Anomalies in the recognition of the legal personality of trusts in South Africa

Abstract

This study examines anomalies in the legal classification of trusts in South African law. Whereas the Trust Property Control Act 57 of 1988 and judicial decisions recognise trusts as mere arrangements in which trustees administer trust assets for beneficiaries, some pieces of legislation treat trusts as if they have legal personality. The central argument in this study is that statutes that recognize the legal personality of trusts create uncertainties. In this regard, the study considers the importance of theoretical clarity on the legal personality of trusts and how it could help to mitigate and possibly solve some practical problems which arise concerning uncertainties about the legal nature of trusts. Theoretical problems emanate from the anomalies which arise because of the statutes which bestow trusts with legal personality, and which result in the imposition of company law doctrines such as the Turquand rule and the lifting of the corporate veil on trusts. The discussion in this study shows that there is a need for a more definitive legal position on whether trusts are legal persons and if not, whether legislative reforms are needed to confer trusts with legal personality. Since uncertainties about the legal nature of trusts are not peculiar to south Africa, this study also examines the legal position of trusts in Quebec and the rest of Canada. The comparative discussion demonstrates a possible correlation on the legal nature of trusts in these jurisdictions.