A comparative perspective on the "joint-action rule" in the context of business trusts

CITATION: De Waal, M.J. & Du Plessis, I. 2014. A comparative perspective on the "joint-action rule" in the context of business trusts. Stellenbosch Law Review = Stellenbosch Regstydskrif 25(2):343-360.The original publication is available at https://journals.co.za/content/journal/ju_slrThe "joint-action rule" in South African trust law entails that all trustees must act jointly in order to bind the trust. Non-compliance with the rule will most often lead to the invalidity of a contract between the trustees and an outsider. Hence, in the context of business trusts, the application of the rule may be particularly problematic. We submit that the main reason why the business trust remains a useful institution is that the trust brings with it, through the importation of certain standard features, important advantages that need not be specifically bargained for. However, normal rules of trust law, such as the joint-action rule, must also be complied with. Hence, mechanisms to ameliorate some of the problematical effects of this rule can be put in place, such as provisions stipulating that decisions can be taken by a majority of the trustees, or that the trustees can delegate certain defined duties or powers. It is clear, however, that difficulties remain and that South African courts are still facing challenges in developing this area of trust law. But South Africa is not the only trust jurisdiction where the joint-action rule applies and where mechanisms have been developed to address the difficulties experienced with this rule. Comparing the position in South Africa to that in England, Scotland and Canada (including Québec), a remarkable degree of similarity between South Africa, on the one hand, and the other jurisdictions, on the other, as far as the basic application of the joint-action rule is concerned, can be noted. However, there are a number of differences as well. In many of the other jurisdictions legislation generally plays a much bigger role than in South Africa and it may provide a rich source of ideas for the development of this area of South African trust law.Publishers versio