South African trusts are commonly structured with three trustees. This is often done deliberately: a family member, a professional, and an independent trustee, each bringing different interests and expertise to the table. In theory, three voices provide balance. In practice, three voices can produce an impasse.
When trustees disagree and cannot reach a decision, the trust is effectively paralysed. Assets cannot be distributed. Investments cannot be made. Resolutions cannot be passed. And unlike a company, where the Companies Act 71 of 2008 provides detailed governance mechanisms for director deadlocks, the Trust Property Control Act 57 of 1988 offers very little structural guidance on what trustees should do when they cannot agree.
This article explains how trustee deadlock arises, what the law does and does not provide, and what trustees and beneficiaries can do when the process stalls.
What the Trust Property Control Act Says About Trustee Decision-Making
The Trust Property Control Act 57 of 1988 is the primary legislation governing trusts in South Africa. It sets out the duties of trustees, regulates the administration of trust property, and requires trustees to act with the care, diligence, and skill of a reasonable person.
However, the Act does not prescribe a default voting mechanism for trustee decisions. It does not specify whether decisions require unanimity or a simple majority. It does not set out a tiebreaker process. These matters are left to the trust deed.
Section 9 of the Act requires trustees to act jointly, but what “jointly” means in practice depends on how the trust deed defines the quorum and decision-making rules. If the deed requires unanimity, all trustees must agree. If it allows majority decisions, two out of three can bind the trust. If the deed is silent on either point, the default position under common law is that trustees must act unanimously.
This is where deadlock most often begins.
The Unanimity Trap
When a trust deed in South Africa fails to specify a voting threshold, the common-law default position is unanimity. This means one trustee can block a decision that the other trustees wish to make. In practice, this creates a situation where:
- One trustee refuses to sign a resolution.
- The other two cannot proceed without the third.
- Beneficiaries are unable to receive distributions.
- Property cannot be transferred or managed.
- The trust may be unable to meet its financial obligations.
The problem is compounded when the dissenting trustee has a personal interest in the outcome, for example, a trustee who is also a beneficiary and is blocking a decision that would reduce their share. The Act imposes a duty on trustees to act in the interests of beneficiaries and in accordance with the trust deed, but enforcing that duty when there is genuine disagreement is not straightforward.
What Happens When the Trust Deed Is Silent
If the trust deed does not address deadlock, the trustees and beneficiaries are not without options, but those options all involve either negotiation or the courts.
Mediation or negotiation is often the first step. Trustees may agree to appoint a neutral third party to facilitate a resolution. This is not provided for in the Act, but is not prohibited by it either. If all parties are willing, this can resolve the impasse without litigation.
Removal and replacement of a trustee is another route. Under Section 20 of the Trust Property Control Act, the Master of the High Court has the power to remove a trustee under certain circumstances, including where the trustee refuses to perform their duties. A court may also order removal. However, this is not a quick process and requires a substantive basis beyond mere disagreement.
Court intervention is the most formal route. The High Court has inherent jurisdiction over trusts and can give directions on the administration of a trust where trustees are unable to act. This route is available but costly and time-consuming.
Practical Implications for Trustees and Beneficiaries
Deadlock has real consequences for everyone connected to the trust.
For trustees:
- A trustee who refuses to participate in decision-making without good cause may be in breach of their fiduciary duty.
- Trustees can face personal liability if the trust suffers loss as a result of their inaction.
- Acting without the required number of signatures on a resolution may invalidate that decision entirely.
For beneficiaries:
- Distributions can be delayed or blocked indefinitely.
- Where the trust holds property, decisions about that property, including sale, maintenance, or transfer, may stall.
- Beneficiaries do not have a direct right to remove a trustee simply because they disagree with the trustee’s position. They would need to approach the court.
For the trust deed:
- Deadlock provisions should ideally be included at the drafting stage. These can include majority decision-making clauses, a casting vote for the independent trustee, or a formal dispute resolution mechanism such as referral to a mediator or arbitrator.
- An independent trustee with a casting vote is one of the most practical structural solutions available.
Conclusion
The Trust Property Control Act 57 of 1988 provides a framework for trustee conduct, but does not resolve what happens when trustees cannot agree. Deadlock is a foreseeable risk in any trust with multiple trustees, and it is most damaging when the trust deed provides no mechanism for breaking it.
The most effective protection is a well-drafted trust deed that specifies how decisions are made, what constitutes a quorum, and what happens when trustees disagree. Trusts that lack these provisions are exposed to delays, litigation, and in some cases, significant financial loss.
If you are a trustee facing a deadlock or a beneficiary whose distributions have stalled, the starting point is always the trust deed. What it says and what it fails to say determine what options are available.
While every reasonable effort is taken to ensure the accuracy and soundness of the contents of this publication, neither the writers of articles nor the publisher will bear any responsibility for the consequences of any actions based on information or recommendations contained herein. Our material is for informational purposes.