THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable

Case No: 20062/2014
In the matter between:
STANDARD BANK OF SOUTH AFRICA LIMITED                             APPELLANT
and
GERHARDUS JOSHUA SWANEPOEL NO                                         RESPONDENT
Neutral Citation: Standard Bank v Swanepoel NO (20062/2014) [2015]  ZASCA 71
(22 May 2015)
Coram:
Lewis, Mhlantla, Pillay JJA and Schoeman and Dambuza AJJA
Heard:
11 May 2015
Delivered:  22 May 2015
Summary:  The naming of a trust as a party to a contract, despite the fact that it
does not have legal personality, does not render the contract invalid where it is clear
that its trustees or trustee acted for the trust in concluding the contract.

___________________________________________________________________

ORDER

On appeal from: Gauteng Division of the High Court, Pretoria (Hughes J sitting as
court of first instance).
The appeal is upheld with costs. The order of the court a quo is set aside and
replaced with the following:
„The exception is dismissed with costs.‟
__________________________________________________________________
JUDGMENT

Lewis JA (Mhlantla and Pillay JJA and Schoeman and Dambuza AJJA
concurring)
[1] At issue in this appeal is whether a duly registered trust can be named as a
party to a contract, concluded by the sole trustee on its behalf. If not, the respondent,
the defendant in the court a quo, claims that he is not bound by two transactions: a
contract of loan (for agricultural production) and a business banking overdraft facility.

[2] The appellant is the Standard Bank of South Africa Ltd. On 3 November 2011
it concluded an „Agricultural Produce Loan‟ with the first respondent, Johannes
Swanepoel,  acting for the  Harne  Trust,  undertaking  to  lend  some   R1 312 860
to it on various terms. (I shall refer to the trust by name or as „the trust‟.) Secondly,
Swanepoel had, also as trustee of the Harne Trust, opened a business banking
account with the Bank in 2008, in terms of which the Bank undertook to lend and
advance moneys from time to time on the overdraft facility granted.

[3] Swanepoel, in his personal capacity, had in 2009 signed a deed of suretyship
guaranteeing the trust‟s obligations to the Bank, which would also have covered
liability under the 2011 loan agreement. The trust defaulted on repayment of the loan
capital and interest, and was overdrawn on the business account. The Bank
instituted action against Swanepoel in his capacity as trustee of the trust and against
him personally as surety. (It had also claimed against his brother as co-trustee, but
withdrew the action against him as it transpired that he was not a trustee of the
trust.)

[4] Swanepoel excepted to the particulars of claim, contending that the loan
agreement purported to be between the Bank and the Harne Trust: a trust is not a
legal person, he contended, and has no contractual capacity and thus no valid
contract was concluded. Accordingly, no valid cause of action was disclosed against
Swanepoel in his capacity as trustee and his accessory obligation as surety was also
unenforceable being in respect of an invalid contract. The same exception was
raised in so far as the business account was overdrawn.

[5] Hughes J in the Gauteng Provincial Division of the High Court upheld the
exception. She held that because the trust was not a legal person, and that it could
act only through its trustees, no contract of loan had been concluded and moneys
advanced by the Bank to the trust, by way of overdraft, also had no valid underlying
transaction. Thus the suretyship, being in respect of non-existent obligations, was
likewise unenforceable. The appeal against this judgment is with the leave of the
court a quo.

[6] The Bank argued on appeal that the finding of the court a quo, that a trust
cannot enter into a contract because it is not a legal person, is contrary to legal
principle and precedent, and fails to distinguish between trust capacity, authority and
nomenclature. Accepting as we must, for the purpose of determining whether the
particulars of claim disclose a cause of action, the fact that Swanepoel was the only
trustee, or was authorized by any other trustee to enter into a binding contract for the

trust, the question is whether the loan to the trust was concluded by him on behalf of
the trust.

[7] The basic principles governing the conclusion of a contract for a trust are
worth repeating. They are set out clearly in BOE Bank Ltd (formerly NBS Boland
Bank Ltd) v Trustees, Knox Property Trust [1999] 1 All SA 425 (D) at 432-7, a
decision approved by Cameron, De Waal and Wunsh in Honore’s South African Law
of Trusts 5 ed (2002) at 71. McCall J, referring inter alia to Commissioner for Inland
Revenue v Friedman & others 1993 (1) SA 353 (A) at 370E-I, and Braun v Blann and
Botha NNO & another 1984 (2) SA 850 (A) at 859E-F, said (at 434h-i)
„However, whatever its true legal nature may be, both our common law and our legislation
have recognised the existence of an arrangement whereby assets and liabilities are vested
in a trustee or in trustees. This arrangement is, in everyday parlance referred to as “a trust”
and individual trusts are often given a name in the deed conferring the trust property, and the
powers to administer it, on the trustee or trustees.‟

[8] This court in Braun v Blann, as McCall J pointed out, has referred to a trust as
a „legal institution sui generis‟. It is a legal entity though it does not have legal
personality. And the Trust Property Control Act 57 of 1988 defines a trust as „the
arrangement through which the ownership in property of one person is by virtue of a
trust instrument made over or bequeathed‟ to a trustee or to beneficiaries designated
in the trust instrument.

[9] McCall J continued, in BOE Bank (at 436d-e): „[I]t is clear that in the
developing law of trusts in South Africa, it is recognised that a trust has a legal
existence, whether it be called “an entity”, “an institution” or “an arrangement”.‟
Moreover, said the court, cases in the name of a trust are not unknown – a reference
to Rosner v Lydia Swanepoel Trust 1998 (2) SA 123 (W).

[10] In BOE Bank the court had to determine an issue on all fours with this matter:
whether the principal debtor, for which a defendant had bound himself as surety, was
sufficiently identified when referred to as a trust. McCall J said (at 436f-g):
„It may well be that it would have been more correct to describe the principal debtor as the
named Trustees, in their capacity as Trustees of the Trust or as the Trustees for the time
being of the Trust. Certainly, as appears from Rosner’s case . . . where there is litigation
against a trust, the trustees in their representative capacity and not the trust, as such ought
to be cited. That however, is not the end of the matter because it is clear that . . . the identity
of the creditor, the surety and the principal debtor must be capable of ascertainment by
reference to the provisions of the Deed of Trust, extrinsic evidence . . . .‟

[11] That principle has been affirmed often by this court including in Sapirstein &
others v Anglo African Shipping Co (SA) Ltd 1978 (4) SA 1 (A) at 12B-E which dealt
with the identity of the parties to a suretyship or of the principal debtor. If the identity
of all the parties can be ascertained by having regard to a trust deed, or extrinsic
evidence, a suretyship must be read accordingly. Indeed, even in construing a will
where an estate, or its residue, is left to a trust, or a bequest is made to a trust,
regard may be had to the trust deed to ascertain the identities of the trustees:
Kohlberg v Burnett NO & others 1986 (3) SA 12 (A) at 25F-26B.

[12] In BOE Bank the court held that the description of the principal debtor as a
trust in the deed of suretyship was sufficient identification and that the suretyship
was enforceable. The principles enunciated by the court, and all the authorities on
which it relied, are in my view correct. The question that then arises is whether this
matter is in any way distinguishable.

[13] The Bank‟s particulars of claim (which I shall reflect as if action had not been
instituted against Swanepoel‟s brother) alleged that Swanepoel had entered into a
written agreement of loan in his capacity as a trustee of the Harne Trust duly
represented by him. A copy of the agreement was attached. The agreement
reflected Harne Trust, with its registration number set out, as the „borrower‟. The

agreement set out the amount of the loan, which was to be repaid over a period of
eight months. The Bank was entitled to charge interest on the outstanding balance
and to debit the account of the trustees for all advances, bank charges and interest.
The agreement was signed by Swanepoel „on behalf of the borrower‟, referred to
again as the Harne Trust with its registration number.

[14] In so far as the overdraft with the Bank was concerned, the Bank also alleged
that the application to open the business account was signed by Swanepoel on
behalf of the Harne Trust, and that the suretyship signed by Swanepoel guaranteed
the repayment of advances and payment of interest and costs.

[15] The Bank, according to the particulars, made advances in terms of the
agricultural production loan, and pursuant to the business loan agreement,  and
debited the accounts with interest, fees and costs. The amount advanced and
repayable to the Bank, it contended, was some R640 688, and the amount by which
Swanepoel‟s account was overdrawn in February 2013 was some R66 342. It
claimed these amounts plus interest.

[16] The agreements are both in standard form, as is the suretyship. The
agricultural loan was authorized by a resolution of the „Trustees of Harne
(Proprietary) Ltd‟ a puzzling nomenclature (but undoubtedly an error arising because
the resolution was in standard form and catered for companies, trusts and other legal
entities),  but was signed by Swanepoel as trustee. A resolution was embodied in the
application for the business account, and that too was signed by Swanepoel „for‟ the
Harne Trust.

[17] In my view, while the documents were not carefully drawn, it is patent that
Swanepoel, when signing the loan agreement and the application for the business
account, was clearly doing so in his capacity as trustee of the trust. I fail to
understand the argument for Swanepoel, accepted by the court a quo, that ex facie

the two agreements the Bank intended to contract with the trust, and not its trustee.
Both contractual documents clearly designate the trust (as duly registered) as the
party to the contract (the borrower) acting through Swanepoel as trustee. There is no
indication whatsoever that Swanepoel was acting in his personal capacity. And there
is nothing in the particulars of claim that suggests that the trust was in some way
acting without a trustee.

[18] The court a quo quoted passages from the judgment of this court in Land and
Agricultural Bank of South Africa Ltd v Parker & others 2005 (2) SA 77 (SCA) paras
9 and 10, where Cameron JA reaffirmed that a trust does not have legal personality
and, in the absence of the authorization of the trustees, as required by the deed of
trust, cannot be bound by a contract. The court a quo concluded from this that the
Harne Trust could not have entered into a contract with the Bank. But Parker says no
such thing. It simply emphasizes the principle that all trustees must act jointly in
order to bind a trust, unless otherwise permitted by a trust deed, which might provide
for prior authority to be given by the trustees to one of them. (See also Thorpe &
others v Trittenwein & another 2007 (2) SA 172 (SCA) paras 9 and 12 to 14.)

[19] Hughes J also found that a court may not refer to extrinsic evidence to identify
the parties to a contract, citing in this regard KPMG Chartered Accountants (SA) v
Securefin Ltd & another 2009 (4) SA 399 (SCA) para 39. Again, the authority has no
bearing on the issue. That paragraph dealt with interpretation of a contract and the
parol evidence rule. Evidence to explain a provision or to identify parties or a merx is
admissible, as the cases cited above show, and the passage in KPMG cited does
not in any way suggest otherwise. It points out only that parol evidence may not be
led to alter or vary the terms of a contract. And it says expressly that in interpreting a
contract the court must have regard to the context, or factual matrix, which in this
case would be all the documents relied upon and the trust deed.

[20] In the circumstances it is clear to me that, on the facts as alleged in the
particulars of claim, a valid cause of action arising from default on the agricultural
production loan and on repayment of the funds advanced on overdraft, is disclosed.

[21] Accordingly, the appeal is upheld with costs. The order of the court a quo is
set aside and replaced with the following:
„The exception is dismissed with costs.‟

_______________________
C H Lewis
Judge of Appeal

APPEARANCES
For Appellant:
S Symon SC
Instructed by:

S Roux Incorporated, Pretoria
Matsepes Incorporated, Bloemfontein

For Respondents:
G Jacobs
Instructed by:

Morris Pokroy Attorneys, Pretoria
E G Cooper Majiedt, Bloemfontein

SUPREME COURT OF APPEAL OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT
OF APPEAL

FROM

The Registrar, Supreme Court of Appeal

DATE

22 May 2015

STATUS

Immediate

Standard Bank v Swanepoel NO [2015] ZASCA 71

Please note that the media summary is intended for the benefit of the
media and does not form part of the judgment of the Supreme Court of
Appeal

The Supreme Court of Appeal today held that where a contract is entered into
by a trustee acting on behalf of a trust, but the trust is named as the
contracting party, the contract is not rendered invalid by that fact. While it is
correct that a trust is not a legal person, it is an entity and can be named as a
party as long as it is clear that the contract is concluded by a duly authorized
trustee.

The SCA thus reversed a decision of the Gauteng Division of the High Court
that had found that where, in an agreement of loan, the borrower was named
as a trust, the contract was invalid.