Nieuwoudt NO and Another v Vrystaat Mielies (Edms) Bpk

The appellants were the only two trustees of a family business trust. The first appellant, acting alone and without the written authority or participation of the second trustee, concluded an advance contract on 9 May 2001 for the sale of 900 tons of yellow maize to a close corporation. The contract was later ceded to the respondent, Vrystaat Mielies (Edms) Bpk. The trust deed required unanimous decisions where there were two trustees. When maize prices rose sharply, the trustees refused to perform, alleging that the contract was null and void because the first trustee lacked authority to bind the trust. The respondent sought to enforce the contract, relying inter alia on the Turquand rule.

The appeal was upheld with costs. The order of the court a quo was set aside and replaced with an order referring the application to trial in terms of Uniform Rule 6(5)(g), with the notice of motion to stand as a summons and the respondent directed to deliver its declaration within 15 days.

The case is significant for clarifying the limits of trustee authority and casting doubt on the automatic application of the Turquand rule to trusts. It underscores that third parties contracting with trusts must pay careful attention to the trust deed and the authority of trustees, and it highlights the distinction between internal administrative acts and substantive contractual powers.