Court Reaffirms the Importance of a Resolution

COURT REAFFIRMS THE IMPORTANCE OF A RESOLUTION


Rich Redinger

The Johannesburg High Court recently confirmed the obligations of a trustee in the case of Goldex 16 (Pty) Ltd v Capper NO and Others[1]. In this matter, the trust bought a real right of extension (considered as property) from Goldex. Copper signed on behalf of the trust without a resolution or the other trustee as co-signatories. Goldex claimed performance in terms of the deed of sale and relied on the “standard” warranty of agreements of sale. This agreement set out the capacity of the Purchaser as follows:

 “Capacity of Purchaser

 12.1 Should the purchaser be a company, a close corporation or an existing trust, the signatory hereto warrants and binds himself in his personal capacity by virtue of his signature hereto-

12.1.1 that he is duly authorised to enter into this agreement on behalf of the company, close corporation or trust;

12.1.2 …

12.1.3 that all conditions have been complied with in order to make this agreement binding on the company, close corporation or trust; and

12.1.4 that the company, close corporation or trust will duly and punctually comply with all its obligations in terms of this agreement.”

The trust did not comply with its obligations in terms of the agreement and was therefore in breach.  Goldex claimed that Copper should be held personally responsible to comply with the conditions of the agreement.

The court held that in the absence of a written authority of one trustee to sign on behalf of the trust, such signatory cannot be regarded as an agent for and on behalf of the trust as contained in section 2(1) of the Alienation of Land Act[2], that provides that an agent can sign for and on behalf of another.

The sale agreement was therefore of no force and effect – the consequence of which was that the claim for specific performance in respect of the trust’s obligations in terms of the sale agreement, could not succeed.

Trustees, agents and sellers are therefore reminded of how important it is to ensure that trustees are duly authorised to sign an agreement on behalf of a trust, prior to entering into such an agreement, alternatively to ensure that all trustees sign the agreement.

This judgment reiterates the fact that non-compliance with the requirements of the Alienation of Land Act[3] that specifically calls for authorisation of an agent acting on behalf of another, will leave the agreement null and void – of no force and effect.  This is a pitfall that can easily be avoided by just requiring proof, which is normally in the form of a Trust Resolution, that the trustee signing for and on behalf of a trust, has the necessary written and signed authorisation in order to do so.

[1] (24218/2013) [2017] ZAGPJHC 305 (18 October 2017)

[2] Act 68 of 1981

[3] Act 68 of 1981

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.

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