Case  CCT 171/23
[2025] ZACC 14

Hearing Date: 22 August  2024

Judgement Date: 01 August 2025

Post Judgment Media Summary  

The following explanatory note is provided to assist the media in reporting this case and is not binding on the Constitutional Court or any member of the Court.

On Friday, 1 August 2025, the Constitutional Court handed down judgment in an application for leave to appeal against the judgment and order of the Supreme Court of Appeal. The application concerned a dispute over whether a decision taken at a trust meeting, by only two of three trustees, to sign a suretyship agreement that bound the Trust, was duly authorised.

The applicant is Shepstone and Wylie Attorneys, a law firm. The respondents are the trustees of the Penvaan Property Trust (the Trust). In terms of the Trust Deed, its beneficiaries are Mr Volker, Mrs Volker and Mr Volker’s descendants. In May 2013, there were three trustees, being Mr Volker, Mrs Volker and Mr de Witt. On 16 May 2023, Mrs Volker gave notice to the trustees of an urgent trustee meeting, one of the purposes of which was to determine whether the Trust should sign a suretyship for Mrs Volker’s personal debts, being legal fees to Shepstone and Wylie, that she had incurred in pursuance of her divorce action from Mr Volker. This meeting was originally scheduled to be held on 23 May 2013 in Tweedie, KwaZulu-Natal. On 21 May 2013, Mr Volker responded by email to Mrs Volker’s notice, stating that he had no problem with the trustee meeting other than the fact that he could not attend on such short notice, and that the proposed location was too far. In the alternative, Mr Volker suggested that the meeting should rather be held in Penvaan, Vryheid, which was closer to his home. That same day, Mrs Volker updated the date and location of the meeting, as being set for 25 May 2013 in Vryheid to accommodate Mr Volker. Additionally, Mrs Volker provided notice to Mr Volker that if he did not attend the meeting, the meeting would proceed without him. Ultimately, Mr Volker did not attend the meeting on 25 May 2013. Mrs Volker and Mr de Witt continued the meeting without Mr Volker, and at such meeting, Mrs Volker and Mr de Witt resolved that the Trust would act as surety for Mrs Volker’s legal fees to Shepstone and Wylie. Mrs Volker and Mr de Witt then signed a deed of suretyship in favour of Shepstone and Wylie to that effect. Consequently, Shepstone and Wylie sought to claim payment for Mrs Volker’s debts, from the Trust, relying on the signed deed of suretyship. Such claim was opposed by the Trust, on the grounds that the deed of suretyship was not binding on the Trust, as the decision was taken by only two of the three trustees, which meant that there was not a unanimous resolution amongst all trustees as required.

On the question of whether the two trustees were authorised to enter into the suretyship agreement in question, the High Court found in the negative. The High Court reasoned that Mr Volker did not participate in the meeting, and thus his views regarding the suretyship were unknown. The High Court went on to note that in terms of South African trust law, where a Trust Deed does not explicitly contain a clause that enables for majority decision making, the general rule is that substantive decisions on external matters (dealing with parties outside of the trustees) required all trustees to act jointly which, in turn, required unanimous agreement/resolution from all trustees. In interpreting the Trust Deed, the High Court concluded that Clause 16 (as relied on by Shepstone and Wylie) enabled for majority decision making only in the event of a disagreement between the trustees. Of which, there was none as according to the High Court, Mr Volker did not abstain from deciding, nor did he disagree, but rather, his decision was simply unknown at the relevant time. The High Court also found that the Trust Deed did not contain a clause that enabled for majority decision making. Hence, the High Court dismissed the application.

Shepstone and Wylie appealed to the Supreme Court of Appeal. The majority judgment concurred with the finding of the High Court, being that Clause 16 applies only in terms of disagreements between the trustees, and that on the facts, Mr Volker did not demonstrate any disagreement, but he simply did not participate in the meeting. The Court then went on to state the principles of trust law, noting that trustees are co-owners of a trust’s assets, and in the absence of a specific majority clause in the Trust Deed, for any decision to be binding on the Trust, there must be unanimous resolution and joint action by all the trustees. Additionally, the Supreme Court of Appeal held that the Trust Deed did not envisage that a suretyship agreement should be concluded on behalf of a trustee, for the trustees’ personal debts, as according to Clause 11 of the Trust Deed, a trustee’s powers were to be exercised for the purpose and benefit of the Trust.

The minority judgment of the Supreme Court of Appeal concurred with the finding of the majority that the exercise of trustee powers must be unanimous and for the benefit of the Trust to be binding on the Trust, and on the facts, the decision by the two trustees to execute a deed of suretyship in favour of Shepstone and Wylie was not binding on the Trust. Accordingly, the appeal was dismissed with costs.

Before this Court, Shepstone and Wylie sought leave to appeal the judgment and order of the Supreme Court of Appeal. Shepstone and Wylie submitted that this Court had jurisdiction as this matter raised an arguable point of law that was of general public importance. According to Shepstone and Wylie, the judgment by the Supreme Court of Appeal on this matter provides a material contradiction from the law as expressed by the Supreme Court of Appeal in the past, and this current expression of the law is wrong. An incorrect alteration of trust law which, given the placing of the Supreme Court of Appeal in the hierarchy of South African courts, raises both an arguable point of law which is also of general pubic importance, given that the lower courts would be bound to apply this incorrect expression of trust law. Consequently, an appeal to the Constitutional Court is the only way to correct the judgement of the Supreme Court of Appeal.

On the question of jurisdiction, Tolmay J, penning the unanimous judgment, noted that a misapplication of the law to a set of facts does not engage this Court’s jurisdiction, but rather, a misstatement of the law (an error of law) would amount to an arguable point of law, which would engage this Court’s jurisdiction. The Court concluded that a misstatement of the law by the Supreme Court of Appeal was sufficient to grant leave to appeal to this Court.

As to the merits, this Court concluded that the Supreme Court of Appeal did get the law wrong, in that a Trust Deed can provide for something other than joint action by the trustees, and which does not require the existence of a majority clause in the Trust Deed. Furthermore, this Court noted that the Supreme Court of Appeal introduced an unwarranted distinction between the decisions of trustees in relation to internal and external matters, which had the effect of incorrectly restricting the ability of a Trust Deed to modify the requirement of joint action. This Court went on to note that the Supreme Court of Appeal erred on the notion that the signed deed of suretyship was a written resolution, when correctly stated, such signing of the deed was an execution of the deed pursuant to the resolution which had been taken at a quorate meeting of the trustees.

Additionally, this Court found that the Supreme Court of Appeal failed to appreciate the distinction between unanimous-decision trusts and majority-decision trusts, of which the latter category the Trust in question falls. In such a case as this one, whereby there is a freestanding majority vote clause, trustees are to act jointly, but are not required to act unanimously.

In concluding, this Court found that, as per Clause 13.1, a quorum of two out of three trustees can meet to dispatch business if the third trustee is given reasonable notice and does not attend the meeting. Should two of the three trustees meet and agree on a matter (if there is no disagreement between both trustees on the matter), then Clause 16.2 is irrelevant, and Mr Volker’s presence as the Chairman is not necessary. Ultimately, this Court concluded that the meeting between Mrs Volker and Mr de Witt was duly authorised and that the two trustees were duly authorised to sign the suretyship agreement on behalf of the Trust in favour of Shepstone and Wylie. In such premises, the judgment and order of the Supreme Court of Appeal was set aside and substituted with an order that upheld the appeal with costs..

The Full judgment  here