Nieuwoudt NO and Another v Vrystaat Mielies (Edms) Bpk. (325/2002) [2003] ZASCA 128; [2004] 1 All SA 396 (SCA); 2004 (3) SA 486 (SCA) (28 November 2003)

Nieuwoudt NO and Another v Vrystaat Mielies (Edms) Bpk. (325/2002) [2003] ZASCA 128; [2004] 1 All SA 396 (SCA); 2004 (3) SA 486 (SCA) (28 November 2003)

The Supreme Court of Appeal held that the Turquand rule, which allows third parties to assume regularity of internal management in companies, does not apply to trusts in the same way. Clause 23.4 of the trust deed only permitted trustees to delegate authority for official purposes, not for the contract in question. The trust deed required both trustees to act jointly, and there was no evidence that the second appellant authorised the first appellant to conclude the contract. The respondent's reliance on the Turquand rule was misplaced, as the rule does not extend to trusts where joint action is required and delegation is not established. The principles of agency and ostensible authority...

Citation
[2003] ZASCA 128
Parties
Appellant: William James Nieuwoudt NO; Appellant: Talitha Cecilia Nieuwoudt NO; Respondent: Vrystaat Mielies (Edms) Beperk
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
28 November 2003
Case Number
325/2002
Procedural Posture
Civil Appeal / Appeal From the Orange Free State Provincial Division
Outcome
Appeal upheld; order of the court a quo set aside and replaced with a referral to trial.
Judges
Harms, Farlam, Brand, Cloete, Van Heerden
Legal Topics
Trust Deeds, Joint Action of Trustees, Turquand Rule, Ostensible Authority, Agency Principles
Commercial and Corporate Land and Property Trust Deeds Joint Action of Trustees Turquand Rule Ostensible Authority Agency Principles

Case Brief

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Parties

William James Nieuwoudt NO

Appellant

Talitha Cecilia Nieuwoudt NO

Appellant

Vrystaat Mielies (Edms) Beperk

Respondent

Procedural Posture

Civil Appeal / Appeal From the Orange Free State Provincial Division

Legal Issues

  1. 1 Whether the Turquand rule applies to trusts, particularly business trusts.
  2. 2 Whether the trust deed authorised one trustee to bind the trust in the sale agreement.
  3. 3 Whether the respondent could rely on the Turquand rule to enforce the contract against the trust.

Ratio Decidendi

The Supreme Court of Appeal held that the Turquand rule, which allows third parties to assume regularity of internal management in companies, does not apply to trusts in the same way. Clause 23.4 of the trust deed only permitted trustees to delegate authority for official purposes, not for the contract in question. The trust deed required both trustees to act jointly, and there was no evidence that the second appellant authorised the first appellant to conclude the contract. The respondent's reliance on the Turquand rule was misplaced, as the rule does not extend to trusts where joint action is required and delegation is not established. The principles of agency and ostensible authority...

Court Disposition

Appeal upheld; order of the court a quo set aside and replaced with a referral to trial.

Orders

  • The appeal succeeds with costs.
  • The order of the court a quo is set aside and replaced.