In an important judgment handed down on Friday 1 August 2025, the Constitutional Court has clearly and succinctly set out the principles applicable to decision making processes applicable to trusts.

Since it was handed down in May 2023, the Supreme Court of Appeal (SCA) judgment in Shepstone and Wylie Attorneys v Abraham Johannes de Witt N O and Others 2023 (6) SA 419 (SCA) has caused uncertainty and consternation in legal, business and banking circles.  Thankfully, that judgment has now been overturned by the Constitutional Court in a judgment that was scathing of the SCA judgement.

The SCA decision had held that trustees, when dealing with trust property, are required to act jointly and that even when the trust deed provides for a majority decision to be effective, all resolutions must be signed by all trustees.  It further held that a majority decision will not bind the Trust where one of the trustees did not participate in the decision-making, even if invited to participate.  As a result, a suretyship that this particular Trust had concluded in favour of Shepstone & Wylie attorneys as security for legal fees incurred by a beneficiary, was held by the SCA to be invalid on the basis that only 2 out of 3 trustees has agreed to it at a meeting where all trustees were given notice and one trustee elected not to attend the meeting.

In contrast to the SCA’s decision, the Constitutional Court drew a very clear distinction between unanimous-decision trusts and majority-decision trusts. 

In the latter type, according to the Constitutional Court, the Trust Deed includes a majority vote clause allowing the decision of the majority of trustees to bind the Trust, provided the notice and quorum provisions are followed.  In the absence of such a clause, the trustees must act not only jointly but also unanimously.  The Trust Deed in this case was held to be a majority-decision type of trust and the suretyship was therefore held to be valid.