March 1st, 2026
Shepstone and Wylie Attorneys v De Witt NO and Others 2025 (11) BCLR 1299 (CC)
By Sandile Khumalo
On 1 August 2025, the Constitutional Court in Shepstone and Wylie Attorneys v De Witt NO and Others 2025 (11) BCLR 1299 (CC), provided much needed clarity on the joint action rule that governs trustee actions and what constitutes a validly constituted trustee meeting and valid trustee resolutions.
Facts
The dispute herein arose from the affairs of the Penvaan Property Trust (the trust). Mr V was the founder of the trust; he was also a trustee of the trust, together with Mrs V (his wife) and Mr de Witt. Mrs V was a beneficiary of the trust. The trust deed authorised the trustees to provide suretyships to third parties for the debts of beneficiaries and required that at least two trustees be in office at all times. A quorum for trustee meetings was two trustees, and trustee decisions taken at meetings required majority support. The deed also allowed for written (round-robin) resolutions, but these required the signatures of all trustees. The deed also stipulated that agreements had to be signed by at least two trustees. The deed designated Mr V as chairperson of trustee meetings for as long as he remained a trustee.
In 16 May 2013, the trust faced sequestration proceedings brought by FirstRand Bank. Mrs V convened an urgent trustee meeting to be held on 23 May 2013, to decide whether the trust should oppose the sequestration and whether it should stand surety for her legal fees owed to Shepstone and Wylie Attorneys (SW) in her divorce proceedings against Mr V. Mr V objected to the notice on logistical grounds. The meeting was postponed to 25 May 2013 and relocated to accommodate him, but he ultimately chose to abstain despite receiving proper notice.
On 25 May 2013, Mrs V and Mr de Witt met as trustees, forming a quorum. They resolved to oppose the sequestration application and to bind the trust as surety for Mrs V’s legal fees. The two of them subsequently signed a deed of suretyship in favour of SW.
Several years later, when SW sought to recover its fees (exceeding R2 589 208) from the trust, the trust denied liability. It argued that the suretyship was invalid because it had not been authorised by all trustees and thus did not comply with the joint action rule.
Litigation history
The High Court (KwaZulu-Natal Division, Pietermaritzburg) found in favour of the trust, holding that trustees must act jointly in external matters and that the suretyship was invalid because only two of the three trustees had signed it.
On appeal, the Supreme Court of Appeal (SCA), by majority, upheld this decision. The SCA reasoned that trustees are co-owners of trust property and must act unanimously unless the trust deed expressly provides otherwise.
Relying heavily on Steyn and Others NNO v Blockpave (Pty) Ltd 2011 (3) SA 528 (FB) (Blockpave), the SCA held that trustees may disagree internally but decisions with an external effect required a unanimous resolution, and that all trustees must participate in decisions affecting the trust. The SCA further held that the suretyship was not for the benefit of the trust and thus was not authorised by the deed. SW’s appeal was dismissed.
SW then appealed to the Constitutional Court.
Issues at the Constitutional Court
The Constitutional Court framed the substantive trust related issues thus –
- whether the SCA had misstated the law; and
- whether, on a proper interpretation of the deed, two out of three trustees could, at a duly convened meeting of trustees, resolve to bind the trust to a deed of suretyship despite the absence of the third trustee from that meeting.
Reasoning and findings
The Constitutional Court held thus:
Misstatement of the law
The court held that the SCA had misstated the law. It rejected the proposition from Blockpave that trustees cannot disagree in external matters and that all trustees must participate in decisions binding the trust. The court endorsed academic criticism of Blockpave, noting that it introduced an unwarranted and artificial distinction between internal and external trustee decisions.
The court reaffirmed that the joint action rule is not immutable and can be modified by the trust deed.
Construing the trust deed
The court emphasised the need to distinguish between unanimous-decision trusts and majority-decision trusts. Where a trust deed contains a freestanding majority-vote clause, trustees must act jointly but not unanimously. Absent a freestanding majority vote clause, the trustees must act not only jointly but also unanimously.
The court rejected the argument that even in a majority-decision trust all trustees must sign resolutions authorising external transactions because insisting on the signature of a trustee who had notice of the meeting but chose not to attend would amount to ‘form over substance’.
The court clarified that the requirements for round-robin resolutions (which required all trustees’ signatures) must not be conflated with those applicable to resolutions taken at trustee meetings.
In this case, the decision to bind the trust as surety was taken at a quorate meeting with majority support, satisfying the requirements for a valid trustee resolution. The execution of the suretyship was also valid, as the trust deed required only two trustees to sign agreements binding the trust, which they did.
With reference to Mr V’s designation as chairperson for as long as he was a trustee, it held that such a clause does not prevent meetings from proceeding in his absence. Where a trustee with a right to chair receives notice but elects not to attend, the remaining trustees may elect a chairperson and proceed, provided a quorum is present.
Outcome and significance
The Constitutional Court upheld SW’s appeal, set aside the SCA judgment, and confirmed that the suretyship was valid and binding on the trust.
This decision is a decisive rejection of the false internal/external decision dichotomy introduced by Blockpave and clarifies that the terms of the relevant trust deed determine the scope of application of the joint action rule.
(Source De Rebus)