benefit(s) accumulate until the next distribution of benefits is due);
• the who-question: the trustee can determine which beneficiary or beneficiaries from
the designated group or class of potential beneficiaries will actually receive trust
income and/or capital;
• the how-much-question: the trustee can determine the extent to which a beneficiary
will benefit (in other words, how much of the trust income and/or capital that
beneficiary will receive);
• the when-question: the trustee can determine the time upon which a beneficiary will
receive his or her income and/or capital; and
• the how-question: the trustee can determine the mode of distributing income and/or
64
capital to a beneficiary.
Where a trustee’s discretion pertains to the withhold-question and/or the who-question,
the appointed beneficiary will obtain a vested right to the particular trust benefit only once
the trustee has exercised the particular discretion in that beneficiary’s favour (provided no
other condition attaches to the benefit). However, where a trustee’s discretion relates to
the how-much-question, the when-question and/or the how-question, the beneficiary will
be vested with a right to his or her trust benefit in accordance with the rules of vesting
65
applicable to that particular trust, and the trustee’s discretion relates merely to matters
impacting the distribution of a benefit to which the particular beneficiary is already legally
entitled. The trustee’s exercise of the relevant discretion regarding the latter three
questions is therefore not a precondition for the vesting of a right to the benefit in the
66
particular beneficiary.
A trust instrument can bestow one of the abovementioned discretionary powers on a
trustee, or it can bestow any number of them in whatever combination the trust
instrument prescribes.
________________________
63 See 1.4.6 and 8.4.2.1 regarding the discretionary trust and 8.2 regarding the power of appointment.
64 Stander 1999 JJS 145 at 149–150; Olivier et al Trustreg en Praktyk 4.3.5.
65 See 8.4.2 regarding the vesting of rights to trust benefits.
66 Stander 1999 JJS 145 at 149–150; Olivier et al Trustreg en Praktyk 4.3.5.4.
198
A trustee should exercise the abovementioned discretionary powers in accordance with the
following guidelines:
• a trustee must apply his or her mind to the exercise of the discretion by actively and
67
conscientiously giving it real and genuine consideration;
• the exercise of a trustee discretion requires a wider and more comprehensive inquiry into
the matter at hand than the inquiry that is reasonably expected of a person who exercises
68
a discretion regarding his or her private affairs; and
• a trustee, when exercising a power of appointment, must not unduly favour one
beneficiary or group of beneficiaries over another but must instead treat all the potential
69
beneficiaries impartially.
70
In Wiid v Wiid a clause in a trust deed empowered a trust’s trustees to apply, in their sole
discretion, the net trust income, or any part thereof, for the maintenance, education and
general benefit of any one or more of the minor income beneficiaries, and to allow, again in
their sole discretion, any or all of the income beneficiaries free use and enjoyment of the trust
assets. The trust founder, his wife, their children and lawful descendants were the potential
trust beneficiaries. The founder, his wife and his son were the trust’s trustees. The trustees
decided to lease the trust assets, which included a farm, livestock and game, to the founder’s
son (who was both a potential beneficiary and a trustee). The rent payable in terms of the
lease agreement was not market related and no rental was charged for the use of the game.
Lacock J opined that a reading of the trust deed’s clause on the trustees’ discretion in the
context of the trust deed as a whole revealed that the founder’s primary objective was to treat
his children on an equal basis and that the clause granting the discretion was meant to
provide for instances where a beneficiary required preferential treatment on meritorious
grounds. The founder thus did not intend to grant the trustees an unlimited and arbitrary
discretion. Lacock J found in this light that the majority of trustees failed to apply their minds
to concluding the lease agreement and therefore did not in fact exercise a discretion but
instead acted like puppets that were manipulated by the founder. The trustees did not comply
71
with their statutory duty of care, diligence and skill, nor did they exercise a discretion in an
72
impartial and independent manner. The trustees did not, in the judge’s opinion,
demonstrate any appreciation of the possible negative effects that the lease agreement’s
prejudicial terms might have on the trust but instead they deprived the trust and its
beneficiaries of the opportunity to increase the trust’s capital. Lacock J thus decided that the
trustees were personally liable for the damage the trust and the beneficiaries suffered as a
73
result of their actions and that they should be removed as trustees of the trust.
The founder of an inter vivos discretionary trust sometimes endeavours to influence or
manipulate the trustee’s exercise of the relevant discretion. Two methods are mainly used for
doing so:
• a letter of wishes in which the founder expresses his or her desires and/or preferences
regarding how the trustee must distribute the trust income and/or capital among the
potential beneficiaries:
o a letter of wishes is not binding on the trustee and he or she can chose to ignore the
founder’s desires or preferences regarding the exercise of the relevant discretion;
________________________

68 Ibid.
69 See 7.3.2.3 regarding the meaning of impartiality in this context. See also Stander v Schwulst 2008 (1) SA 81 (C).
70 Case No. 1571/2006 NCHC (13 January 2012).
71 See 7.3.1.4 regarding the duty of care, diligence and skill.
72 See 7.3.2.2 regarding a trustee’s duty to exercise independent judgement and discretion.
73 At paras 14–15. See Nel 2016 Obiter 436 for a discussion of this judgment.
199
o a letter of wishes that is not properly drafted or one that the trustee simply follows
slavishly can however be construed as forming part of the trust provisions which can in
turn detract from, or even negate, the trust’s discretionary nature or it can point to the
conclusion that the founder exercises de facto control over the trust property and that
74
the trust is thus the founder’s alter ego; and
o a letter of wishes must therefore be drafted in such a manner that it leaves no room for
75
the contention that it fetters the trustee’s discretion.
• a testamentary reservation in terms of which the founder directs in his or her will how the
trustee must distribute the trust income and/or capital among the potential beneficiaries
after the founder’s death:
o a testamentary reservation is best avoided because it can also point to the conclusion
that the trust was in fact the founder’s alter ego and it can thus yield adverse tax
76
consequences for the founder’s deceased estate.
9.6 The business trust

9.6.1 The nature and definition of a business trust
77
Business trusts, particularly family business trusts, have gained popularity in recent times.
However, a precise definition of a business trust or an enumeration of its distinctive features
78
has proven elusive. Most commentators agree that a business trust is one that has as a
79
principal objective the carrying on of business for profit. Commentators also generally
concur that a business trust in the broad sense is not a separate type of trust, but that the
appellation “business trust” merely signifies one of the uses or application possibilities of an
80
ordinary trust. Olivier et al contend that a business trust in the strict sense is one that draws
capital contributions from the trust beneficiaries for which they receive certificates as proof of
these contributions and on the basis of which they share in the trust income in proportion to
81
their capital contributions. Whatever definition or description of a business trust is used, the
82
Supreme Court of Appeal affirmed in Land and Agricultural Bank of South Africa v Parker that,
so long as the functions of trusteeship remain distinct from the trust beneficiaries’ beneficial
interests in the trust, the business trust is unobjectionable because the trust’s (and trust law’s)
control mechanisms ensure that business trusts operate properly and that outsiders dealing
83
with them are duly protected.
The family business trust (“business trust” is used here in the broad sense as indicated above)
is an increasingly popular business platform as an alternative to the sole proprietorship,
________________________
74 Pace and Van der Westhuizen Wills and Trusts B10. See Jordaan v Jordaan 2001 (3) SA 288 (C) paras 19
and 29–33; W v H 2017 (1) SA 196 (WCC) paras 81 and 82. See 4.2.1.2 and 7.6.1 regarding the alter ego
trust and the abuse of the trust form.
75 Jordaan v Jordaan 2001 (3) SA 288 (C) par 19.3.
76 Pace and Van der Westhuizen Wills and Trusts B10 and B18.2.1.
78 Theron 1991 SALJ 277.
79 Pace and Van der Westhuizen Wills and Trusts B4.2. See also Wunsh 1986 SALJ 561; Theron 1991 SALJ
277 at 278–279.
81 Trustreg en Praktyk 5.5.3.1. See 1.4.8 regarding the definition of a business trust.
82 2005 (2) SA 77 (SCA).
83 At par 24.
200
partnership and company. The Chief Master identified the following characteristics of a family
84
business trust:
• the trustees have the power to contract with outsider third parties, thereby creating trust
creditors;
• the trustees are all beneficiaries of the self-same trust; and
• the beneficiaries are all related to one another.
9.6.2 The business trust in practice

Neither the common law nor any specific statute authorises a trustee to summarily conduct
business as part of his or her administration of a trust. The trust instrument of a business trust
must therefore expressly bestow on the trustee the power(s) to trade or to otherwise conduct
85
business. Geach mentions the following specific powers with which the trustee of a business
86
trust is typically endowed:
• the power to carry on business or to trade, which implies that the trustee may expose the
trust assets to the ordinary risks associated with the specific type of business or trade for
which the trust is earmarked;
• the power to trade in, develop and grow the trust assets;
• the power to sell, cede or otherwise deal with his or her (the trustee’s) interest in the trust
(in the same way that a shareholder can deal with his or her shares in a company); and
• powers akin to those of a company director (with the trust beneficiaries commensurately
enjoying rights similar to those of company shareholders).
Some of a business trust’s principal advantages are:

• it affords limited liability to the founder, trustee and beneficiaries for the trust’s debts
insofar as the trust’s creditors claim against the trust estate and not against the private
87
estates of the parties to the trust;
• it provides a fairly flexible business platform because the trust is not subject to
comprehensive statutory regulation, and the administrative red tape that pertains to
88
other business forms consequently does not apply to a business trust;
• it permits, in the absence of disclosure requirements akin to those applicable to a
89
company, a degree of secretiveness that allows for greater confidentiality regarding
90
the trust’s business dealings; and
continued
________________________

85 IA Essack Family Trust v Soni 1973 (3) SA 625 (D) 627H.
87 Ibid 493; Delport Entrepreneurial Law 296; De Waal 2000 SALJ 548 at 561.
88 Delport Entrepreneurial Law 297; Wunsh 1986 SALJ 561 at 569 and 574; Theron 1991 TSAR 268 at 274.
89 Part C of the Companies Act prescribes a number of measures to ensure the transparency, accountability
and integrity of companies. These include maintaining company records (s 24); keeping accurate and
complete accounting records (s 28); rules on preparing and releasing a company’s financial statements (s
29); and the auditing of a company’s financial statements (s 30).
90 Theron 1991 TSAR 268 at 277. This is the case unless the trust itself is a holding-company: Delport
Entrepreneurial Law 297. See 9.6.3.1 regarding a trust as a holding-company.
201
91
• it can, unlike some other business entities, exist in perpetuity.
Ironically, some of the aforementioned advantages are also among a business trust’s weak
points:
• the absence of disclosure requirements akin to those that pertain to a company
creates risk for outsiders dealing with a business trust insofar as they may be in the
dark regarding the state of the trust’s financial affairs whilst they have, by reason of
the parties to the trust’s limited liability, restricted recourse against those parties if
92
things go awry;
• the trust institution’s flexibility and lack of statutory regulation creates the real danger
of the abuse of the trust form by unscrupulous business trust trustees who violate the
trust’s core idea or disregard the trust instrument’s prescripts but nevertheless attempt
to shield themselves from liability by invoking their non-compliance with the trust
instrument’s prescripts or fundamental trust law principles to frustrate the claims of
93
third parties who transacted with them in their capacity as trustees.
The aforementioned weaknesses of the business trust demand that the trustees of such a
trust, and the trustees of a family business trust, in particular, ensure that they conduct trust
administration in conformity with the trust’s core idea regarding the functional separation
between the trustees’ control of trust property and the beneficiaries’ enjoyment of trust
94
benefits. These trustees must moreover ensure that they abide at all times by the trust
instrument’s prescripts, in particular those prescripts pertinent to them binding the trust
contractually to third parties. Our courts have, with good reason, issued copious cautions
regarding the dangers – for both trust beneficiaries and third parties who transact with
trustees – of family business trusts in terms of which the trustees are both a trust’s effective
controllers as well as its principal beneficiaries, and the potential for the abuse of the trust
95 96
form in these instances. In Thorpe v Trittenwein the court issued, arguably, the sternest of
these warnings to business trust trustees when it said that “[t]hose who choose to conduct
business through the medium of trusts . . . cannot enjoy the advantage of a trust when it suits
97
them and cry foul when it does not”.
9.6.3 Legislation applicable to business

business trusts
trusts
The Trust Property Control Act applies to all business trusts that conform to the definition of a
trust as provided for in section 1 of the Act. A number of other statutes also reference the
business trust or contemplate the application of the trust in a business or corporate context.
Four of these statutes are briefly considered hereafter.
________________________
91 Theron 1991 TSAR 268 at 276. For example, a partnership terminates by operation of law on the death of
one of the partners.
92 Theron 1991 SALJ 277.
93 See 7.6 regarding the abuse of the trust form.
94 See 1.2.1.
95 Nieuwoudt v Vrystaat Mielies (Edms) Bpk 2004 (3) SA 486 (SCA) par 17; Land and Agricultural Bank of South
Africa v Parker 2005 (2) SA 77 (SCA) paras 25 and 26; Van der Merwe v Hydraberg Hydraulics CC; Van der
Merwe v Bosman 2010 (5) SA 555 (WCC) paras 34 and 35; Raath v Nel 2012 (5) SA 273 (SCA) par 13; Van
Zyl v Kaye 2014 (4) SA 452 (WCC) par 21.
96 2007 (2) SA 172 (SCA).
97 At par 17.
202
9.6.3.1 The Companies Act

Section 1 of the Companies Act defines a juristic person for the purpose of the Act to include a
trust, whether it was created in- or outside South Africa. Section 1 furthermore defines a
group of companies as a holding-company and all its subsidiaries. A holding-company in
relation to a subsidiary means, in terms of section 1, a juristic person that controls that
98
subsidiary. A subsidiary refers to a juristic person as a holding-company but only to a
99
company as a subsidiary. A trust can therefore be a holding company, but not a subsidiary
100
in terms of the Companies Act.
A number of the Companies Act’s provisions relate specifically to trusts. For example,
101
section 40(5) demands of a company to hold shares in trust in particular circumstances.
102
Section 43(7) contains a directive analogous to that in section 9(2) of the Act insofar as the
former subsection invalidates any provision contained in a trust deed for securing any debt
instruments, or in any agreement with the holders of any debt instruments secured by a trust
deed, to the extent that it exempts a trustee from, or indemnifies a trustee against, liability for
breach of trust, or a failure to exercise the degree of care and diligence required of the
prudent and careful person, having regard to the provisions of the trust deed in respect of the
powers, authorities or discretions of trustees. Section 50(2) provides that a company must,
after issuing any securities, enter in its securities register the names and addresses of the
persons to whom the securities were issued. Since a trust is regarded as a person for this
purpose, the company must reflect the name of the trust in its securities register as the
person to whom the securities have been issued.
The foregoing provisions of the Companies Act illustrate the trust’s relevance and utility
within the corporate context. However, the Companies Act also limits the trust’s utility in this
regard. For example, a trust may not be appointed as a company director because section
69(7) prohibits a juristic person from being a company director. A trust may, however, be
appointed as a company secretary by virtue of section 87 whereby a juristic person is
103
appointable to the office of company secretary. It bears repeating at this juncture that the
Companies Act does not, through its definition of a juristic person, convert all trusts into legal
104
persons but that it merely subjects trusts to the Companies Act’s regulatory framework if
they operate within the Act’s domain.
9.6.3.2 The Close Corporations Act

Section 28 of the Close Corporations Act provides that a close corporation may, at its
incorporation, have one or more members, but at no time shall the membership number
105
exceed ten. Membership of a close corporation is generally restricted to natural persons,
and a juristic person cannot directly or indirectly be a member of a close corporation. A
company or another close corporation cannot therefore hold a member’s interest in a close
corporation. The Close Corporations Act was amended in 2005 to permit a trustee of a trust to
be a member of a close corporation in his or her capacity as trustee. This applies to the
trustees of both testamentary and inter vivos trusts. However, a trustee’s membership of a
close corporation is subject to certain restrictions, for example, that no juristic person may be
________________________
98 This control must result from any of the circumstances contemplated in s 2(2)(a) or s 3(1)(a) of the Act.
99 S 3. See Delport Entrepreneurial Law 163.
100 Ibid 164.
101 See also Davis et al Companies 390.
102 See 6.11.2 regarding s 9(2) of the Act.
103 Cassim et al Company Law 30. See also in general Geach Trust Law 458; Davis et al Companies 390.
104 See 1.2.6.
105 S 29.
203
a beneficiary of the trust concerned. The Close Corporations Act provides that a natural or
juristic person in the capacity of a trustee of an inter vivos trust may be a member of a close
106
corporation, provided certain conditions laid down by the Act are met.
The Close Corporations Act’s engagement with the trust again underscores the trust’s
importance in the corporate context.
9.6.3.3 The Consumer Protection Act

The Consumer Protection Act promotes and advances the social and economic welfare of
107
consumers in South Africa. This Act prohibits any person, in dealing with a consumer in the
ordinary course of business for consideration, to engage in conduct contrary to the purpose
108
and policy of the Consumer Protection Act. Section 1 determines that a person, for the
aforementioned purpose, includes a juristic person, and a juristic person in turn includes a
trust as defined in the Trust Property Control Act. Section 1 of the Consumer Protection Act
also defines a consumer as either a person to whom particular goods or services are marketed
in the ordinary course of a supplier’s business as well as a person who entered into a
transaction with a supplier in the ordinary course of the supplier’s business. A trust, generally,
and a business trust, in particular, can thus be a consumer for the purpose of the Consumer
Protection Act. This Act does not, however, apply to any transaction in terms of which the
consumer is a juristic person (thus also a trust) whose asset value or annual turnover at the
time of the transaction equals or exceeds the threshold value determined by the Minister
109
responsible for consumer protection matters.
Section 1 of the Consumer Protection Act defines a supplier as a person who markets any
goods or services. Section 5(8)(c) extends the Consumer Protection Act’s application to any
matter irrespective of whether a supplier is one of a range of entities, one of which is a trust.
A business trust can thus, depending on the circumstances, be a supplier dealing with a
consumer for the purpose of the Consumer Protection Act. Such a trust may not, in any such
dealings in the ordinary course of business for consideration, engage in any conduct contrary
110
to the purpose and policy of the Consumer Protection Act. Section 1 furthermore defines an
intermediary as a person who, in the ordinary course of business and for remuneration or
gain, represents another person regarding the supply of any goods or services; or accepts
possession of any goods or property for the purpose of offering it for sale; or offers to sell or
solicits to a consumer any goods or property that belongs to a third person, including any
service to be supplied by a third person. An intermediary must disclose the information
prescribed by the Minister responsible for consumer protection matters to any person whom
he or she represents regarding the sale or supply of any property, goods or services. However,
these requirements do not apply to intermediaries who hold particular offices, including that
111
of a trustee.
A business trust that conforms to the definition of a trust in the Act thus falls within the
Consumer Protection Act’s regulatory ambit and is subject to the aforementioned statutory
prescripts.
________________________
106 S 29(1A).
107 S 3(1).
108 S 4(5)(b).
109 S 5(2)(b).
110 S 4(5)(b).
111 S 27(2)(c).
204
9.6.3.4 The National Credit Act

112
The National Credit Act regulates the South African credit market and industry. Section 1 of
this Act defines a juristic person to include a trust if it has three or more individual trustees or
the trustee is itself a juristic person. Section 4 determines that the National Credit Act applies
to every credit agreement concluded between parties dealing at arm’s length, but it excludes
from the Act’s regulatory ambit a credit agreement in terms of which the consumer is a
juristic person whose asset value or annual turnover at the time of the agreement equals or
exceeds the threshold value determined by the Minister responsible for consumer credit
matters in terms of section 7(1) of the Act. A trust that has fewer than three trustees falls
outside the scope of this exclusion and therefore enjoys the protection afforded by the
National Credit Act. A trust with three or more trustees or one of which the trustee is itself a
juristic person is, as a juristic person in terms of the definition in section 1, by and large
exempt from the National Credit Act’s application, but this exclusion is subject to the test in
113
respect of its asset value or annual turnover prescribed by section 4.
9.7 The charitable trust

A charitable trust can either be an inter vivos trust or a testamentary one. Charitable trusts are
usually created to achieve an impersonal trust object. The trust founder therefore need not
appoint ascertained or ascertainable beneficiaries under the trust but can instead merely
114
stipulate the impersonal charitable object or purpose that the trust must attain. What
constitutes a charitable object or purpose is not easy to determine. It is nevertheless trite that
a disposition for a charitable object or purpose must evince some element of public benefit.
115
The court explained in Ex parte Henderson that public benefit in this context does not
necessarily denote the conferment of a benefit on society as a whole or the community at
large. The court admitted that the requisite element of public benefit is present in a bequest
aimed at the advancement of the interests of a section of or group in the community,
provided that the section or group is sufficiently large or representative of a segment of
society. The court enumerated the following purposes as typically evincing an element of
public benefit: religious and educational purposes as well as the giving of aid to or providing
for the care and comfort of the aged, infirm, incapacitated, underprivileged and the needy.
The court lastly acknowledged that a disposition aimed at providing assistance to
comparatively small but distinct groups of people in need may constitute a charitable
purpose, as may the advancement of a small section of the community, in a respect that
116
serves some public interest.
Once a trust is identified as a charitable trust, South African courts tend to adopt a lenient
and accommodating approach in dealing with it. This approach is aimed at maintaining,
rather than invalidating, charitable trusts. The judicial leniency and accommodation afforded
charitable trusts are manifest in the following examples:
117
• the requirements for creating a trust, in particular those that pertain to identifying the
trust beneficiaries or the trust object, are not as strictly applied to the charitable trust as
________________________
112 S 3.
113 Botha et al Estate Planning 260; Tennant Consumer Law 8.
115 1971 (4) SA 549 (D).
116 At 554A–B. See also Marks v Estate Gluckman 1946 AD 289 at 302–307 and 311.
117 See 4.2 regarding these requirements.
205
they are to the private trust: a charitable trust will not therefore fail because its object is not
determined or determinable with the precision that is demanded of a private trust’s
118
object;
• the trustee of a charitable trust can be granted a wider power of appointment than the
trustee of a private trust: the power of a testamentary charitable trust’s trustee to appoint
trust beneficiaries is therefore not restricted to the specific power of appointment that can,
119
according to the judgment in Braun v Blann and Botha, be given to a testamentary private
120
trust’s trustee, but the former trustee can receive a more general power to appoint trust
121
beneficiaries of his or her choosing;
• the provisions of a charitable trust instrument can, in appropriate circumstances, be
judicially varied in terms of the cy près doctrine that allows a court to vary charitable trust
provisions if the trust’s object cannot be realised because the founder’s purpose can no
longer be accomplished or because the manner in which the founder’s purpose has to be
accomplished is no longer possible: the court can then earmark an alternative purpose cy
près, that is a purpose as near as possible to the original trust object that still serves the
122
founder’s general charitable intention.
9.8 Miscellaneous practical trust matters

9.8.1 The trust and land registration practice
123
The trustee of an ownership trust is vested with the ownership of the trust property. The
mode of transfer of ownership in the initial trust property to the trustee depends on the act
creating the particular trust. In the case of a testamentary trust, created in terms of the will of
its founder, section 40 of the Administration of Estates Act prescribes that transfer of movable
trust assets is effected through their delivery by the executor of the founder’s deceased estate
to the trust’s trustee. Immovable trust property is transferred through the endorsement of the
terms of the testator’s will, or a reference thereto, against the title deed of such property and
against any mortgage or notarial bond forming part of that property, coupled with delivery of
the title deed and such a bond by the executor of the founder’s deceased estate to the trustee.
The executor must also lodge with the Master the trustee’s written receipt for the movable
property, deeds or bonds as well as a certificate by the registration officer concerned or a
conveyancer certifying that the deeds or bonds have been duly endorsed.
The trustee of an inter vivos ownership trust, created contractually between the founder
and trustee, acquires ownership of movable trust property through the delivery of the
movable assets to him or her, often by way of a donation by the founder or another person.
Immovable trust property is customarily registered in the name of either the trust itself or of
the trustee in his or her official capacity.
________________________

119 1984 (2) SA 850 (A).
120 See 8.2 regarding the power of appointment.
122 Ibid. See also 5.4.1.3 regarding the cy près doctrine.
123 See 1.4.1.
206
The registration of immovable trust property in a trustee’s name occurs as follows:

“In the name of X in his (or her) capacity as the trustee of the ABC Trust.”
The reality that such a named trustee may vacate the trustee office and be replaced by
another trustee(s) prompted the practice to register immovable trust property without
referencing a trustee(s) by name:
“In the name of the trustee for the moment (or for the time being, or from time to time) of the
124
ABC Trust.”
The aforementioned practices regarding the registration of immovable trust property elicited
125
Flemming DJP’s criticism in Joubert v Van Rensburg. He objected to the registration of
immovable trust property in the name of an inter vivos trust itself on the ground that section
16 of the Deeds Registries Act allows only for the conveyance of title from one person to
another. Because a trust is not a legal person and is therefore, according to Flemming DJP,
126
“something that does not exist”, it is incapable of receiving transfer of immovable property.
Flemming DJP furthermore found no justification for the registration of immovable trust
property in the name of an inter vivos trust’s “trustees from time to time” in that such a
description fails to identify the person(s) in whom ownership vests and therefore “attains the
127
exact opposite of the principles of transparency and publicity of our registration system”.
128
Commentators criticised Flemming DJP’s decision in the Joubert case on this issue and the
129
Deputy Judge President’s views on point were held in Mkangeli v Joubert to have been prima
130 131
facie wrong. The legislature nevertheless amended the Deeds Registries Act through the
inclusion of a trust under the definition of “person” in section 102 of that Act. This definition
states that “person”, for the purpose of the registration of immovable trust property only,
includes a trust. Some commentators opine that the aforementioned amendment of the
Deeds Registries Act signifies that the trust is a legal person separate from its trustee for the
132
purpose of land registration practice. Even if this view is correct, the practice of treating a
trust as a person for the purpose of land registration does not detract from trust theory that
133
the trust is generally not endowed with legal personality, nor does it change the fact that the
trustee of an ownership trust (and not the trust itself) is, as a matter of law, vested with the
ownership of the trust property.
9.8.2 Purchasing immovable property for a trust yet to be formed

The need often arises for immovable property to be acquired on behalf of a trust yet to be
formed. The Act does not regulate the pre-formation stage of trusts and there consequently
exists no statutory provision allowing a purchaser to sign an agreement of sale as the
134
prospective trustee of a trust still to be formed. A purchaser can purchase the immovable
property for him- or herself or for a nominee (the trust once it is created) but the South
African Revenue Service insists on exact compliance with section 16 of the Transfer
________________________
124 De Waal 1993 THRHR 1 at 3; Olivier et al Trustreg en Praktyk 2.11.3.4.

125 2001 (1) SA 753 (W).
126 At par 9.3.
127 At paras 10.1.1–10.2.
128 Mostert and Du Toit 2002 Stell LR 151; Van der Spuy and Van der Linde 2002 THRHR 485.
129 2002 (4) SA 36 (SCA).
130 At par 10.
131 By s 2 of the Deeds Registries Amendment Act which came into operation on 30 April 2003.
132 Green January/February 2006 De Rebus 24 at 27; Lötz and Nagel 2006 THRHR 698 at 703.
133 De Waal 1993 THRHR 1 at 4. See also 1.2.6 regarding the trust’s lack of legal personality.
134 Green January/February 2006 De Rebus 24 at 26.
207
135
Duty Act in respect of such a nominee agreement and, if the sale of the immovable
136
property does not comply with section 16’s prescripts, double transfer duty may be payable
in respect of the original purchase and the subsequent transfer of the purchased property to
137
the trust once it is formed.
Pace and Van der Westhuizen view the purchase of immovable property for a trust yet to
be formed by using a stipulatio alteri as preferable to the aforementioned purchase by means
138
of a nominee agreement. The stipulatio alteri permits the purchaser to conclude a contract
with the seller for the acquisition of property in favour of a trust yet to be formed as third
party. Pace and Van der Westhuizen maintain that section 16 of the Transfer Duty Act does
not apply where an agreement of sale is structured as a stipulatio alteri and it therefore
obviates the need to comply with section 16’s prescripts to avoid double transfer duty
liability, but they nevertheless concede that the South African Revenue Service can indeed
also invoke section 16 in respect of an agreement for the sale of immovable property cast in
139
the form of a stipulatio alteri. It therefore remains an open question whether it is indeed
prudent for a purchaser to enter into an agreement for the purchase of immovable property
140
for a future trust even when such an agreement takes the form of a stipulatio alteri.
9.8.3 The sale of a trust

The sale of a trust refers to the practice of replacing existing trust beneficiaries and trustees
with new beneficiaries and trustees against monetary compensation. The sale of a trust is
used primarily to obviate transfer duty liability in respect of the purchaser’s acquisition of
141 142
immovable trust property. The Transfer Duty Act was however amended in 2002 to
provide for new definitions of “property” and “transaction” for the purpose of that Act. These
definitions curtail the utility of the sale of a trust as a means to circumvent the payment of
143
transfer duty. Authority also exists for the contention that the sale of a trust as described
above is not in fact a sale as such but, because the transaction results in a change of trustees
as well as a change of beneficiaries and thus in a change of the purpose and stated object of
the trust, such a transaction, in effect, amounts to a termination of an existing trust and the
144
creation of an entirely new trust.
________________________
135 S 16 provides that, where property is sold to a person who acts as someone else’s agent, the person
acting as the agent shall disclose to the seller or to his or her agent the name and address of the principal
for whom he or she acts, and furnish the seller or his or her agent with a copy of the documents
appointing him or her as agent. If the sale is by auction, these steps must be taken on the day of
acceptance by the auctioneer of his or her offer or, if the sale is otherwise than by auction, these steps
must be taken on the day of the conclusion of the agreement of sale. S 16 determines, furthermore, that
any person who was appointed as an agent, but fails to take these steps shall, for the purpose of the
payment of transfer duty in respect of the acquisition of the property in question, be presumed, unless
the contrary is proved, to have acquired the property for him- or herself.
136 Transfer duty (Afrikaans: hereregte) is levied on the value of immovable property, or rights in or to
immovable property, acquired by a person.
138 Ibid.
139 Ibid. See also Green January/February 2006 De Rebus 24 at 25.
140 Green January/February 2006 De Rebus 24 at 25.
142 By the Revenue Laws Amendment Act which came into operation on 13 December 2002.
144 ITC 1828 70 SATC 91.
208
9.8.4 The deregistration of a trust

The Act does not specifically require the deregistration of a trust upon its termination. The
145
Chief Master’s Directive instructs the Master, in order to confirm a trust’s termination and
to close that trust’s file in the Master’s Office, to request the following from the trustee:
• the reason(s) for terminating the trust or, where applicable, the original signed trustee
resolution terminating the trust:
o if the trust was terminated by trustee resolution, the resolution must indicate whether
the trust was dormant or active and, if a bank account was opened in the trust’s name,
whether that account has been closed;
• the trustee’s original letter of authority;
• bank statements reflecting a zero balance on the trust’s bank account; or the final
statement regarding the trust’s bank account; or a letter from the bank confirming that the
trust’s bank account was closed (if a bank account was opened);
• proof that the trust beneficiaries received their trust benefits; and
• an affidavit from the trustee confirming that the trust has been divested of all its assets.
After having confirmed the trust’s termination and having informed the trustee that the trust’s
file is closed, the Master must direct the trustee’s attention to section 17 of the Act regarding
146
the custody of trust documents in the aftermath of a trust’s termination.
________________________

146 See 7.3.1.9 regarding s 17 of the Act.
209
Appendix
TRUST PROPERTY CONTROL ACT

NO. 57 OF 1988
[ASSENTED TO 1 JUNE, 1988] [DATE OF COMMENCEMENT: 31 MARCH, 1989]
(Afrikaans text signed by the State President)
This Act has been updated to Government Gazette 17129 dated 19 April, 1996.
as amended by
Justice Laws Rationalisation Act, No. 18 of 1996
[with effect from 1 April, 1997]
ACT
To regulate further the control of trust property; and to provide for matters
connected therewith.
1. Definitions.—In this Act, unless the context otherwise indicates—
“banking institution” means an institution registered otherwise than provisionally as a

bank in terms of the Banks Act, 1965 (Act No. 23 of 1965);
“building society” means a mutual building society registered finally as a mutual
building society in terms of the Mutual Building Societies Act, 1965 (Act No. 24 of 1965), or
a building society registered finally as a building society in terms of the Building Societies
Act, 1986 (Act No. 82 of 1986);
“court” means the provincial or local division of the Supreme Court of South Africa
having jurisdiction;
211
“financial institution” means a financial institution as defined in the Financial

Institutions (Investment of Funds) Act, 1984 (Act No. 39 of 1984);
“Master”, in relation to any matter, means the Master, Deputy Master or Assistant
Master of the Supreme Court appointed under section 2 of the Administration of Estates
Act, 1965 (Act No. 66 of 1965), who under section 3 of this Act has jurisdiction in respect of
the matter concerned;
“trust” means the arrangement through which the ownership in property of one person
is by virtue of a trust instrument made over or bequeathed—
(a) to another person, the trustee, in whole or in part, to be administered or
disposed of according to the provisions of the trust instrument for the benefit of
the person or class of persons designated in the trust instrument or for the
achievement of the object stated in the trust instrument; or
(b) to the beneficiaries designated in the trust instrument, which property is placed
under the control of another person, the trustee, to be administered or disposed
of according to the provisions of the trust instrument for the benefit of the
person or class of persons designated in the trust instrument or for the
achievement of the object stated in the trust instrument,
but does not include the case where the property of another is to be administered by any
person as executor, tutor or curator in terms of the provisions of the Administration of
Estates Act, 1965 (Act No. 66 of 1965);
“trustee” means any person (including the founder of a trust) who acts as trustee by
virtue of an authorization under section 6 and includes any person whose appointment as
trustee is already of force and effect at the commencement of this Act;
“trust instrument” means a written agreement or a testamentary writing or a court
order according to which a trust was created;
“trust property” or “property” means movable or immovable property, and includes

contingent interests in property, which in accordance with the provisions of a trust
instrument are to be administered or disposed of by a trustee.
2. Certain documents deemed to be trust instruments.—If a document represents

the reduction to writing of an oral agreement by which a trust was created or varied, such
document shall for the purposes of this Act be deemed to be a trust instrument.
3. Jurisdiction of Masters.—(1) (a) In respect of trust property which is to be

administered or disposed of in terms of a testamentary writing, jurisdiction shall lie with the
Master in whose office the testamentary writing or a copy thereof is registered and accepted,
and in any other case, with the Master in whose area of appointment in terms of the
Administration of Estates Act, 1965 (Act No. 66 of 1965), the greater or greatest portion of the
trust property is situated: Provided that a Master who has exercised jurisdiction shall continue
to have jurisdiction notwithstanding any change in the situation of the greater or greatest
portion of the trust property.
(b) Notwithstanding the provisions of paragraph (a) a Master who would otherwise
have no jurisdiction in respect of trust property may, on written application by any person
having an interest in that trust property, and with the consent of the Master who has such
jurisdiction, assume jurisdiction of that trust property.
212
Appendix
(2) No act performed by a Master in the bona fide belief that he has jurisdiction shall
be invalid merely on the ground that it should have been performed by another Master.
(3) If more than one Master has in such belief exercised jurisdiction in respect of the
same trust property, that property shall, without prejudice to the validity of any act already
performed by or under the authority of any other Master, as soon as it becomes known to the
Masters concerned, be administered or disposed of under the supervision of the Master who
first exercised such jurisdiction, and any authorization or appointment of a trustee made by
any other Master in respect of that property, shall thereupon be cancelled by such other
Master.
4. Lodgement of trust instrument.—(1) Except where the Master is already in

possession of the trust instrument in question or an amendment thereof, a trustee whose
appointment comes into force after the commencement of this Act shall, before he assumes
control of the trust property, upon payment of the prescribed fee, lodge with the Master the
trust instrument in terms of which the trust property is to be administered or disposed of by
him, or a copy thereof certified as a true copy by a notary or other person approved by the Master.
(2) When a trust instrument which has been lodged with the Master is varied, the
trustee shall lodge the amendment or a copy thereof so certified with the Master.
5. Notification of address.—A person whose appointment as trustee comes into effect

after the commencement of this Act, shall furnish the Master with an address for the service
upon him of notices and process and shall, in case of change of address, within 14 days notify
the Master by registered post of the new address.
6. Authorization of trustee and security.—(1) 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.
(2) 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.
(3) The Master may, if in his opinion there are sound reasons to do so—
(a) whether or not security is required by the trust instrument (except a court order),
dispense with security by a trustee;
(b) reduce or cancel any security furnished;
(c) order a trustee to furnish additional security;
(d) order a trustee who has been exempted from furnishing security in terms of a
trust instrument (except a court order) to furnish security.
(4) If any authorization is given in terms of this section to a trustee which is a cor-
poration, such authorization shall, subject to the provisions of the trust instrument, be given
in the name of a nominee of the corporation for whose actions as trustee the corporation is
213
legally liable, and any substitution for such nominee of some other person shall be endorsed
on the said authorization.
7. Appointment of trustee and co-trustee by Master.—(1) If the office of trustee

cannot be filled or becomes vacant, the Master shall, in the absence of any provision in the
trust instrument, after consultation with so many interested parties as he may deem
necessary, appoint any person as trustee.
(2) When the Master considers it desirable, he may, notwithstanding the provisions of
the trust instrument, appoint as co-trustee of any serving trustee any person whom he deems
fit.
8. Foreign trustees.—When a person who was appointed outside the Republic as

trustee has to administer or dispose of trust property in the Republic, the provisions of this
Act shall apply to such trustee in respect of such trust property and the Master may authorize
such trustee under section 6 to act as trustee in respect of that property.
9. Care, diligence and skill required of trustee.—(1) A trustee shall in the per-
formance of his duties and the exercise of his powers act with the care, diligence and skill
which can reasonably be expected of a person who manages the affairs of another.
(2) Any provision contained in a trust instrument shall be void in so far as it would
have the effect of exempting a trustee from or indemnifying him against liability for breach of
trust where he fails to show the degree of care, diligence and skill as required in subsection (1).
10. Trust account.—Whenever a person receives money in his capacity as trustee, he

shall deposit such money in a separate trust account at a banking institution or building
society.
11. Registration and identification of trust property.—(1) Subject to the provisions of

the Financial Institutions (Investment of Funds) Act, 1984 (Act No. 39 of 1984), section 40 of
the Administration of Estates Act, 1965 (Act No. 66 of 1965), and the provisions of the trust
instrument concerned, a trustee shall—
(a) indicate clearly in his book-keeping the property which he holds in his capacity
as trustee;
(b) if applicable, register trust property or keep it registered in such manner as to
make it clear from the registration that it is trust property;
(c) make any account or investment at a financial institution identifiable as a trust
account or trust investment;
(d) in the case of trust property other than property referred to in paragraphs (b) or
(c), make such property identifiable as trust property in the best possible
manner.
(2) In so far as the registration or identification of trust property being administered
by a trustee at the commencement of this Act does not comply with the requirements of
subsection (1), the trustee shall within a period of 12 months after the said commencement
take such steps or cause such steps to be taken as may be necessary to bring the registration
or identification of such property into conformity with the said requirements.
(3) Upon application in terms of subsection (2) to bring the registration of trust
property into line with the provisions of subsection (1), the officer in charge of a deeds
214
Appendix
registry where such trust property is registered, shall free of charge take such steps as may be
necessary to effect the required registration.
12. Separate position of trust property.—Trust property shall not form part of the
personal estate of the trustee except in so far as he as trust beneficiary is entitled to the trust
property.
13. Power of court to vary trust provisions.—If a trust instrument contains any
provision which brings about consequences which in the opinion of the court the founder of a
trust did not contemplate or foresee and which—
(a) hampers the achievement of the objects of the founder; or
(b) prejudices the interests of beneficiaries; or
(c) is in conflict with the public interest,
the court may, on application of the trustee or any person who in the opinion of the court has
a sufficient interest in the trust property, delete or vary any such provision or make in respect
thereof any order which such court deems just, including an order whereby particular trust
property is substituted for particular other property, or an order terminating the trust.
14. Variation of trust instrument.—Whenever a trust beneficiary under tutorship or
curatorship becomes entitled to a benefit in terms of a trust instrument, the tutor or curator of
such a beneficiary may on behalf of the beneficiary agree to the amendment of the provisions
of a trust instrument, provided such amendment is to the benefit of the beneficiary.
15. Report of irregularities.—If an irregularity in connection with the administration of
a trust comes to the notice of a person who audits the accounts of a trust, such person shall, if in
his opinion it is a material irregularity, report it in writing to the trustee, and if such irregularity
is not rectified to the satisfaction of such person within one month as from the date upon
which it was reported to the trustee, that person shall report it in writing to the Master.
16. Master may call upon trustee to account.—(1) A trustee shall, at the written
request of the Master, account to the Master to his satisfaction and in accordance with the
Master’s requirements for his administration and disposal of trust property and shall, at the
written request of the Master, deliver to the Master any book, record, account or document
relating to his administration or disposal of the trust property and shall to the best of his
ability answer honestly and truthfully any question put to him by the Master in connection
with the administration and disposal of the trust property.
(2) The Master may, if he deems it necessary, cause an investigation to be carried out
by some fit and proper person appointed by him into the trustee’s administration and
disposal of trust property.
(3) The Master shall make such order as he deems fit in connection with the costs of
an investigation referred to in subsection (2).
17. Custody of documents.—A trustee shall not without the written consent of the
Master destroy any document which serves as proof of the investment, safe custody, control,
administration, alienation or distribution of trust property before the expiry of a period of five
years from the termination of a trust.
18. Copies of documents.—Subject to the provisions of section 5 (2) of the Administration
of Estates Act, 1965 (Act No. 66 of 1965), regarding the documents in connection with the
estate of a deceased person, the Master shall upon written request and payment of the
215
prescribed fee furnish a certified copy of any document under his control relating to trust
property to a trustee, his surety or his representative or any other person who in the opinion
of the Master has sufficient interest in such document.
19. Failure by trustee to account or perform duties.—If any trustee fails to comply
with a request by the Master in terms of section 16 or to perform any duty imposed upon him
by the trust instrument or by law, the Master or any person having an interest in the trust
property may apply to the court for an order directing the trustee to comply with such request
or to perform such duty.
20. Removal of trustee.—(1) A trustee may, on the application of the Master or any
person having an interest in the trust property, at any time be removed from his office by the
court if the court is satisfied that such removal will be in the interests of the trust and its
beneficiaries.
(2) A trustee may at any time be removed from his office by the Master—
(a) if he has been convicted in the Republic or elsewhere of any offence of which
dishonesty is an element or of any other offence for which he has been
sentenced to imprisonment without the option of a fine; or
(b) if he fails to give security or additional security, as the case may be, to the
satisfaction of the Master within two months after having been requested thereto
or within such further period as is allowed by the Master; or
(c) if his estate is sequestrated or liquidated or placed under judicial management;
or
(d) if he has been declared by a competent court to be mentally ill or incapable of
managing his own affairs or if he is by virtue of the Mental Health Act, 1973 (Act
No. 18 of 1973), detained as a patient in an institution or as a State patient; or
[Para. (d) amended by s. 4 of Act No. 18 of 1996.]
(e) if he fails to perform satisfactorily any duty imposed upon him by or under this
Act or to comply with any lawful request of the Master.
(3) If a trustee authorized to act under section 6 (1) is removed from his office or
resigns, he shall without delay return his written authority to the Master.
21. Resignation by trustee.—Whether or not the trust instrument provides for the
trustee’s resignation, the trustee may resign by notice in writing to the Master and the
ascertained beneficiaries who have legal capacity, or to the tutors or curators of the bene-
ficiaries of the trust under tutorship or curatorship.
22. Remuneration of trustee.—A trustee shall in respect of the execution of his official
duties be entitled to such remuneration as provided for in the trust instrument or, where no
such provision is made, to a reasonable remuneration, which shall in the event of a dispute be
fixed by the Master.
23. Access to court.—Any person who feels aggrieved by an authorization, appoint-

ment or removal of a trustee by the Master or by any decision, order or direction of the
Master made or issued under this Act, may apply to the court for relief, and the court shall
have the power to consider the merits of any such matter, to take evidence and to make any
order it deems fit.
216
Appendix
24. Regulations.—The Minister of Justice may make regulations regarding any matter
which in terms of this Act is required or permitted to be prescribed.
25. Application of Act.—This Act shall not apply to a trust which has been exempted
by any other Act from the application of the Trust Moneys Protection Act, 1934 (Act No. 34 of
1934), or to a scheme in terms of the Participation Bonds Act, 1981 (Act No. 55 of 1981).
26. Amendment or repeal of laws, and savings.—(1) The laws mentioned in the
Schedule are hereby repealed or amended to the extent indicated in the third column
thereof.
(2) Anything done under any provision of any law repealed by subsection (1) which
may be done under a corresponding provision of this Act, shall be deemed to have been done
under that corresponding provision.
27. Short title and commencement.—This Act shall be called the Trust Property
Control Act, 1988, and shall come into operation on a date to be fixed by the State President
by proclamation in the Gazette.
Schedule
PROVISIONS OF LAWS AMENDED OR REPEALED (SECTION 26)
No. and year of law Short title Extent of amendment or repeal
Act No. 34 of 1934 Trust Moneys The repeal of the whole.

Protection Act,
1934
Act No. 19 of 1941 Attorneys’ Admission The substitution for section 5 of the following section:
Amendment and “Obligation upon executors, etc., to provide
Legal Practitioners’ security incapable of being waived
Fidelity Fund Act,
1941 .................. 5. The obligation to provide security imposed
by any law upon executors, tutors, curators or
trustees in insolvency, shall not be capable of being
waived unless the instrument by which they are
nominated expressly directs that such security shall
be dispensed with or unless a provincial or local
division of the Supreme Court of competent
jurisdiction on application grants special exemption
therefrom.”.
Act No. 66 of 1965 Administration of 1. The amendment of section 1—

Estates Act, 1965
(a) by the deletion of the definitions of
“accountant”, “administrator” and “letters of
administratorship”; and
(b) by the insertion of the following definition
after the definition of “territory”:
“ ‘trustee’ means a trustee as defined in
section 1 of the Trust Property Control Act,
1988;”.
continued
217
2. The amendment of section 4—

(a) by the substitution in subsection (1) for the
words preceding the proviso of the following
words:
“In respect of the estate of a deceased
person, or of any portion thereof,
jurisdiction shall lie—
(a) in the case of a deceased person who
was, at the date of his death, ordinarily
resident within the area of jurisdiction
of a provincial division of the Supreme
Court, with the Master appointed in
respect of that area; and
(b) in the case of a deceased person who
was not at that date so resident, with
the Master to whom application is
made to grant letters of executorship or
to sign and seal any such letters already
granted in respect of the estate
concerned:”; and
(b) by the deletion in subsection (4) of the word
“administratorship”.
3. The amendment of section 5 by the substitution for

the proviso to subsection (2) of the following proviso:
“Provided that any executor, trustee, tutor or curator,
or his surety, may inspect any such document or cause
it to be inspected without payment of any fee.”.
(a) by the substitution for subsection (1) of the
following subsection:
“(1) If a trustee has been appointed to
administer any property of a deceased
person under his will (including in the case
of a massed estate any property forming
part of the share of the survivor or survivors
of that estate which, according to a
distribution account, is to be administered
by such trustee), the executor shall—
(a) deliver to the trustee such of the
movable property as should, according
to the distribution account, be delivered
to him;
(b) cause the terms of the will, or a
reference thereto, in so far as they
relate to the administration, to be
endorsed against the title deeds of such
of the property as is immovable, and
against any mortgage or notarial bond
forming part of the property, and
deliver the title deeds and any such
bond, subject to the provisions of
section 41 (2), to the trustee; and
continued
218
Appendix
(c) lodge with the Master the trustee’s ac-

quittance for any such movable
property, deeds or bond, and a
certificate by the registration officer
concerned or a conveyancer that such
deeds or bond has been endorsed as
aforesaid.”; and
(b) by the deletion of subsections (2) and (3).
5. The repeal of chapter III.
6. The amendment of sections 95, 96, 98 and 99 by
the deletion of the word “administrator”, wherever it
occurs.
(a) by the substitution for subsection (1) of the
“(1) A copy certified by the Master of any
letters of executorship, tutorship or curatorship
lodged with him under section 21, or under
the said section read with section 74, or of a
copy of any such letters, shall be admissible
in evidence as if it were the original letters.”;
(b) by the deletion of paragraph (b) of subsection
(2); and
(c) by the substitution for subsection (3) of the

“(3) A certificate under the hand of the
Master shall be prima facie proof of any loss
referred to in section 23 (5) or in section
77 (5), and of any value referred to in section
35 (1) or in section 46 or in the last-
mentioned section as applied by section 85.”.
8. Amendment of section 102—
(a) by the substitution for paragraph ( f ) of sub-
section (1) of the following paragraph:
“( f ) being an executor wilfully distributes
any estate otherwise than in
accordance with the provisions of
section 35 (12), or of the relevant will;
or”;
(b) by the substitution for paragraph (g) of
subsection (1) of the following paragraph:
“(g) contravenes or fails to comply with the
provisions of section 9 (1) or (3), 13, 27
(1), 35 (13), 47, 71, 78, 83, 93 (1) or (3),
or with any notice under section 9 (2); or”;
continued
219
(c) by the substitution for paragraph (h) of

“(h) contravenes or fails to comply with the
provisions of section 6 (4), section 8 (1)
or (2), section 11 (1), section 26 (1) or
of the last-mentioned section as applied
by section 85, section 28 (1), (2) or (3)
or of the last-mentioned section as
applied by section 12 (7) or by section
85, section 30, section 35 (1), or with
any direction under section 35 (2) or any
notice under section 43 (3) or (4); or”;
and
(d) by the substitution for paragraph (i) of
“(i) contravenes or fails to comply with the
provisions of sections 7 (1) or (2),
section 35 (8), section 41 (1), section
54 (5) or of the last-mentioned section
as applied by section 85, or with any
notice under section 7 (3) or any
direction under section 28 (6) or of the
last-mentioned section as applied by
section 85, or fails without reasonable
excuse to comply with a notice under
section 32 (1) (b), or, having appeared
in answer to such notice, refuses to
take the oath or to submit to
examination or to answer fully and
satisfactorily any lawful question put to
him,”.
9. The repeal of section 108.
10. The substitution for section 109 of the following
section:
“Short title and commencement
109. This Act shall be called the Administration of

Estates Act, 1965, and shall come into operation upon
a date to be fixed by the State President by
proclamation in the Gazette.”.
11. The substitution for the long title of the following
long title:
“ACT
To consolidate and amend the law relating to the
liquidation and distribution of the estates of deceased
persons, the administration of the property of minors
and persons under curatorship, and of derelict estates;
to regulate the rights of beneficiaries under mutual
wills made by any two or more persons; to amend the
Mental Disorders Act, 1916; and to provide for
incidental matters.”.
continued
220
Appendix
Act No. 38 of 1984 Inspection of The amendment of section 8 by the substitution for para-
Financial graph (a) of the proviso to subsection (1) of the following
Institutions Act, paragraph:
1984
“(a) any information obtained by the registrar in the
course of an inspection under this Act or from a
report by an inspector—
(i) may be used by the registrar or his staff in
connection with any financial institution,
person, partnership or company; and
(ii) may at the discretion of the registrar be
conveyed to the Master of the Supreme
Court; and”.
221
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Key:
Key
CJCCL – Canadian Journal of Comparative and Contemporary Law
ELR – Edinburgh Law Review
ICLQ – International and Comparative Law Quarterly
JCLS – Journal of Civil Law Studies
JJS – Journal for Juridical Science (Tydskrif vir Regswetenskap)
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230
Legislation Register
South African Legislation

Year Number Title and section Page(s)
1913 24 Administration of Estates Act 25
1934 34 Trust Moneys Protection Act 25
1936 24 Insolvency Act 6, 116, 195
Section 2 12, 116, 169
20(2)(a) 169
20(2)(b) 169
1937 47 Deeds Registries Act
Section 16 207
Section 102 207
1949 40 Transfer Duty Act
Section 16 207, 208
1953 7 Wills Act
Section 2(1)(a) 14
2(3) 14
2C(1) 177, 179
2C(2) 177
2D(1) 162
2D(1)(c) 162
4A 84
4A(1) 85
4A(2)(a) 85
4A(2)(c) 85
4A(3) 85
231

1955 45 Estate Duty Act 191
Section 3(2)(a) 12
3(3)(d) 194
1956 50 General Law Amendment Act
Section 5 13
1962 58 Income Tax Act 6, 191
Section 1 5, 7, 192, 193
1(a) 192
1(b) 192, 193
6B(1) 192
7C 194
1965 66 Administration of Estates Act 1, 25, 71, 196
Section 5(2) 64, 65, 66
8 65, 124
40 128, 198, 206
Chapter III 25
99 85
1965 94 Immovable Property (Removal or Modifica-
tion of Restrictions) Act
Section 2 81
2(1) 81
3 81
3(1) 81, 82
3(2) 82
8 187
8(1) 187
8(2) 187
1973 18 Mental Health Act
Section 1 119
1973 61 Companies Act 116
1977 51 Criminal Procedure Act
Section 77(6)(a)(i) 119
78(6)(i)(aa) 119
1979 70 Divorce Act
Section 7(1) 150
7(3) 140, 149-154, 157
7(4) 140, 149-154, 157
7(5) 140, 149-154, 157
7(6) 140, 149, 151-154,
157, 158
232

1981 68 Alienation of Land Act 110
Section 2 13
2(1) 103, 144, 145
1984 39 Financial Institutions (Investment of Funds) 128
Act
1984 69 Close Corporations Act
Section 28 203
29 203
29(1A) 204
1984 88 Matrimonial Property Act
Section 2 149
3 149, 154
4 154
5 154
1988 57 Trust Property Control Act
Section 1 1, 6-8 10-14, 26,
56, 63, 84, 123,
161, 202
1(a) 6
1(b) 6
2 13, 63
3 124, 125
3(1)(a) 124
3(1)(b) 125
3(2) 125
3(3) 125
4 64, 96
4(1) 64, 65, 127
4(2) 64, 127
5 96, 127
6 11, 84, 89
6(1) 13, 90-93, 95-97,
104, 184
6(2) 97, 98
6(2)(a) 90, 97, 127
6(2)(b) 90, 98
6(3) 97, 98
6(3)(a) 97
6(3)(d) 97, 98
6(4) 90, 91
continued
233

7 3, 25, 87, 89, 90,
184
7(1) 11, 87, 88
7(2) 87, 88
8 89
9(1) 113, 115, 127,
138,184
9(2) 115, 203
10 116, 117, 127
11 116
11(1) 128, 129
11(1)(a) 128
11(1)(b) 128
11(1)(c) 128
11(1)(d) 128
11(2) 128
11(3) 128
12 3, 25, 116
13 40, 44, 45, 46, 79,
80, 81, 135
13(a)-(c) 80
14 72
15 25, 125, 129
16 25, 125, 126,
129, 134
16(1) 125
16(2) 126
16(3) 126
17 96, 117, 129, 209
18 64, 65, 66, 183
19 25, 126, 134, 183
20 25
20(1) 99, 120, 121, 134,
171, 183, 184
20(2) 84, 119, 121, 184
20(2)(a) 119
20(2)(b) 99, 119
20(2)(c) 119
20(2)(d) 119
20(2)(e) 99, 119, 134
20(3) 118, 120, 121
continued
234

21 118, 119
22 111
23 65, 87, 88, 90, 99,
111, 120, 126,
127, 184
1990 27 Maintenance of Surviving Spouses Act
Section 2(1) 193
2(3)(d) 193
1996 Constitution of the Republic of South Africa 33, 34, 36, 37, 42,
43, 58
Section 8(1) 33
8(3) 42, 69
9 5, 33, 38
9(3) 69
10 35
14 35
16 35
18 35
25 34, 35
25(1) 34
36 35
1997 57 Lotteries Act
Section 21 14
1998 84 National Forests Act
Section 41 14
1998 111 Correctional Services Act
Section 1 119
1998 120 Recognition of Customary Marriages Act
Section 7(2) 148
1998 121 Prevention of Organised Crime Act
Section 14 147
2000 2 Promotion of Access to Information Act 65
2000 3 Promotion of Administrative Justice Act 65, 126
2001 28 Financial Institutions (Protection of Funds) 128
Act
2002 17 Mental Health Care Act
Section 1 119
2002 74 Revenue Laws Amendment Act 208
continued
235

2003 9 Deeds Registries Amendment Act
Section 2 207
2005 34 National Credit Act
Section 1 205
3 205
4 205
7(1) 205
2006 17 Civil Union Act
Section 13 148
2008 68 Consumer Protection Act
Section 1 204
3(1) 204
4(5)(b) 204
5(2)(b) 204
5(8)(c) 204
27(2)(c) 204
2008 71 Companies Act 6, 109, 116
Section 1 5, 203
2(2)(a) 203
3 203
3(1)(a) 203
20(7) 108
20(9) 142
Part C 201
24 201
28 201
29 201
30 201
40(5) 203
43(5) 85
43(7) 203
50(2) 203
69(7) 203
87 203
185 108
187 108
Foreign Legislation: United Kingdom
1535 Statute of Uses 20
1873 and Judicature Acts 20
1875
236
Table of Cases
Page
A
Adam v Dada 1912 NPD 495 ................................................................................................ 114
Administrators, Estate Richards v Nichol and Another
1996 (4) SA 253 (C) ........................................................................ 51, 52, 55, 56, 58, 67, 68
Administrators, Estate Richards v Nichol and Another 1999 (1) SA 551 (SCA) .......... 24, 138, 139
African Bank Ltd v Weiner [2003] 4 All SA 50 (C).................................................................. 100
AJP Properties CC v Sello 2018 (1) SA 535 (GJ) ........................................................................ 35
Alberts and Others, Ex parte 1944 TPD 187 .......................................................................... 181
Aronson v Estate Hart and Others 1950 (1) SA 539 (A) .......................................................... 197
B
Badenhorst v Badenhorst 2006 (2) SA 255 (SCA) ............ 30, 107, 140, 141, 150, 151, 152, 153,
154, 156, 157
Bafokeng Tribe v Impala Platinum Ltd and Others 1999 (3) SA 517 (BH) ............................ 8, 182
Barkhuizen v Napier 2007 (5) SA 323 (CC) ...................................................... 34, 36, 37, 38, 69
BC v CC 2012 (5) SA 562 (ECP) ............................................................................................. 154
BC Plant Hire CC t/a BC Carriers v Grenco (SA) (Pty) Ltd 2004 (4) SA 550 (C) ............................ 53
Beaumont v Beaumont 1987 (1) SA 967 (A) ................................................................... 149, 150
Beira v Beira 1990 (3) SA 802 (W) ........................................................................................ 168
Beningfield v Baxter (1886) 12 AC 167 (PC) .......................................................................... 182
Blum, Ex parte: In re Estate Kalson 1964 (2) SA 643 (C) .......................................................... 70
BOE Trust Ltd, Ex parte 2009 (6) SA 470 (WCC) ............................................. 36, 46, 68, 69, 79
BOE Trust Ltd and Others NNO, In re 2013 (3) SA 236 (SCA) ........................... 26, 34, 35, 46, 80
Bonugli and Another v Standard Bank of South Africa Ltd 2012 (5) SA 202 (SCA) ................... 101
Boyce NO v Bloem and Others 1960 (3) SA 855 (T) ........................................ 113, 114, 115, 184
Braun v Blann and Botha
1984 (2) SA 850 (A) ....................................................... 9, 10, 11, 14, 18, 21, 23, 24, 26, 27,
28, 57, 162, 163, 164, 206
Brisley v Drotsky 2002 (4) SA 1 (SCA) ......................................................................... 35, 37, 69
Brunette v Brunette 2009 (5) SA 81 (SE) ................................................................................ 150
Bruton NO, Ex parte 1970 (4) SA 154 (E) .......................................................................... 52, 57
Bydawell v Chapman NO and Others 1953 (3) SA 514 (A) .................................................. 34, 72
237
C
Cape Pacific Ltd v Lubner Controlling Investments (Pty) Ltd 1995 (4) SA 790 (A) .................... 142
Carmichele v Minister of Safety and Security and Another (Centre for Applied Legal
Studies Intervening) 2001 (4) SA 938 (CC) ........................................................................... 37
Coetzee v Peet Smith Trust en Andere 2003 (5) SA 674 (T) ......................................... 5, 102, 136
Coetzee v Stellenbosch Universiteit 1959 (4) SA 705 (C) ........................................................... 56
Commissioner for Inland Revenue v Estate Crewe 1943 AD 656 ....................................... 75, 165
Commissioner for Inland Revenue v Friedman and Others NNO 1993 (1) SA 353 (A) ................... 7
Commissioner for Inland Revenue v Lukin’s Estate 1956 (1) SA 617 (A) ................................. 162
Commissioner for Inland Revenue v Smollan’s Estate 1955 (3) SA 266 (A) ................................ 33
Commissioner, South African Revenue Service v Dyefin Textiles (Pty) Ltd
2002 (4) SA 606 (N) ............................................................................................... 8, 55, 176
Conze v Masterbond Participation Trust Managers (Pty) Ltd and Others
1996 (3) SA 786 (C) ............................................................................................ 1, 7, 81, 135
Crookes NO and Another v Watson and Others
1956 (1) SA 277 (A) .......................................... 8, 10, 13, 22, 28, 29, 61, 62, 75, 76, 77, 165
Cupido v Kings Lodge Hotel [1999] 3 All SA 578 (E) .............................................................. 112
Curators, Emma Smith Educational Fund v University of KwaZulu-Natal and Others
2010 (6) SA 518 (SCA).................................................. 26, 33, 40, 41, 42, 45, 47, 48, 80, 81
D
Deedat and Another v The Master and Others 1998 (1) SA 544 (N) ............................... 88, 90, 97
Deedat and Others v The Master and Others 1995 (2) SA 377 (A) ........................... 10, 13, 52, 56
De Lange v Methodist Church and Another 2016 (2) SA 1 (CC) ................................................. 43
Dempers and Others v The Master and Others 1977 (4) SA 44 (SWA) ..................... 51, 52, 56, 58
Desai-Chilwan v Ross and Another 2003 (2) SA 644 (C) ............................. 4, 101, 102, 112, 114
Doyle v Board of Executors 1999 (2) SA 805 (C) .......................... 15, 22, 29, 100, 101, 134, 167
Dube NO v Road Accident Fund 2014 (1) SA 577 (GSJ) ........................................................... 195
Dunlop Tyres (Pty) Ltd v Brewitt [1999] 2 All SA 328 (W) ........................................................ 58
Du Plessis NO and Others v Van Niekerk and Others
2018 (6) SA 131 (FB) ............................................................................ 12, 29, 117, 120, 136
Durandt NO v Pienaar NO and Others 2000 (4) SA 869 (C) .................................................... 165
E
Edelstein v Edelstein 1952 (3) SA 1 (A) .................................................................................. 148
Edinburg v Mercantile Credit (Pvt) Ltd 1980 (1) SA 744 (ZR) .................................................. 134
Egerer v Executrust (Pty) Ltd [2018] NASC 5 (6 February 2018) .............................................. 63
Erwee NO and Another v Erwee NO and Others [2006] 1 All SA 626 (O) ............... 29, 85, 90, 102
Esther G. Castanera Scholarship Fund, Re The 2015 MBQB 28 ................................................. 45
F
Fesi v Trustees Elect of the Ndabeni Communal Property Trust
[2018] 2 All SA 617 (SCA) ............................................ 65, 83, 85, 87, 88, 99, 111, 124, 126
First National Bank of South Africa Ltd v Strachan Family Trust
[2000] 3 All SA 379 (T) ..................................................................................................... 112
First Rand Limited trading inter alia as First National Bank v Britz and Others
[2013] JOL 29875 (GNP) .................................................................................. 117, 146, 148
238
Table of Cases
G
Ganie and Others v Ganie and Others [2011] ZAKZDHC 66 (23 December 2011) .................. 119
Genesis Medical Aid Scheme v Registrar, Medical Schemes and Another 2017 (6) SA 1 (CC) .. 4, 14
Ghersi v Tiber Developments (Pty) Ltd 2007 (4) SA 536 (SCA) ................................................ 101
Goodricke & Son (Pty) Ltd v Registrar of Deeds, Natal 1974 (1) SA 404 (N)................................. 1
Goolam Ally Family Trust v Textile, Curtaining & Trimming (Pty) Ltd
1989 (4) SA 985 (C) .................................................................................................. 102, 136
Gore and Others NNO, Ex parte 2013 (3) SA 382 (WCC) .......................................................... 23
Govender, Ex parte 1984 (4) SA 217 (D) .................................................................................. 72
Gowar and Another v Gowar and Others 2016 (5) SA 225 (SCA) .............. 76, 100, 102, 113, 120
Grayson, In re Estate 1937 AD 96 ........................................................................................... 52
Greenberg and Others v Estate Greenberg 1955 (3) SA 361 (A) ......................................... 27, 165
Griessel v Bankorp Trust Bpk 1990 (2) SA 328 (O)................................................... 29, 111, 179
Grobbelaar v Grobbelaar (case number 26600/98 TPD)......................................................... 150
Groeschke v Trustee, Groeschke Family Trust and Others
2013 (3) SA 254 (GSJ) ....................................................................... 3, 11, 62, 63, 64, 73, 74
Gross and Others v Pentz 1996 (4) SA 617 (A) ................................................ 15, 111, 113, 114,
167, 170, 171, 182, 183, 185, 186
H
Haffejee NO and Others v Ethekwini Municipality and Others 2011 (6) SA 134 (CC) ................. 34
Hanekom v Voight NO and Others 2016 (1) SA 416 (WCC) .............. 34, 63, 71, 72, 90, 100, 132
Hansen NO v Commissioner for Inland Revenue 1955 (2) SA 470 (W) ...................................... 12
Harksen v Lane NO and Others 1998 (1) SA 300 (CC) .............................................................. 44
Harper and Others v Crawford NO and Others
2018 (1) SA 589 (WCC) ........................................................... 10, 26, 34, 35, 36, 38, 39, 41,
44, 47, 48, 50, 67, 79, 80
Harvey NO and Others v Crawford NO and Others
[2018] ZASCA 147 (17 October 2018) .................................................. 10, 26, 50, 67, 79, 80
Harris and Others v Rees and Others 2011 (2) SA 294 (GSJ)............................................... 91, 97
Harter v Epstein 1953 (1) SA 287 (A) ...................................................................................... 52
Henderson and Another NNO, Ex parte 1971 (4) SA 549 (D) .................................... 10, 163, 205
Heydenrych Testamentary Trust and Others, In re
2012 (4) SA 103 (WCC) ............................................................ 40, 41, 42, 45, 47, 48, 80, 81
Heymann v Administrators Estate Heymann 1932 WLD 45...................................................... 68
Hirschsohn NO and Others v Horn NO 1990 (1) SA 769 (C) .................................................... 181
Hoeksma and Another v Hoeksma 1990 (2) SA 893 (A) ............................................................ 72
Hofer and Others v Kevitt NO and Others 1996 (2) SA 402 (C) ............................. 13, 76, 99, 100
Hofer and Others v Kevitt NO and Others 1998 (1) SA 382 (SCA) ............... 13, 28, 29, 73, 75, 76
Hoosen and Others NNO v Deedat and Others 1999 (4) SA 425 (SCA) ....... 22, 134, 135, 136, 137
Hoppen v Shub 1987 (3) SA 201 (C) .............................................. 100, 107, 120, 131, 132, 133
Howard v Herrigel 1991 (2) SA 660 (A) ................................................................................. 101
Hutchinson, Ex parte 1952 (2) SA 219 (O)............................................................................... 67
Hyde Construction CC v Deuchar Family Trust and Another
2015 (5) SA 388 (WCC) ................................................................ 93, 97, 103, 104, 111, 112
I
IA Essack Family Trust v Soni and Others 1973 (3) SA 625 (D) .............................................. 201
Investec Bank Ltd v Adriaanse and Others NNO 2014 (1) SA 84 (GNP)............................ 105, 130
239
ITC 1828 70 SATC 91 ........................................................................................................... 208

Isted, Ex parte 1948 (2) SA 71 (C) ........................................................................................... 67
J
Jansen NO and Others v Ringwood Investments 87 CC
[2013] ZAGPPHC 129 (20 May 2013) ....................................................................... 102, 103
Jarvis NO v Hawken and Others 1959 (2) SA 594 (FC) ............................................................. 52
Jewish Colonial Trust Ltd: In re Estate Nathan, Ex parte 1967 (4) SA 397 (N) ...................... 14, 67
Jewish Colonial Trust Ltd v Estate Nathan 1940 AD 163 ........................................................ 168
Jordaan v Jordaan 2001 (3) SA 288 (C) ............................................................ 58, 134, 150, 200
Joubert and Others v Van Rensburg and Others 2001 (1) SA 753 (W) ............. 13, 24, 29, 30, 207
Jowell v Bramwell-Jones and Others 1998 (1) SA 836 (W) ............................. 11, 12, 56, 65, 100,
113, 114, 136, 186
Jowell v Bramwell-Jones and Others 2000 (3) SA 274 (SCA) ..................................... 56, 131, 132
K
Kalshoven v Kalshoven NO 1966 (3) SA 466 (R) .................................................................... 126
Kemp, Estate and Others v McDonald’s Trustee 1915 AD 491 ...................................... 21, 26, 27
Kemp, Ex parte Executors Estate 1940 WLD 26 ................................................................ 52, 56
Kemp, Trustees for the time being of Erf 591 Riversbend Trust v Ralbern
Properties (Pty) Ltd [1999] 3 All SA 154 (SE) ..................................................................... 112
Khabola v Ralitabo [2011] ZAFSHC 62 24 (March 2011) ......................................................... 53
Kidbrooke Place Management Association and Another v Walton and Others NNO
2015 (4) SA 112 (WCC) ...................................................................... 15, 100, 121, 132, 133
King and Others NNO v De Jager and Others
2017 (6) SA 527 (WCC) ...................................................... 10, 34, 35, 36, 41, 43, 48, 49, 50
Klopper NO, Ex parte 1974 (1) SA 289 (O) .............................................................................. 86
Kohlberg v Burnett NO 1986 (3) SA 12 (A) ............................................................................. 193
Kriel v Terblanche NO 2002 (6) SA 132 (NC) ............................................................... 91, 93, 94
Kropman NO v Nysschen 1999 (2) SA 567 (T).............................................................. 91, 92, 93
L
Laco Parts (Pty) Ltd t/a ACA Clutch v Turners Shipping (Pty) Ltd 2008 (1) SA 279 (W) ............ 185
Land and Agricultural Bank of South Africa v Parker and Others
2005 (2) SA 77 (SCA)................................................................... 2, 3, 4, 5, 9, 11, 13, 24, 35,
54, 55, 63, 84, 85, 87, 88, 96,
101, 102, 103, 104, 105, 109, 113,
130, 131, 134, 139, 141, 143, 161,
189, 196, 200, 202
Landby NO v De Wet NO 1959 (1) SA 15 (N) ......................................................................... 181
Law Society of the Cape of Good Hope v Randell [2015] 4 All SA 173 (ECG)........................ 74, 75
Leandy NO, Ex parte 1973 (4) SA 363 (N) ............................................................................... 86
Legator McKenna Inc and Another v Shea and Others 2010 (1) SA 35 (SCA) ............................. 94
Lello and Others v Dales NO 1971 (2) SA 330 (A) .................................................................. 179
Levin and Another v Gutkin, Fisher and Schneier NNO and Others 1997 (3) SA 267 (W) ...... 11, 72
Liebenberg NO v MGK Bedryfsmaatskappy (Pty) Ltd 2003 (2) SA 224 (SCA) ........................... 135
Lochner v MEC for Health and Social Development, Mpumalanga 2014 JDR 34 (GNP) ............. 195
Loewenthal, Ex parte Trustees Estate 1939 WLD 78 .......................................................... 72, 73
Lorentz v TEK Corporation Provident Fund and Others 1998 (1) SA 192 (W) ............................ 10
240
Table of Cases
Louw and Others v ABSA Trust Ltd and Others [2014] ZAWCHC 159
(28 October 2014) .................................................................................................... 113, 114
Louw and Others v FWKP Albrecht Trust 1998 (3) SA 1048 (C) ..................................... 180, 181
Lucas’ Trustee v Ismail and Amod 1905 TS 239 ....................................................................... 21
Lupacchini v Minister of Safety and Security
2010 (6) SA 457 (SCA)...................................................... 3, 4, 5, 90, 91, 93, 95, 96, 97, 101
Lynn NO and Another v Coreejes and Another 2011 (6) SA 507 (SCA) .................................... 105
M
Magnum Financial Holdings (Pty) Ltd (in Liquidation) v Summerly NO
1984 (1) SA 160 (W)......................................................................................................... 116
MAN Truck & Bus (SA) Ltd v Victor en Andere 2001 (2) SA 562 (NC).................. 23, 66, 102, 109
Marais and Others, Ex parte 1953 (4) SA 620 (T) .................................................................. 181
Mariola and Others v Kaye-Eddie NO and Others 1995 (2) SA 728 (W) ............................. 30, 111
Maritz v Maritz [2006] JOL 16569 (T) ................................................................................... 150
Marks v Estate Gluckman 1946 AD 289 ................................................................................ 205
Meijer NO and Another v Firstrand Bank Ltd (formerly known as First National
Bank of Southern Africa) and Another, In re: Firstrand Bank Ltd (formerly known
as First National Bank of Southern Africa) and Another v Meijer and Others
[2012] ZAWCHC 23 (4 April 2012) ................................................................................... 118
Melville v Busane and Another [2012] 1 All SA 675 (ECP) .................................................. 5, 116
Metequity Ltd v NWN Properties Ltd 1998 (2) SA 554 (T) ..................................... 85, 90, 91, 100
Milton, Ex parte 1959 (3) SA 426 (C) ...................................................................................... 12
Minister of Education and Another v Syfrets Trust Ltd NO and Another
2006 (4) SA 205 (C) ................................................................... 5, 26, 33, 35, 36, 37, 39, 41,
42, 44, 45, 47, 48, 49, 58, 68, 69, 81
Minister of Safety and Security v Lupacchini [2015] JOL 33825 (FB) ........................................ 95
Mkangeli and Others v Joubert and Others 2002 (4) SA 36 (SCA) ............................................ 207
MM v JM 2014 (4) SA 384 (KZP) ................................................................................... 154, 155
Mohamed NO v Ally 1999 (2) SA 42 (SCA)............................................................................... 86
Moore NO and Others v Du Toit and Others [2009] ZAKZPHC 66
(30 November 2009) .................................................................................................. 88, 126
Moosa NO and Others v Harneker and Others 2017 (6) SA 425 (WCC) ................................... 179
Moosa NO and Others v Minister of Justice and Others 2018 (5) SA 13 (CC) ........................... 179
Moraitis Investments (Pty) Ltd v Montic Dairy (Pty) Ltd 2017 (5) SA 508 (SCA) ...................... 102
N
National Director of Public Prosecutions v Cunningham and Others and Other
Related Cases [2012] 4 All SA 74 (WCC) ........................................................................... 147
Nedbank Ltd v Thorpe [2008] ZAKZHC 72 (26 September 2008)..................................... 55, 145
Nedbank Ltd v Thorpe [2009] ZAKZPHC 44 (16 September 2009) ........................................ 146
Nel v Metequity Ltd 2007 (3) SA 34 (SCA)................................................................................ 91
Nieuwoudt and Another NNO v Vrystaat Mielies (Edms) Bpk
2004 (3) SA 486 (SCA)................................................................. 5, 23, 54, 65, 66, 101, 102,
108, 109, 110, 139, 194, 202
Nkotobe and Others v Bengu and Others [2015] ZAECBHC 12
(15 May 2015) .......................................................................................... 170, 171, 183, 184
241
P
Pascoal and Another v Wurdeman and Others 2012 (3) SA 422 (GSJ) ....................... 64, 112, 135
Paulsen and Another v Slip Knot Investments 777 (Pty) Ltd
2015 (3) SA 479 (CC).......................................................................................................... 37
Pentz v Gross and Others 1996 (2) SA 518 (C) ....................................... 111, 113, 114, 167, 185
Peterson and Another NNO v Claassen and Others 2006 (5) SA 191 (C) ............ 29, 56, 57, 58, 66
Phillips v Fieldstone Africa (Pty) Ltd [2004] 1 All SA 150 (SCA) ....................................... 99, 100
Pienaar v Pienaar [2005] ZAWCHC 123 (1 January 2005) .................................................... 150
Potgieter and Another v Potgieter NO and Others
2012 (1) SA 637 (SCA)..................................................................... 8, 28, 29, 38, 75, 76, 77,
78, 79, 166, 169, 170
Potgieter NO v Shell Suid-Afrika (Edms) Bpk 2003 (1) SA 163 (SCA) ....................................... 135
President of the Conference of the Methodist Church of Southern Africa NO,
Ex Parte: In re William Marsh Will Trust 1993 (2) SA 697 (C) ........................................ 44, 80
Pringle v Pringle [2009] ZAWCHC 207 (27 March 2009) ...................................................... 154
Pritchard’s Trustee v Estate Pritchard 1912 CPD 87 ................................................................ 52
R
Raath v Nel 2012 (5) SA 273 (SCA) ............................................................................... 194, 202
Ras and Others NNO v Van der Meulen and Another 2011 (4) SA 17 (SCA) ..................... 121, 126
Raubenheimer NO v Trustees, Johannes Bredenkamp Trust
2006 (1) SA 124 (C) .......................................................................................................... 112
REM v VM 2017 (3) SA 371 (SCA).................................. 88, 113, 129, 140, 141, 142, 143, 153,
154, 155, 156, 157, 158, 159
Rees v Harris 2012 (1) SA 583 (GSJ) ..................................................................................... 142
Road Accident Fund v Arendse NO 2003 (2) SA 490 (SCA) ..................................................... 195
Robinson v Randfontein Estates Gold Mining Co Ltd 1921 AD 168 ........................................... 99
Rosner v Lydia Swanepoel Trust 1998 (2) SA 123 (W) ............................................. 90, 111, 112
Royal British Bank v Turquand (1843–1860) All ER 435 ........................................................ 108
RP v DP and Others 2014 (6) SA 243 (ECP)........................................... 143, 147, 151, 152, 155
Rudman v Road Accident Fund 2003 (2) SA 234 (SCA) .......................................................... 194
Ruskin v Sapire NO 1966 (2) SA 306 (W) .............................................................................. 195
S
Sackville West v Nourse and Another 1925 AD 516 .......................................... 15, 22, 100, 113,
114, 120, 138, 139, 184
Sasfin (Pty) Ltd v Jessop and Another 1997 (1) SA 675 (W) .................................................... 114
Schaefer and Nagel NNO v Estate Petzall 1966 (3) SA 769 (W) ............................................... 133
Schaumberg v Stark NO 1956 (4) SA 462 (A) ......................................................................... 176
Sea Plant Products Ltd and Others v Watt 2000 (4) SA 711 (C) ................................................ 29
Shoprite Checkers (Pty) Ltd v MEC for Economic Development, Eastern Cape and Others
2015 (6) SA 125 (CC).......................................................................................................... 34
Sidelsky, Ex parte 1983 (4) SA 598 (C) .............................................................................. 67, 68
Simplex (Pty) Ltd v Van der Merwe NO 1996 (1) SA 111 (W) ............................ 91, 92, 93, 95, 96
Slip Knot Investments 777 (Pty) Ltd v Du Toit 2011 (4) SA 72 (SCA) ............................... 107, 108
Smart NO v Burne NO [2013] ZAKZDHC 59 (19 July 2013) ..................................................... 75
Smit v Van de Werke NO 1984 (1) SA 164 (T) .......................................................................... 86
242
Table of Cases
Soekoe NO v Le Roux [2007] ZAFSHC 135 (29 November 2007)........................................... 118

South African Forestry Co Ltd v York Timbers Ltd 2005 (3) SA 323 (SCA) ................................ 67
Standard Bank of South Africa Ltd v July and Others [2018] ZASCA 85 (31 May 2018) ........... 182
Standard Bank of South Africa Ltd v Koekemoer and Others 2004 (6) SA 498 (SCA)........ 130, 135
Stander and Others v Schwulst and Others 2008 (1) SA 81 (C) ....................... 110, 112, 114, 199
Starkey v McElligott 1984 (4) SA 120 (D) ................................................................................ 72
Stern and Ruskin NO v Appleson 1951 (3) SA 800 (W) ................................... 169, 170, 173, 175
Steyn and Others NNO v Blockpave (Pty) Ltd 2011 (3) SA 528 (FB) ............. 5, 102, 103, 106, 107
Strauss, Ex parte 1983 (4) SA 598 (C) ..................................................................................... 67
T
T v T [2014] ZAGPJHC 245 (19 September 2014) ................................................................. 156
TEK Corporation Provident Fund v Lorentz 1999 (4) SA 884 (SCA)......................................... 135
The Master v Deedat and Others 2000 (3) SA 1076 (N) .................................................. 114, 121
Theron NNO v Loubser NO 2014 (3) SA 323 (SCA) ................................................................. 112
Thorpe and Others v Trittenwein and Another 2007 (2) SA 172 (SCA) ............ 101, 102, 103, 202
Tijmstra NO v Blunt-MacKenzie NO
2002 (1) SA 459 (T) ................................................................. 101, 102, 106, 107, 108, 117,
120, 127, 129, 130, 131, 134
Trinity Asset Management (Pty) Ltd v Grindstone Investments 132 (Pty) Ltd
2018 (1) SA 94 (CC)............................................................................................................ 34
Truter v Die Administrateur, Kaapprovinsie 1978 (3) SA 489 (C) ............................................. 70
Tshwane City v Link Africa and Others 2015 (6) SA 440 (CC)................................................... 34
V
Van der Merwe NO and Others v Hydraberg Hydraulics CC and Others;
Van der Merwe NO and Others v Bosman and Others
2010 (5) SA 555 (WCC) ................................................................... 106, 109, 110, 118, 143,
144, 145, 202
Van der Merwe v Van der Merwe 2000 (2) SA 519 (C).............................................................. 91
Van der Westhuizen v Van Sandwyk 1996 (2) SA 490 (W)...................................................... 102
Van Wyk v Daberas Adventures CC [2018] ZANCHC 31 (1 June 2018) ................................... 137
Van Zyl and Another NNO v Kaye NO and Others
2014 (4) SA 452 (WCC) ................................................. 9, 26, 52, 53, 54, 55, 140, 142, 143,
147, 148, 151, 152, 202
Verseput and Others v De Gruchy NO and Another 1977 (4) SA 440 (W)................................... 15
Villet’s Estate v Villet’s Estate 1939 CPD 152 .......................................................................... 52
Visser v Hull and Others 2010 (1) SA 521 (WCC)................................................................... 186
Volkwyn v Clarke and Another 1946 WPD 456 ...................................................................... 120
Vorster v Steyn 1981 (2) SA 813 (O) ....................................................................................... 57
Vrystaat Mielies (Edms) Bpk v Nieuwoudt en ’n Ander NNO 2003 (2) SA 262 (O) ........ 23, 66, 109
VZ v VZ [2014] ZAGPJHC 42 (14 February 2014) .................................................................. 153
W
W v H 2017 (1) SA 196 (WCC) .............................................................................................. 200
Watkins-Pitchford, Estate and Others v Commissioner for Inland Revenue
1955 (2) SA 437 (A) .................................................................................................... 27, 162
Watson v Cockin [2016] ZAGPPHC 259 (22 April 2016) ........................................................ 164
Watt v Sea Plant Products Bpk [1998] 4 All SA 109 (C).......................................... 90, 91, 95, 96
243
Webb and Another, Ex parte 1952 (2) SA 541 (W) ................................................................. 165
Webb v Davis NO and Others 1998 (2) SA 975 (SCA) ............................................................. 165
Welch’s Estate v Commissioner, South African Revenue Service
2005 (4) SA 173 (SCA).......................................................................................... 14, 29, 197
Wessels NO v De Jager en ’n Ander NNO 2000 (4) SA 924 (SCA)............................................. 165
Westminster Bank Ltd NO and Others v Zinn NO 1938 AD 57 ................................................ 162
Wiid and Others v Wiid and Others Case No. 1571/2006 NCHC (13 January 2012) ............... 199
Willow Waters Home Owners Association (Pty) Ltd v Koka NO and Others
2015 (5) SA 304 (SCA)........................................................................................................ 34
WT and Others v KT 2015 (3) SA 574 (SCA) .................... 23, 113, 142, 148, 156, 157, 158, 159
Y
YB v SB and Others NNO 2016 (1) SA 47 (WCC) .................................................................... 154
Z
Zandberg v Van Zyl 1910 AD 302 ...................................................................................... 52, 53
Zazeraj NO v Jordaan and Others [2012] ZAWCHC 120 (22 March 2012) .............................. 150
Zinn NO v Westminster Bank Ltd 1936 AD 89 ........................................................................... 1
244
Index
Para(s)
A
Abstract theory of the passing of ownership ................................................................ 6.5.3.1
Abuse of a trust/abuse of the trust form (see also Piercing the trust’s veneer or going
behind the trust form)................................................................. 2.3.2, 4.2.1.2, 6.3.1.4, 6.8.2.3,
7.3.1.6, 7.3.2.2, 7.6.1, 7.6.2, 7.6.2.1,
7.6.2.2, 7.6.2.3, 7.6.2.4
distinguished from a sham trust ........................................................ 4.2.1.2, 7.6.1, 7.6.2.2
nature of ........................................................................................... 4.2.1.2, 7.6.1, 7.6.2.2
Acceleration of trust benefits ............................................................................ 5.5, 8.5, 8.5.3
Accountability
of trustee to co-trustees ..................................................................................... 6.7, 7.3.2.5
of trustee to Master .......................................... 7.2.1.2, 7.2.1.3, 7.2.2, 7.3.1.8, 7.3.3, 8.6.3
of trustee to trust beneficiary ............................................................ 2.3.2, 7.3.2.3, 7.3.2.5
Account
bank ...................................................................................... 6.12.2, 7.3.1.5, 7.3.1.6, 9.8.4
trust (see Trust, accounts)
Accountant ........................................................................................................................ 5.3
Accounting books (see also Trust, accounts) .................................................... 7.2.1.2, 7.3.2.4
Accrual of trust benefits/Ius accrescendi ................................................................... 8.5, 8.5.2
Accrual system (see Marriage, out of community of property)
Alter ego trust (see Trust, alter ego)
Actio legis Aquiliae (see also Aquilian action/liability) ........................................... 6.11, 8.6.4.1.1
Action
based on breach of trust (see Breach of trust)
based on unjustified enrichment (see Unjustified enrichment)
direct................................................................................. 8.6.1, 8.6.2, 8.6.4.1.1, 8.6.4.1.2
representative ...................................................................... 8.6.1, 8.6.2, 8.6.4.1.1, 8.6.4.2
to enforce trust provisions ........................................................................... 6.11, 8.6.4.1.3
to recover trust property ................................................................ 8.6.1, 8.6.4.1.2, 8.6.4.2
245
Adiation/acceptance of (trust) benefits .............................. 2.4.2, 5.4.2.2, 8.3, 8.4.2.2, 8.4.2.3

Administration of deceased estate (see Deceased estate, administration (winding-up) of)
Administrator....................................................... 1.1, 1.3, 1.4.2, 2.3.3, 3.4.1.2, 8.2, 8.4.2.3.2
Agency ............................................................................................... 1.1, 2.3.2, 4.2.1.1, 7.4.2
Agent .................................................................... 1.1, 2.3.2, 4.2.1.1, 6.8, 6.13.6, 7.4.2, 9.8.2
Ante-nuptial contract .......................................................................... 2.3.1, 7.6.2.3, 7.6.2.3.1
Aquilian action/liability (see also Actio legis Aquiliae) ........................................ 6.11, 8.6.4.1.1
Attorney.............................................................................................................................. 6.9
Audit/auditor/auditing profession .............................. 2.3.4, 6.3.1.4, 6.9, 7.2.1.2, 7.3.1.7, 9.6.2
B
Beneficiary ................................................................................................................... 1.5.3, 8
acceptance of contingent benefit ......................................................................... 5.4.2.2.4
actual ........................................................................... 1.4.5, 4.2.4, 5.3, 6.3.1.4, 8.5.3, 9.5
appointment of ........................... 1.4.6, 2.3.2, 8.2, 8.4.2.1, 8.4.2.2, 8.4.2.3, 8.5.3, 9.5, 9.7
capital ................................................................................. 1.5.3, 3.4, 5.4.2.2.1, 5.4.2.2.2,
6.11, 7.3.2.3, 8.2, 8.4.2, 8.4.2.1, 8.4.2.3.1,
8.4.2.3.2, 8.5.2, 8.5.3, 8.6.2, 9.2.1, 9.2.2.1, 9.4, 9.5
class of ............................................................. 1.3, 1.4.6, 5.4.2.2.4, 8.2, 8.4.2.2, 9.3.4, 9.5
consent to amendment of trust instrument on behalf of ........................................ 5.4.2.1.3
contingent (see also Contingent beneficiary; Potential beneficiary) ................. 8.4.1, 8.4.2.1
income .............................................................................. 1.4.8, 1.5.3, 5.4.2.2.1, 5.4.2.2.4,
5.4.3.1, 5.4.3.2, 5.5, 6.3.1.4, 6.11,
6.13.2, 7.3.2.3, 7.5, 8.2, 8.4.2, 8.4.2.1,
8.4.2.2, 8.4.2.3.1, 8.4.2.3.1, 8.4.2.3.2,
8.5.1, 8.5.2, 8.5.3, 8.6.2, 9.2.1, 9.2.2.1, 9.5
form of acceptance under inter vivos trust ................................................................... 8.3.2
locus standi of .................................................................... 7.6.2.4, 8.4.2.1, 8.6.2, 8.6.4.1.3
personal right to proper trust administration .................... 8.3.2, 8.4.1, 8.4.2, 8.4.2.1, 8.6.2
personal right to trust benefit(s) ................................................. 1.4.5, 1.4.6, 2.5, 5.4.2.2.4,
8.4.2, 8.4.2.1, 8.4.2.2, 8.4.2.3.1, 8.4.2.3.2
potential (see also Contingent beneficiary; Potential beneficiary) ......... 1.4.6, 3.4.1.2, 3.4.3,
4.2.4, 8.2, 8.4.1, 8.4.2.1, 8.4.2.2, 8.6.2
remedies of ............................................................................................. 8.6.1, 8.6.3, 8.6.4
rights of........................................................................................................................... 8.4
substitution of (see Substitution, of beneficiary)
unborn ...................................................................................................... 5.4.2.1.3, 5.4.3.2
Bewind ..................................................................................................................................... 1.4.2
Bewindhebber ................................................................................................................... 1.4.2
Bewind trust (see Trust, bewind)
Boni mores (see also Contra bonos mores; Public policy) ................................. 3.1, 3.3.1, 3.3.2
Bonus et diligens paterfamilias .................................................................................. 6.7, 6.11, 7.5
246
Index
Breach of trust (see also Actio legis Aquiliae; Aquilian action/liability)

beneficiary’s locus standi to sue for (see also Beneficiary, locus standi of) .............. 8.6.4.1.1
co-trustees’ liability for ............................................................................................... 6.11.1
exemption from liability for ....................................................................................... 6.11.2
nature of ....................................................................................................................... 6.11
trustee’s liability for .............................................................. 6.11, 7.3.2.1, 8.6.4.1.1, 9.6.3.1
Bursary trust (see also Charitable trust) ................... 3.3.1, 3.4.1.2, 3.4.2, 3.4.3, 5.4.1.2, 5.4.3.1
Business trust/trading trust ................................................. 1.4.8, 6.3, 6.3.1.4, 6.8.1, 6.10, 9.6
private business trust ................................................................................................... 1.4.8
public business trust..................................................................................................... 1.4.8
C
Capital gains tax ................................................................................................ 9.2.1, 9.2.2.3
Causal theory of the passing of ownership .................................................................... 6.5.3.1
Cession ......................................................................................................................... 6.5.3.1
Cestui que use .................................................................................................................. 2.2.1
Charitable trust
application of cy près doctrine to (see also Cy près doctrine) .............................. 5.4.1.3, 9.7
description of ...................................................................................................... 1.4.10, 9.7
functioning in the public domain/public nature of ................................... 1.4.10, 3.4, 3.4.1.1,
3.4.1.2, 3.4.1.3, 3.4.2, 3.4.3
power of appointment under .......................................................................................... 9.7
public benefit as essential element of........................................ 1.4.10, 3.4.1.1, 3.4.1.2, 9.7
leniency afforded to ........................................................................................................ 9.7
Civil union .................................................................................................................... 7.6.2.3
Close corporation ................................................................................ 7.6.2.1, 7.6.2.2, 9.6.3.2
Company (see also Corporation)
as legal/juristic person ........................................................................................ 1.2.6, 7.6.2
as trustee ..................................................................................................... 6.5.2, 6.9, 6.10
Condition ..................................................................................... 5.4.2.2.4, 5.4.3.2, 5.5, 8.3.2,
8.4.2.1, 8.4.2.2. 8.4.2.3.1, 8.5.1, 8.5.3
Constitution/constitutional rights (see also Equality; Discrimination)1.2.6, 3.1, 3.2, 3.3.1, 3.3.2,
3.4, 3.4.1.1, 3.4.1.2, 3.4.1.3,
3.4.2, 3.4.3, 4.2.5, 5.4.1.2, 6.1, 7.4.1
Constructive notice (see Notice, doctrine of constructive)
Constructive trust (see Trust, constructive)
Consumer protection .................................................................................................... 9.6.3.3
Contingent beneficiary (see also Potential beneficiary) .............................. 8.4.1, 8.4.2.1, 8.6.2
distinction between strict and broad senses .............................................. 5.4.2.2.4, 8.4.2.1
distinguished from potential beneficiary ................................................................... 8.4.2.1
247
Contingent right/interest/benefit ................................................................ 1.6, 4.2.3, 5.4.2.2.4,

8.3.2, 8.4.2.1, 8.4.2.2, 8.4.2.3
distinguished from vested right ................................................................................ 8.4.2.1
various interpretations of .......................................................................... 5.4.2.2.4, 8.4.2.1
Contra bonos mores (see also Boni mores; Public policy)................................................... 3.3.1
Contract for the benefit of a third party (see also Stipulatio alteri)
inter vivos trust akin to .................................................................... 1.4.3, 1.7.1, 2.4.2, 4.4.2,
5.4.2.2.2, 5.4.2.2.3, 5.4.2.2.4, 8.3.2
nature of ............................................................................................................ 1.7.1, 2.4.2
parties to ............................................................................................................ 1.7.1, 2.4.2
Contractual freedom (see also Freedom of contract) ....................................... 3.2, 3.3.1, 3.3.2
Corporation (see also Company)
as trustee ............................................................................................................ 6.5.2, 6.10
nominee of................................................................................................................... 6.5.2
Corpus (see also Trust capital) .............................................................................................. 1.6
Court ordered trust (see Trust, created by court order)
Curator/curatorship .......................................................................... 1.1, 1.3, 5.4.2.1.3, 6.5.3.1,
6.13.4, 7.2.1, 9.3.5
Cy près doctrine ..................................................................................................... 5.4.1.3, 9.7
D
Debenture trust (see Trust, debenture)
Deceased estate
administration (winding-up) of ....................................................... 1.1, 5.3, 6.3.1.1, 6.5.3.1
executor of (see Executor/executorship)
Delegation of trustee powers (see Trustee, delegation of powers)
Delatio ................................................................................................ 4.4.1, 8.3.1, 8.4.2.2, 8.4.2.3
Dies cedit ............................................................................................... 8.4.2.1, 8.4.2.2, 8.4.2.3.1
Dies venit ..................................................................................... 8.4.2.1, 8.4.2.2, 8.4.2.3.1, 8.5.3
Direct action (see Action, direct)
Discretionary trust ............................................... 1.4.6, 4.2.4, 7.2.4, 8.4.1, 8.4.2.1, 8.6.2, 9.5
nature of beneficiaries’ rights under................................................................... 8.4.2.1, 9.5
nature of trustee’s discretion under.................................................................... 8.4.2.1, 9.5
power of appointment under ...................................................................... 1.4.6, 4.2.4, 9.5
Discrimination
between (income and capital) beneficiaries .............................................................. 7.3.2.3
unfair (see also Discriminatory trust provisions; Racial and gender
restrictions in trusts; Religious restrictions in trusts) ............ 3.4, 3.4.1.2, 3.4.2, 3.4.3, 4.2.5
Discriminatory trust provisions (see also Racial and gender
restrictions in trusts; Religious restrictions in trusts) ........... 3.1, 3.4, 3.4.1.2, 3.4.1.3, 3.4.2,
3.4.3, 4.2.5, 5.4.3.1
Disinheritance..................................................................................................... 3.4.1.2, 3.4.3
248
Index
Divorce
redistribution of assets order................................................. 7.6.1, 7.6.2.3, 7.6.2.3.1, 9.3.6
settlement/settlement agreement ....................................................... 1.7.3, 7.6.2.3.1, 9.3.6
taking trust assets into account to determine the patrimonial consequences of
(see Piercing the trust’s veneer or going behind the trust form)
trust created at divorce ...................................................................................... 1.7.3, 9.3.6
Doctrine
of constructive notice (see Notice, doctrine of constructive)
of cy près (see Cy près doctrine)
of notice (see Notice, common law doctrine of)
Donation ......................................................................................... 1.5.1, 1.7.1, 8.6.4.2, 9.8.1
Donations tax ................................................................................................................. 9.3.2
Donor ....................................................................................................... 1.5.1, 3.4.3, 4.2.1.1
Dormant trust (see Trust, dormant)
E
Enrichment (see Unjustified enrichment)
Estate(s)
deceased ............................................................... 1.1, 1.2.6, 2.3.3, 2.4.1, 4.2.2, 4.4.1, 5.3,
5.4.2.1.2, 6.3.1.1, 6.5.3.1, 7.2.1, 7.3.1.6,
8.3.1, 8.4.2.2, 8.4.2.3.1, 8.4.2.3.2, 8.6.2, 9.5, 9.8.1
insolvent (see also Trust, insolvency of; Trustee, insolvency of private estate) .............. 7.2.1
planning ............................................................................................................. 7.6.1, 9.3.2
separation of ............................................................ 1.2.2, 1.2.6, 2.5, 6.12.2, 7.3.1.6, 7.6.2
trust .................................................................... 1.2.2, 1.2.6, 1.3, 2.3.4, 2.5, 6.1, 6.6, 6.8.1,
6.9, 6.10, 6.11, 6.11.2, 6.12.1, 6.12.2,
7.6.2.2, 7.6.2.3.2, 8.5.1, 8.5.3, 9.6.2
trustee’s private .................................................. 1.2.2, 1.2.4, 2.3.4, 2.5, 4.2.1.2, 6.2, 6.10,
6.11, 6.12.1, 6.12.2, 7.3.1.6, 7.6.2.2,
7.6.2.3.1, 7.6.2.3.2, 9.6.2
Estate duty ............................................................................................ 1.6, 9.2.1, 9.3.1, 9.3.2
Equality
constitutional right of (see also Discrimination, unfair; Discriminatory trust provisions;
Racial and gender restrictions in trusts; Religious restrictions in trusts) ..... 3.1, 3.4, 3.4.1.1,
3.4.1.2, 3.4.1.3, 3.4.2, 3.4.3
substantive ................................................................................................................... 3.4.2
Equitable estate/ownership ................................................................... 2.2.2, 2.3.1, 2.4.1, 2.5
Equity
in English law ............................................................................................................... 2.2.2
Executor/executorship .................................................. 1.1, 1.2.6, 1.3, 2.3.3, 4.2.2, 5.4.2.1.2,
6.3.1.1, 6.5.3.1, 6.13.3, 7.2.1.1,
7.3.1.6, 8.4.2.3.2, 8.6.2, 9.3.1, 9.8.1
249
F
Family agreement ...................................................................................................... 5.4.2.1.3
Family trust (see Trust, family; Trust, family business)
Feoffee ........................................................................................................................... 2.2.1, 2.2.2
Feoffor ........................................................................................................................... 2.2.1, 2.2.2
Fideicommissary (fideicommissarius) ......................... 1.6, 2.3.2, 2.4.1, 3.4.3, 8.2, 8.5.1, 9.2.1
Fideicommissary property .............................................................................. 1.6, 2.4.1, 9.2.1
Fideicommissum ....................................................................... 1.3, 1.6, 2.2.1, 2.4.1, 2.5, 3.4.1.2,
3.4.3, 4.2.1, 8.2, 8.5.1, 8.7, 9.2.1
Fideicommissum purum ........................................................................................................... 2.4.1
Fideicommittens ....................................................................................................................... 9.2.1
Fiducia cum amico ....................................................................................................................... 2.5
Fiduciary (fiduciarius) ........................................................... 1.6, 2.3.2, 2.4.1, 8.2, 8.5.1, 9.2.1
Fiduciary ................................................................................................................... 1.2.3, 7.1
capacity/duty/duties/obligation/position of trustee............................... 1.2.3, 1.3, 2.4.2, 2.5,
5.4.2.2.3, 6.1, 6.5.3.3, 6.7, 6.8, 6.8.2.3,
6.11, 6.11.1, 7.1, 7.3.2.2, 7.3.2.3,
7.3.2.5, 7.4.1, 7.5, 7.6.1, 7.6.2.4, 8.4.1
Fiduciary functionaries .................................................................................................... 2.3.2
Fiduciary interest ........................................................................................................... 6.13.6
Financial institution ............................................................... 6.6, 6.9, 6.13.6, 7.3.1.5, 7.3.1.6
Financial planning/planner (see also Estate(s), planning/planner) ........................................ 9.5
Forensic examination ................................................................................................... 7.6.2.2
Founder
as donor/settlor ............................................................................................................ 1.5.1
as trust beneficiary................................................................................................ 1.5.1, 8.1
as trustee ................................................................................................... 1.5.1, 4.5.2, 6.1
reservation of right of variation in favour of ........................................... 5.4.2.1.1, 5.4.2.2.1
unilateral declaration of trust by .................................................................................. 4.5.2
Freedom
of association .................................................................................................................. 3.2
of disposition (see also Ius disponendi).......................... 3.1, 3.2, 3.3.1, 3.3.2, 3.4.1.3, 3.4.2
of expression .................................................................................................................. 3.2
of contract/contractual freedom ........................................ 3.2, 3.3.1, 3.4.1.2, 3.4.1.3, 5.4.1
of testation .................................................... 3.2, 3.3.1, 3.4.1.2, 3.4.2, 3.4.3, 5.4.1, 5.4.1.1
G
Going behind the trust form (see Piercing the trust’s veneer)
Guardian/guardianship .......................................................................... 6.2, 8.3.2, 9.2.1, 9.3.5
Guardian’s Fund..................................................................................................... 7.2.1, 9.3.5
250
Index
H
High Court
acceptance/consent on behalf of beneficiaries ....................................................... 5.4.2.1.3
appointment of trustee by......................................................................................... 6.3.1.5
control over trustee ..................................................................................... 7.1, 7.2.2, 7.4.1
removal of trustee from office by ...................................................... 1.8, 6.6, 6.13.6, 7.2.2,
7.3.3, 8.2.4.1, 8.6.2, 8.6.3
Honoré, AM (Tony) .......................................................................................................... 2.3.4
I
Immovable property (see also Land)
as trust property ..................................................................................... 4.2.3, 9.8.1, 9.8.2
registration of ................................................................................................ 6.5.3.1, 9.8.1
removal or modification of restrictions on ......................................................... 5.4.3.2, 8.7
transfer of ............................................................................. 6.5.3.1, 7.6.2.1, 7.6.2.2, 9.8.1
Impersonal trust object .......................................................... 1.1, 1.3, 1.5.2, 2.4.2, 3.2, 4.2.4,
6.1, 7.1, 7.4.1, 8.1
Income tax............................................................................... 1.2.6, 1.3, 9.2.1, 9.2.2.3, 9.3.2
Independent trustee
appointment of .............................................................................................. 6.3, 6.3.1.4
circumstances when required ........................................................................ 6.3, 6.3.1.4
Inflation ....................................................................................................... 2.3.2, 5.4.1.1, 7.5
Interdict ........................................................................................................ 8.4.2.1, 8.6.4.1.3
Investment
by trustee ................................................. 2.3.2, 6.13.6, 7.3.1.6, 7.3.1.9, 7.3.2.5, 7.4.1, 9.4
changes in strategy ............................................................................................... 2.3.2, 7.5
Ius accrescendi (see Accrual of trust benefits)
Ius disponendi (see also Freedom, of disposition) ................................................ 3.2, 3.3.2, 3.4.3
J
Judicial review
of Master’s actions ............................................ 5.3, 6.3.1.4, 6.5.1, 6.6, 6.9, 6.13.5, 7.2.1.4
Jurisdiction
of High Court at common law (see also High Court, control over trustee) .................... 7.2.2
of Master over trustee ..................................................................................... 7.2.1, 7.2.1.1
L
Land (see Immovable property)
Legal capacity ................................................................. 6.2, 6.5.3.1, 6.13.4, 8.1, 9.2.2.3, 9.4
Legal estate/ownership.................................................................................... 2.2.2, 2.4.1, 2.5
Legal person/legal personality (see also Company; corporation) ....... 1.2.6, 1.5.1, 2.4.1, 2.4.2,
6.10, 7.6.2, 8.1, 9.6.3.1, 9.8.1
Legality principle (see also Rule, of law) .............................................................................. 3.4
251
Letter
of authority ...................... 5.3, 6.5.1, 6.5.2, 6.5.3.1, 6.6, 6.10, 6.13.4, 6.13.5, 6.13.6, 9.8.4
of wishes ......................................................................................................................... 9.5
Loan account ................................................................................................................... 9.3.2
Locus standi/legal standing/capacity to litigate
of beneficiary ......................................................................... 6.11.1, 7.6.2.4, 8.4.2.1, 8.6.2
of spouse to pierce the trust’s veneer ....................................................................... 7.6.2.4
of trust .......................................................................................................................... 6.10
of trustee................................................................................................ 6.5.2, 6.5.3.2, 6.10
M
Majority vote
as exception to common law rule requiring unanimity .................................................. 6.8
Marriage
civil .............................................................................................. 7.6.2.3, 7.6.2.3.1, 9.2.2.3
customary ................................................................................................................. 7.6.2.3
in community of property ............................................................ 7.6.2.2, 7.6.2.3, 7.6.2.3.3
out of community of property and out of community of
profit and loss ....................................................................... 7.6.2.3, 7.6.2.3.1, 7.6.2.3.2
Master of the High Court
appointment of trustee by......................................................................................... 6.3.1.4
calling on trustee to account ........................................................................ 7.2.1.3, 7.3.1.8
control over trustee/trust administration ............................ 2.5, 5.3, 6.1, 7.1, 7.2.1, 7.2.1.1,
7.2.1.2, 7.2.1.3, 7.4.1
jurisdiction of (see Jurisdiction, of Master over trustee)
removal of trustee from office by ....................................... 6.2, 6.6, 6.13.5, 6.13.6, 7.2.1.4,
7.2.2, 7.3.3, 8.6.2, 8.6.3
Matrimonial property systems (see Marriage)
Minor/minority........................................................... 5.4.1.1, 5.4.2.1.3, 6.2, 8.1, 8.3.2, 8.5.2,
9.2.1, 9.2.2.2, 9.2.2.3, 9.3.3, 9.3.5, 9.4, 9.5
Modus .................................................................................................................................... 4.2.1.1
N
Notice
common law doctrine of ........................................................................................... 8.6.4.2
doctrine of constructive ............................................................................................ 6.8.2.4
Nudum praeceptum ............................................................................................................ 4.2.4, 9.4
O
Off-shore trust................................................................................................................ 1.4.11
Oral trust/agreement ................................................................................................. 1.7.1, 5.1
252
Index
Owner/ownership
abstract/causal theory of (see Abstract theory of the passing of ownership/Causal theory of
the passing of ownership)
equitable (see Equitable estate/ownership)
legal (see Legal estate/ownership)
singular/unitary ..................................................................................................... 2.3.1, 2.5
Ownership trust (see Trust, ownership)
P
Pacta sunt servanda........................................................................................................... 3.2, 5.4.1
Personal autonomy ........................................................... 3.1, 3.2, 3.3.2, 3.4, 3.4.1.2, 3.4.1.3
Piercing the corporate veil
at common law ............................................................ 7.6.2, 7.6.2.3.1, 7.6.2.3.2, 7.6.2.3.3
as transplanted into trust law ............................................................................. 2.3.2, 7.6.2
Piercing the trust’s veneer or going behind the trust form (see also Abuse
of a trust/abuse of the trust form/trust as alter ego) ...................................................... 7.6.2
as derived from common law ................................................ 7.6.2.3.1, 7.6.2.3.2, 7.6.2.3.3
as equitable remedy ........................................................................................ 7.6.2, 7.6.2.2
at divorce
involving a redistribution of assets order ............................................................ 7.6.2.3.1
involving marriages in community of property ................................................. 7.6.2.3.3
involving marriages subject to the accrual system .............................................. 7.6.2.3.2
circumstances in which appropriate to apply ............................................................... 7.6.2
legal standing to apply for ........................................................................................ 7.6.2.4
regarding contracts entered into by trustees ............................................................. 7.6.2.1
regarding insolvency ................................................................................................. 7.6.2.2
specific remedial consequences of ............................................................................... 7.6.2
trust assets deemed to be private assets of trustee.................................... 7.6.2.2, 7.6.2.3.2
Potential beneficiary (see also Contingent beneficiary) ............. 1.4.6, 3.4.3, 8.4.1, 8.4.2.1, 9.5
Pour-over trust (see Trust, pour-over)
Power of appointment (see also Testamentary power, rule against
non-delegation of) .................................................................................. 1.4.6, 8.2, 8.4.2.2,
8.4.2.3.1, 9.5, 9.5, 9.7
and inter vivos trusts ..................................................................................................... 8.2
specific compared to general .......................................................................................... 8.2
when invalid ................................................................................................................... 8.2
Power of assumption .................................................................................................... 6.3.1.2
Power of subrogation .................................................................................................... 6.3.1.2
Private trust/non-charitable trust ..................................................... 1.4.9, 1.4.10, 3.4, 3.4.1.1,
3.4.1.2, 3.4.1.3, 3.4.3, 4.2.4, 8.2, 9.7
Privacy, constitutional right of ..................................................................... 3.2, 3.4.1.3, 3.4.3
Professional trustee (see Trustee, professional)
253
Promittens (see also Contract for the benefit of a third party; Stipulatio alteri) ....... 1.7.1, 2.4.2
Protective trust (see also Spendthrift trust) ...................................................................... 9.3.4
Public benefit (trust)...................................................................... 1.4.10, 3.4.1.1, 3.4.1.2, 9.7
Public interest ...................................... 3.2, 3.3.1, 3.4.1.2, 3.4.2, 5.4.3.1, 5.4.3.2, 6.5.3.1, 9.7
Public policy ....................................................................... 3.1, 3.2, 3.3.1, 3.3.2, 3.4, 3.4.1.2,
3.4.2, 3.4.3, 4.2.5, 5.4.1.2, 6.13.2
as an “unruly horse” .................................................................................................... 3.3.1
limiting freedom of disposition .......................................................................... 3.3.1, 3.3.2
rooted in the Constitution ............................................................................................ 3.3.2
supporting freedom of disposition.................................................. 3.3.1, 3.3.2, 3.4.2, 3.4.3
used to challenge trust provisions ................................... 3.1, 3.2, 3.3.1, 3.3.2, 3.4, 3.4.1.1,
3.4.1.2, 3.4.1.3, 3.4.2, 3.4.3
R
Racial and gender restrictions in trusts (see also Discriminatory
trust provisions) .......................................... 3.3.1, 3.4, 3.4.1.2, 3.4.2, 3.4.3, 5.4.1.2, 5.4.3.1
Ratification ......................................................................................... 6.5.3.1, 6.8, 6.8.1, 6.11
Religious restrictions in trusts (see also Discriminatory trust provisions) ..... 3.3.1, 3.4, 3.4.1.2,
3.4.2, 5.4.1.2
Real subrogation ................................................................................................ 1.2.4, 1.3, 2.5
Redistribution of assets order (see Divorce, redistribution of assets order)
Removal application, standing to bring ............................. 6.13.5, 6.13.6, 8.4.2.1, 8.6.2, 8.6.3
Representative action (see Action, representative)
Repudiation/rejection of (trust) benefits ............ 5.4.2.1.3, 5.5, 8.3.1, 8.3.2, 8.5.1, 8.5.2, 8.5.3
Restitution .................................................................................................................... 8.6.4.2
Rule
against perpetuities ......................................................................................................... 8.7
of law .............................................................................................................................. 3.4
S
Sham trust (see Trust, sham)
Simulated contract/arrangement/transactions ..................................... 4.2.1.1, 7.6.1, 7.6.2.3.2
Special trust ................................................................................................................. 9.2.2.3
Spendthrift trust (see also Protective trust) ....................................................................... 9.3.4
Spes ........................................................................................................... 5.4.2.2.4, 8.3.2, 8.4.2.1
Stipulans (see also Contract for the benefit of a third party; Stipulatio alteri) .......... 1.7.1, 2.4.2
Stipulatio alteri ......................................................................................................................... 1.7.1
and variation of inter vivos trust provisions ................................ 2.4.2, 5.4.2.2.1, 5.4.2.2.2,
5.4.2.2.3, 5.4.2.2.4
as means to acquire immovable property for trust yet to be formed ........................... 9.8.2
inter vivos trust akin to .................................................. 1.4.3, 1.7.1, 2.4.2, 4.4.2, 5.4.2.2.2,
5.4.2.2.3, 5.4.2.2.4, 8.3.2
parties to ............................................................................................................ 1.7.1, 2.4.2
254
Index
Substitution
direct ........................................................................................................................... 8.5.1
fideicommissary .......................................................................................................... 8.5.1
of beneficiary ........................................................................................................ 8.5, 8.5.1
of nominee where trustee is a corporation .................................................................. 6.5.2
of trust property .............................................................................................. 1.2.4, 5.4.3.1
of trustee.......................................................................................... 6.3.1.2, 6.3.1.5, 6.13.4
T
Testamentary power, rule against non-delegation of ...................................... 2.3.2, 4.2.4, 8.2
Testamentary reservation ................................................................................................... 9.5
Third party as joint wrongdoer with trustee ........................................................ 6.11, 8.6.4.2
Trading trust (see Business trust/trading trust)
Transfer duty ......................................................................................................... 9.8.2, 9.8.3
Treuhand................................................................................................................. 2.2.1, 2.4.1, 2.5
Trust
accounts ...................................................... 2.3.4, 7.2.1.2, 7.3.1.5, 7.3.1.6, 7.3.1.7, 7.3.2.4
alter ego (see also Abuse of a trust/abuse of the trust form) ........ 4.2.1.2, 5.4.2.2.1, 6.8.2.2,
6.12.2, 7.3.1.6, 7.3.2.2, 7.6.1, 7.6.2.2.
7.6.2.3, 7.6.2.3.1, 7.6.2.3.2, 7.6.2.3.3, 9.5
conceptual confusion between alter ego and sham trusts............... 4.2.1.2, 7.6.1, 7.6.2.2
as an institution sui generis ............................................................................... 2.4.1, 2.4.2
as a legal institution ............................................................. 1.1, 1.2.2, 2.2.1, 4.2.1.1, 7.6.1
as a consumer or supplier ............................................................................ 9.6.3.3, 9.6.3.4
as a creature of document ........................................................................................ 1.7, 5.2
as a legal person ...................................................... 1.2.6, 2.4.1, 6.10, 7.6.2, 9.6.3.1, 9.8.1
as a member of a close corporation ........................................................................ 9.6.3.2
as a shield from private creditors of trustee .......................................... 1.2.2, 7.6.2.2, 9.6.2
bewind .................................................................................. 1.4.2, 2.3.4, 4.3.2, 6.12.2, 8.1,
8.4.2, 8.4.2.3.2, 8.5.1, 8.5.3 9.4
bursary (see Bursary trust; Charitable trust)
business/trading (see Business trust/trading trust)
charitable (see Charitable trust)
company (see also Corporation) ...................................... 1.2.6, 1.5.1, 6.2, 6.6, 6.8.2.4, 6.9,
6.11.2, 7.6.2, 7.6.2.3.2, 7.6.2.3.3,
9.3.2, 9.6.1, 9.6.2, 9.6.3.1, 9.6.3.2
constructive .................................................................................................................... 2.5
core idea of ............................................................. 1.2.1, 4.2.1.2, 7.6.1, 7.6.2.1, 8.1, 9.6.2
created by court order................................................... 1.7, 1.7.3, 2.4.3, 4.2.2, 5.1, 5.4.3.1
created by testamentary writing ............................................. 1.7, 1.7.2, 4.2.2, 5.1, 7.2.1.1
created by written agreement .............................................................. 1.7, 1.7.1, 4.2.2, 5.1
created in terms of legislation/statute................................................................. 1.7.4, 4.2.2
255
Trust (continued)
debenture/debt instruments ........................................................................ 1.1, 6.2, 9.6.3.1
definition of
in terms of Income Tax Act ................................................................... 1.2.6, 1.3 9.2.2.3
in terms of Trust Property Control Act ............................................. 1.3, 1.5.1, 2.3.4, 7.1
discretionary (see Discretionary trust)
distinguished from sham trust.................................................. 4.2.1, 4.2.1.1, 7.6.1, 7.6.2.2
dormant ................................................................................................... 4.2.3, 9.3.1, 9.8.4
essential notion of (see Trust, core idea of)
estate (see Estate, trust)
family (see also Trust, family business).......................................... 1.4.7, 3.4, 3.4.3, 4.2.1.2,
4.2.4, 5.4.2.1.3, 7.6.2.2, 7.6.2.3.3
family business (see also Trust, family)................................. 6.3, 6.3.1.4, 6.8.1, 9.6.1, 9.6.2
for receiving maintenance awards ............................................................................... 9.3.1
formalities ............................................................................ 1.7.1, 1.7.2, 4.5.1, 6.8, 7.6.2.1
founder, as party to trust.............................................................................................. 1.5.1
in strict sense ......................................................................... 1.1, 1.3, 2.3.4, 4.1, 4.2.1, 6.2
in wide sense .................................................................................................... 1.1, 1.3, 6.2
instrument
constitutive nature of ......................................................... 1.7, 5.1, 5.2, 5.3, 6.1, 7.3.2.1
definition of ......................................................................................................... 1.7, 5.1
determinative of trustee’s capacities, duties and powers ................. 1.3, 5.2, 6.1, 7.3.2.1
rules for interpretation of ............................................. 2.4.2, 4.2.1, 6.3, 8.2, 7.4.1, 8.5.3
insolvency of .................................................................................................... 1.2.6, 6.12.1
inter vivos
acceptance of benefits under .................................. 2.4.2, 5.4.2.2.1, 5.4.2.2.2, 5.4.2.2.3,
5.4.2.2.4, 8.3.1, 8.3.2, 8.4.1, 8.4.2.2, 8.4.2.3.1
akin to stipulatio alteri ............................................................... 1.4.3, 1.7.1, 2.4.2, 4.4.2,
5.4.2.2.2, 5.4.2.2.3, 5.4.2.2.4, 8.3.2
description of ...................................................................................... 1.4.3, 1.7.1, 2.4.2
object of
as distinguished from purpose of ............................................................................. 4.2.5
as requirement for creation of trust ...................................... 4.2, 4.2.4, 4.2.5, 9.7, 9.8.3
off-shore (see Off-shore trust)
ownership .......................................................... 1.4.1, 1.5.1, 1.5.2, 2.3.4, 2.4.1, 2.5, 4.3.2,
6.8, 6.12.2, 8.1, 8.4.2, 8.4.2.3.1, 8.5.3,
9.2.1, 9.2.2.1, 9.2.2.2, 9.2.2.3, 9.3.1,
9.3.2, 9.3.3, 9.3.4, 9.3.5, 9.3.6, 9.4
piercing veneer of (see Piercing the trust’s veneer or going behind the trust form)
pour-over ................................................................................................................. 8.1, 8.2
property, nature of .......................................................................................................... 1.6
protective (see Spendthrift trust)
256
Index
Trust (continued)
sham
as distinguished from abuse of the trust form/alter ego trust 4.2.1.1, 4.2.1.2, 7.6.1, 7.6.2.2
determination of existence of...................................................................... 4.2.1.1, 7.6.1
consequences of....................................................................................... 4.2.1.1, 7.6.2.2
permutations of..................................................................................................... 4.2.1.1
special (see special trust)
testamentary ......................................................................................................... 1.4.4, 9.2
description and legal nature of ...................................................................... 1.4.4, 2.4.1
distinguished from usufruct and fideicommissum ........................................... 2.4.1, 9.2.1
vesting (see Vesting trust)
without beneficiary ......................................................................................................... 8.1
without trustee ......................................................................................... 1.5.2, 4.2.2, 4.3.1
Trustee......................................................................................................................... 1.5.2, 6
accountability of (see Accountability)
acting ultra vires ........................................................................................................... 7.4.1
as bare owner of trust property ......................................................................... 1.5.2, 9.2.1
as beneficiary ........................................................................................................ 1.5.2, 8.1
as joint wrongdoer with third party ................................................................. 6.11, 8.6.4.2
appointment, as distinguished from authorisation ....................................................... 6.5.1
appointment of an independent (see Independent trustee, appointment of)
control of trust property .................................................. 1.1, 1.2.1, 1.3, 1.4.2, 1.5.2, 2.3.2,
2.4.1, 2.5, 4.2.1.2, 4.2.2, 4.2.3, 4.3.2,
5.3, 5.4.1.1, 5.4.2.2.1, 6.1, 6.3.1.4,
6.8.2.2, 6.11.1, 6.13.1, 6.13.6, 7.1,
7.3.1.9, 7.4.2, 7.6.1, 7.6.2.1, 8.1,
8.4.2.3.2, 9.2.1, 9.4, 9.6.1, 9.6.2
borrowing trust money (see also Trustee, conflict of interest) .................................... 7.3.2.3
conflict of interest ........................................................................................... 7.3.2.3, 8.6.2
core duties/golden rules of trust administration ............................. 7.1, 7.3.2.2, 7.6.1, 8.4.1
corporation as (see Corporation, as trustee; see also Trust, company)
co-trustee(s) .................................................................................................................... 6.8
as holding a single office ............................................................................................ 6.8
as joint wrongdoers ......................................................................... 6.11, 6.11.1, 8.6.4.2
appointment by Master ......................................................................................... 6.3.1.4
degree of independent judgment required of ........................................... 6.8.2.2, 7.3.2.2
dominant .............................................................................................................. 6.8.2.2
decisions of to be unanimous unless trust instrument stipulates otherwise ................ 6.8
executive/managing .................................................................................................... 6.8
joint action by ................................................................. 1.2.5, 1.2.6, 6.8, 6.8.1, 6.8.2.1,
8.2.3, 6.8.2.4, 6.11.1, 7.1, 7.6.1, 7.6.2.4
joint and several liability of (see Trustee, co-trustee(s), as joint wrongdoers)
257
Trustee (continued)
co-trustee(s)
marginalisation of a co-trustee ................................................... 6.8.2.1, 7.6.2.1, 7.6.2.4
passive/sleeping/puppet ................................................................. 6.8.2.3, 7.3.2.2, 7.6.1
prescribed minimum number of ...................................... 4.2.2, 6.5.3.1, 6.5.3.2, 6.5.3.3,
6.8.1, 6.13.3, 6.13.4, 6.13.6, 7.6.2.1
scrutiny of actions and decisions of.......................................................... 6.8.2.1, 7.3.2.2
trustee meetings and decision-making ................................. 5.4.2.1, 6.3.1.2, 6.8, 6.8.2.1
vested with co-ownership in trust property ...................................................... 1.5.2, 6.8
delegation of powers .......................................................................................... 2.3.2, 7.4.2
discretion regarding manner of exercising powers................................ 7.3.2.2, 7.3.2.3, 9.5
duty of care, diligence and skill (see also Fiduciary duty) ................... 1.2.2, 1.2.3, 6.7, 6.11,
6.11.2, 7.1, 7.3.1.4, 7.5,
7.6.1, 8.6.4.1.1, 9.5
indemnification/exemption from ........................................................................... 6.11.2
fiduciary duty ................................................................ 1.2.3, 2.4.2, 5.4.2.2.3, 6.1, 6.5.3.3,
6.7, 6.8, 6.8.2.3, 6.11, 6.11.1,
7.3.2.2, 7.3.2.3, 7.3.2.5, 7.4.1,
7.5, 7.6.1, 7.6.2.4, 8.4.1
and variation of trust instrument ........................................................................ 5.4.2.2.3
fiduciary office of/official capacity of .................................. 1.2.3, 1.3, 1.4.1, 2.3.4, 2.5, 6.1,
6.10, 6.11, 6.12.2, 6.13, 7.1, 7.4.1,
7.6.2.4, 8.4.1, 9.3.1, 9.8.1
indemnification for trust expenses .................................................................................. 6.9
indemnification from furnishing security ....................................................................... 6.6
insolvency of private estate ............................................. 1.2.2, 2.5, 6.12.2, 7.3.1.6, 7.6.2.2
investment, power and duty of ................................................................. 2.3.2, 6.13.6, 7.5
locus standi............................................................................................. 6.5.2, 6.5.3.3, 6.10
negligence of ..................................................................... 6.11.1, 6.11.2, 6.13.6, 8.6.4.1.1
personal liability of..................................................................................... 6.11.2, 8.6.4.1.1
professional ................................................................................................... 4.5.2, 6.6, 6.9
purchasing immovable property from trust (see also Trustee,
conflict of interest) ................................................................................................ 7.3.2.3
remuneration .................................................................................................................. 6.9
resignation of ................................................................................................... 6.8.1, 6.13.4
removal of ............................................................................. 1.8, 3.4.1.2, 6.2, 6.6, 6.8.2.3,
6.13.2, 6.13.5, 6.13.6, 7.2.1.4,
7.2.2, 7.3.1.6, 7.3.3, 8.4.2.1, 8.6.2, 8.6.3
security, furnishing of ........................................... 4.3.1, 6.3.1.4, 6.5.1, 6.6, 6.13.5, 7.3.1.3
specified minimum number of (see Trustee, co-trustee(s), prescribed minimum number of)
sub-minimum number of (see Trustee, co-trustee(s), prescribed minimum number of)
vested with two estates .................................................................................. 1.2.2, 2.5, 6.1
voting by proxy ......................................................................................................... 6.8.2.1
258
Index
Trustee (continued)
written authorisation of (see also Letter of authority) ...... 1.5.2, 4.3.1, 6.1, 6.5, 6.5.1, 6.5.2,
6.5.3.1, 6.5.3.2, 6.5.3.3, 6.6, 6.7,
6.8.1, 7.2.1, 7.2.1.1, 7.2.2. 8.6.3
Turquand rule ...................................................................................................... 2.3.2, 6.8.2.4
Tutor/tutorship ............................................................. 1.1, 1.3, 2.3.2, 5.4.2.1.3, 6.13.4, 7.2.1
U
Ubuntu .................................................................................................................................... 6.13.2
Unjustified enrichment ................................................................................. 8.6.4.1.2, 8.6.4.2
Use, the (see also Cestui que use; Feoffee; Feoffor) ...................................... 2.2.1, 2.2.2, 2.3.1
Usufruct ............................................................................................ 1.3, 1.6, 2.3.2, 8.2, 9.2.1
bare owner under ........................................................................................... 2.3.2, 9.2.1
Usufructuary ...................................................................................................... 1.6, 8.2, 9.2.1
Usufructuary interest .......................................................................................................... 1.6
V
Vested right/interest
description of ........................................................................................................... 8.4.2.1
as distinguished from contingent right/interest .................................................. 1.6, 8.4.2.1
Vesting of beneficiary’s rights ............................................. 1.4.5, 1.4.6, 1.6, 4.4.2, 5.4.2.1.1,
5.4.2.1.3, 5.4.2.2.4, 8.3.1, 8.3.2, 8.4.1, 8.4.2,
8.4.2.1, 8.4.2.2, 8.4.2.3.1, 8.4.2.3.2,
8.5.2, 8.7, 9.4, 9.5
Vesting trust/non-discretionary trust ................................................................................ 1.4.5
Vicarious liability.............................................................................................................. 6.5.2
W
Waqf................................................................................................................................................... 2.2.1
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Fundamentals of South African Trust Law 2019

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Fundamentals of South African Trust Law 2019

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Fundamentals of

South African Trust Law

Anton van der Linde

Editor: Angela Rowe

Chapter 1 General Introduction

Chapter 3 The Trust, Public Policy and Constitutionalism

Chapter 4 The Creation of a Trust

4.5 Is the creation of a trust a unilateral or multilateral act? ......................................... 61

Chapter 5 The Trust Instrument

Chapter 6 The Trustee

Chapter 7 Trust Administration

Chapter 8 The Trust Beneficiary

Chapter 9 The Trust in Practice

1.2 The essential features of the South African trust

11 1996 (3) SA 786 (C).

1.2.2 The separation

1.2.3 Trusteeship as a fiduciary office

18 2013 (3) SA 254 (GSJ).

1.2.4 Real subrogation

1.2.5 Joint action by co-

1.2.6 The absence of legal personality

1.3 The statutory definitions of a trust

56 At paras 12 and 16.

1.4 Trust descriptions

1.4.2 The bewind trust

1.4.3 The inter vivos trust

1.4.4 The testamentary trust

1.4.5 The vesting trust

70 See 1.2.3 regarding a trustee’s fiduciary office.

1.4.6 The discretionary trust

1.4.7 The family trust

1.4.8 The business trust

1.4.9 The private trust

1.4.10 The charitable trust

1.4.11 The off-

1.5 The parties to a trust

89 Braun v Blann and Botha 1984 (2) SA 850 (A) 859H.

1.5.2 The trustee

1.5.3 The trust beneficiary

The following provision appears in A’s will:

1.6 Trust property

114 Du Plessis v Van Niekerk 2018 (6) SA 131 (FB) par 2.

1.7 Trust instruments

1.7.1 Written agreement

123 2005 (2) SA 77 (SCA).

1.7.2 Testamentary writing

1.7.3 Court order

1.7.4 Other trust instruments

1.8 The South African trust in a legal-

143 Du Toit 2015 Rabel J 852 at 855.

2.2 The history of the trust

1 De Waal 2000 SALJ 548 at 554.

4 Albertus 2014 Acta Juridica 268.

2.2.2 The trust in England24

25 Du Toit 2015 Rabel J 852 at 854.

2.3.2 Judicial development

Roman-Dutch law as exceptions to the prohibition on the delegation of testamentary power in

65 See 8.2 regarding testamentary powers of appointment.

2.3.3 Statutory development

2.3.4 The contribution of legal scholars

2.4 The legal nature of the South African trust

80 Cameron et al Law of Trusts 7 and 9.

• The proprietary interests of a fiduciary and a fideicommissary under a fideicommissum are

90 De Waal and Schoeman-Malan Law of Succession 147–148.