Pretorius N.O and Another v Thaba Chweu Local Municipality and Another (5502/2023) [2025] ZAMPMBHC 107 (20 October 2025)
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The applicants, the two trustees of the LS Family Trust (Trust), brought an application to, amongst others, declare a sale of two properties between, Thaba Chweu Local Municipality (first respondent) and the Trust, void ab initio and to set aside the transfer of the properties. The second respondent was the Registrar of Deeds.
The first respondent opposed the application. Based on the conduct of the trustees of the trust over the past 12 years, and specifically the fiduciary obligations of the trustees to keep proper accounting records and act as responsible trustees, created the impression that the trust was duly authorised to enter into the deed of sale and, as such, they were of the opinion that the trustees of the trust is estopped from denying that they did not have the authority to enter into the contract. Other defences were also raised by the first respondent, which is not relevant for this summary.
At the time of entering into the deed of sale with the first respondent, the Trust had two trustees, namely Ms LS and Mr JCS.
The resolution by the Trust to enter into the deed of sale was only signed by Ms LS.
The Court (Managa AJ) as a point of departure, considered the contents of the Trust Deed and found that the Trust Deed requires that decisions of the Trust must be made by a majority of trustees. Since there were only two trustees, it effectively means that both trustees have to participate in the decision-making process for the decision to bind the Trust.
The Court then considered the resolution by the trustee(s) of the Trust to purchase the property, as well as the deed of sale itself. From that it was clear that only one trustee, Ms LS, signed the documents, which was not in line with the stipulations of the Trust Deed, which require the majority of trustees to make decisions on behalf of the Trust.
The Court concluded that apart from the fact that decisions of the trustees must be taken by a majority of the trustees, it could not find any other provision in the Trust Deed which confers powers on one of the trustees to transact on behalf of the Trust in the absence of another trustee.
Whether Estoppel Applies to a Trust
The Court then examined the structure of a Trust and its legal standing as an entity at the hand of case law to determine whether estoppel applies to a trust. The Court indicated that there are important considerations provided in case law to determine this.
The first is that the Trust assets can only be bound by the decisions of the trustees which are in line with the stipulations of the Trust Deed. The second is that third parties must be careful when dealing with a Trust. The third one is that, unlike a company, the Trust does not have internal formalities. The fourth one is that the Trust is a sui generis entity and the fifth one is that the authority conferred by a Trust Deed is a matter of internal management with which outsiders need not concern themselves.
The Court then indicated that estoppel, by definition, is meant to protect the interests of a third party against an entity, by allowing to assume that the principal gave the requisite authority to the agent. In terms of estoppel, even if there was no authority given by the principal, the company will be bound as a matter of law.
The Court concluded that a Trust, on the other hand, is different. The trust assets can only be bound if there is adherence to the stipulations of the Trust Deed. Therefore, an argument that estoppel should apply to a Trust is against the foundational principle of the Trust. It will highly prejudice the beneficiaries of the Trust.
The Court further referred to the judgement of Mdalana-Mayisela J in the matter of Nedbank Ltd v Mhlari NO and Others 2022(6) SA 438 (GJ) wherein it was found that estoppel applies to a Trust. The Court clearly indicates that it respectfully disagrees with the reasons and findings in the Mhlari case and then concluded that it does not agree with the conclusion that estoppel applies to a Trust as it will defeat the very essence of a Trust.
The Court thus found that estoppel does not apply to a Trust.
The Court declared that the deed of sale between the Trust and first respondent to be void ab initio and also declared the transfer of the properties as invalid.
Each party had to bear its own costs.
Summarised by Jan du Plessis, FISA CEO