By Pieter Strydom – Associate
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It is common practice in the South African commercial sphere for a family trust to govern and head the intricate workings of family businesses due to the advantages and protection that is offered by a trust. The structure, however, is not without its compliance and administration drawbacks. This article deals with the latest caselaw affecting specifically the instances where a trustee resigns from his / her position and when such resignation is deemed to be effective.
Legislation
Section 21 of the Trust Property Control Act 57 of 1988 (the “Act”) affords trustees the right to resign from their position, even in circumstances where the trust instrument does not address the resignation of trustees. Section 21 provides that a trustee may resign by notice in writing to:
- the Master of the High Court (Master); and
- the beneficiaries who have legal capacity, or to the tutors or curators of the beneficiaries of the trust under tutorship or curatorship.
Recent Caselaw
In Die Orffer Landgoed (Pty) Ltd v Orffer NO and Others (17494/2024) [2025] ZAWCHC 4 (“Orffer”), a dispute unfolded over the exact date upon which the trustee’s resignation became effective. The findings in the Orffer case differed from previous matters where this legal issue of trustee resignations required the Court’s determination, being Soekoe NO v Le Roux [2007] ZAFSHC 135 (“Soekoe”) and Meijer NO v FirstRand Bank Limited [2012] ZAWCHC 23 (“Meijer”).
In the Orffer case the Court was tasked to declare a special power of attorney as original, however, in order to grant the requested declaration, the Court was required to first determine whether a resignation of a trustee is effective:
- immediately upon providing a resignation letter in terms of the trust deed, or
- at the time when the Master receives the trustee’s resignation, i.e. stamps receipt of the resignation letter, or
- at the date upon which the Master notes the resignation (i.e. formal acknowledgement from the Master), or
- at the date upon which new letters of authority are issued by the Master.
This undetermined legal issue was dealt with in Soekoe as well as in the matter of Meijer, although the Court reached conflicting conclusions in these respective matters.
Relevant facts to consider in the Orffer-case:
- Mr Stoffberg who acted as an independent trustee of the Bloubank Boerdery Trust (the “Trust”), delivered his letter of resignation to the Trust on 12 June 2019;
- The Office of the Master of the High Court issued a letter on 29 March 2021 confirming receipt of the 12 June 2019 resignation;
- The Trust’s instrument (Trust Deed) provided for the resignation of a trustee and further that a trustee ceases to hold office as a trustee when it resigns, by way of written notice to the remaining trustees;
- The Trust provided consent to Orffer Landgoed (Pty) Ltd (the “Company”) to sell, amongst others, immovable property to settle outstanding debts. A special power of attorney was concluded on 14 December 2022 by the Trust in favour of the Company for the sale of the immovable property;
- The Company, subsequently, lost the original special power of attorney which is a requirement for the transfer of the property to be finalised and registered;
- The trustees of the Trust refused to issue a new special power of attorney in favour of the Company and disputed the Company’s authority to sell the immovable property, citing that the Trust was not duly authorised to issue the special power of attorney as Mr Stofberg was required to participate in the Trust’s decision to sign the special power of attorney;
- The Trust maintained that Mr Stofberg’s resignation has no legal effect until the letters of authority are amended by the Master to reflect such a change in the trustees of the Trust;
- The Company contended that the resignation was in line with the Trust’s trust deed, and therefore effective from the date upon which the Master acknowledged receipt of the resignation.
Conflicting legal positions:
- The Court in Meijer held that the date upon which the Master acknowledges the trustee’s resignation should be the date on which the resignation is deemed to take effect;
- The Court in Soekoe held that the resigning trustee remains accountable to its fellow trustees until the Master, by providing an amended letter of authority, removes the trustee from office. The trustee will remain liable to its fellow trustees and its duties will only cease once it has been succeeded by a newly appointed trustee; and
- The Court in Orffer held that in this circumstance, mainly due to the trust deed being silent on the effective date of the resignation, the resignation was deemed to be effective upon the date when the Master noted the resignation, being 29 March 2021. Orffer therefore concurred with the Meijer judgment to an extent.
- It is imperative to note that both Meijer and Orffer was adjudicated in the Western Cape Division of the High Court, whereas Soekoe was adjudicated in the Free State Division.
- Cognisance of the application of the legal principles within the different Divisions of the High Court should be taken.
Conclusion
Having considered the lacuna in law regarding the effective date of a trustee’s resignation, it is attractive reasoning to follow the Meijer and Orffer approach whereby the Master’s formal acknowledgement of receipt of the resignation is the moment when the resignation becomes effective.
Considering the conflicting views held by the Court it is important to have regard to the trust instrument and what is stated therein regarding the resignation of a trustee. It is advised that ambiguous and unclear wording of a trust deed should be avoided.
By implementing clear and concise wording in the trust instrument, unnecessary delays and costly litigation could be avoided within the commercial or family structure.