On 1 August 2025, the Constitutional Court delivered a landmark ruling that has reshaped the legal landscape around trustee decision-making in South Africa. The judgment brought long-awaited clarity following the controversial Supreme Court of Appeal (SCA) ruling in Shepstone and Wylie Attorneys v Abraham Johannes de Witt N.O. and Others 2023 (6) SA 419 (SCA), which had sparked widespread concern in the legal, business, and financial sectors.
The Controversy Created by the SCA
The SCA’s 2023 decision had unsettled the law on how trustees manage trust property. The court held that trustees are required to act jointly in all circumstances, and even where a trust deed expressly authorises majority decisions, every resolution still needed to be signed by all trustees.
The practical effect of the judgment was severe: even if a trust deed contained a valid majority decision clause, the absence of one trustee’s participation (even after receiving notice) rendered the decision ineffective. This interpretation caused uncertainty for trust administration, banking transactions, and commercial dealings involving trusts.
In the specific case, the SCA invalidated a suretyship agreement entered into by two of three trustees of a trust, ruling it unenforceable because the third trustee had not attended the meeting, despite receiving proper notice.
The Constitutional Court’s Intervention
The Constitutional Court overturned the SCA’s position, sharply criticising its reasoning. The apex court drew a critical distinction between two categories of trusts:
- Unanimous-decision trusts – where the trust deed does not provide otherwise, trustees must act together and unanimously.
- Majority-decision trusts – where the trust deed includes a valid clause permitting majority decisions, the decision of the majority is binding, provided notice requirements and quorum rules are satisfied.
In this case, the trust deed clearly permitted majority decision-making. The Constitutional Court therefore confirmed that the suretyship signed by two trustees was valid and binding, despite the absence of the third trustee.
Why This Judgment Matters
This ruling restores certainty to trust law in South Africa and provides crucial reassurance to trustees, beneficiaries, businesses, and financial institutions dealing with trusts.
- For trustees: The decision confirms that majority clauses in trust deeds are enforceable, reducing the risk of administrative deadlock.
- For banks and businesses: The ruling provides security when entering into transactions with trusts, ensuring that valid majority resolutions cannot be undone simply because one trustee did not participate.
- For beneficiaries: The judgment strengthens the enforceability of transactions entered into on behalf of a trust, safeguarding financial arrangements.
Key Takeaway
The Constitutional Court has firmly established that the trust deed governs trustee decision-making. Where a deed requires unanimity, all trustees must act together. Where it allows majority decisions, compliance with notice and quorum requirements is enough to bind the trust.
This decision marks a decisive return to legal certainty in South African trust governance, overturning the uncertainty caused by the SCA’s interpretation and reaffirming the principle that the terms of the trust deed remain paramount.
