A warning to trustees: a trust structure will not protect you from your conduct

A trust is governed by the Trust Property Control Act — a statute of just a few pages — while a company falls under the Companies Act, spanning many hundreds of pages. That legislative gap means the rules on authority, representation, and accountability for trusts are far less prescriptive — and, as the High Court judgment in Standard Bank of South Africa Limited v Janse Van Rensburg and Others [2026] ZAFSHC 367 demonstrates, the consequences of getting it wrong can be severe for lenders and trustees alike.

In this matter, the bank extended overdraft and credit facilities to an individual and was held to have justifiably relied on three associated family trusts signing as guarantors and co-principal debtors for an amount exceeding R20.8 million. Throughout the commercial relationship — including settlement negotiations — the individual held himself out as the authorised representative of the trusts.

Only after enforcement proceedings commenced did the trustees allege, for the first time, that:

• the individual lacked authority to represent the trusts; and

• that the underlying trust resolutions authorising the underlying guarantees were defective and not properly passed.

The court considers the distinction between conduct that is voidable and conduct that is void from inception. While public policy and the Constitutional Court's repeated endorsement of the principle that agreements freely entered into must be honoured can rescue voidable conduct, truly void conduct requires more. Specifically, the concepts of ostensible authority and estoppel become critical. In this instance, the allegations of the trustees would have resulted in conduct void from inception and effectively absolving them of responsibility and liability in terms of the arrangements.

The court did not agree with the trustees’ allegations. It quoted existing caselaw which states that those who choose to conduct business through the medium of trusts "cannot enjoy the advantage of a trust when it suits them and cry foul when it does not."

Applying these principles, it was found that the trustees' conduct and documentation created a reasonable impression which the bank relied upon to its prejudice. This conduct included resolutions furnished to the Bank and correspondence acknowledging the indebtedness. The trustees failed in the proceedings to rebut that evidence or to show that the bank knew, or ought reasonably to have known, of any lack of authority. The court noted that the same facts satisfied the requirements for estoppel. Where trustees are in a position to rebut a prima facie impression of authority and fail or elect not to do so, they must bear the consequences.

For trustees, this is a cautionary tale.

A trust structure and relying on technical loopholes cannot rescue trustees from responsibility or liability where the conduct as trustees indicates an actual intention to be bound. Anyone transacting with trusts must ensure that they have taken the necessary steps to avoid a dispute, and to protect yourself should a dispute arise.

First, conduct proper due diligence on the trust, its deed, and the authority the trustees purport to act upon. Second, ensure your agreements contain appropriate protections including warranties of authority, notification obligations, and undertakings that all required resolutions have been obtained.

Signature of documents by all trustees is a recommended step.

In a landscape where trusts remain a vehicle of choice for estate planning and asset protection, this case is a powerful reminder that the courts will hold trustees to the representations they make — and will not permit the trust form to be used as a shield against obligations voluntarily undertaken.