,CLA2601 Assignment 2 Semester 1 2025 (770920) - DUE 16
April 2025 ;100 % correct explanations and solutions.
Question 1 Lesego and Phumudzo are the trustees of the Build
Your Own Home Trust, which carries on its business in the
construction industry. Even though the trust deed of Build Your
Own Home Trust does not explicitly authorise the trustee/s to
purchase a back actor to excavate and prepare building sites for
construction, Lesego and Phumudzo purchase a back actor for
the Trust. Considering the requirement that trustees must
preserve trust assets, discuss whether Lesego and Phumudzo
have acted lawfully. 5 marks
Discussion on the Lawfulness of Lesego and Phumudzo’s
Actions as Trustees
Trustees play a crucial role in the administration and
management of trust assets. Their duties and powers are
primarily derived from the trust deed, common law, and
statutory provisions such as the Trust Property Control Act 57 of
1988. The key obligation of trustees is to act in the best interests
of the beneficiaries while ensuring the preservation of trust
assets. In this case, Lesego and Phumudzo, as trustees of the
Build Your Own Home Trust, have purchased a back actor for
the trust, despite the trust deed not explicitly authorising such an
acquisition. The central question is whether their actions comply
with their legal duties as trustees or constitute a breach of trust.
Duties of Trustees
Duty to Act in Terms of the Trust Deed
, A trust deed serves as the governing document that outlines the
powers and limitations of trustees. Trustees must strictly adhere
to the provisions of the trust deed. If the trust deed does not
explicitly authorise a particular action, trustees generally lack
the power to undertake it unless such action can be justified
within the scope of their fiduciary duties.
In this scenario, the trust deed does not explicitly authorise the
purchase of a back actor. Therefore, Lesego and Phumudzo's
decision to acquire this equipment could be questioned as an act
beyond their authority (ultra vires) unless they can demonstrate
that it aligns with the overall objectives of the trust and is
necessary for its proper functioning.
Duty to Preserve Trust Assets
Trustees have a fundamental obligation to preserve and manage
trust assets prudently. This duty is enshrined in section 9 of the
Trust Property Control Act, which requires trustees to act with
the care, diligence, and skill that can reasonably be expected of a
person managing the affairs of another.
Purchasing a back actor may be seen as an investment that
enhances the trust’s ability to carry out its construction-related
business. If the acquisition contributes to the long-term financial
health of the trust and serves its objectives, Lesego and
Phumudzo might argue that they acted within the scope of their
fiduciary duty. However, if the purchase poses a financial risk to
the trust or is not essential for its operations, it could be deemed
imprudent and a failure to preserve trust assets.
April 2025 ;100 % correct explanations and solutions.
Question 1 Lesego and Phumudzo are the trustees of the Build
Your Own Home Trust, which carries on its business in the
construction industry. Even though the trust deed of Build Your
Own Home Trust does not explicitly authorise the trustee/s to
purchase a back actor to excavate and prepare building sites for
construction, Lesego and Phumudzo purchase a back actor for
the Trust. Considering the requirement that trustees must
preserve trust assets, discuss whether Lesego and Phumudzo
have acted lawfully. 5 marks
Discussion on the Lawfulness of Lesego and Phumudzo’s
Actions as Trustees
Trustees play a crucial role in the administration and
management of trust assets. Their duties and powers are
primarily derived from the trust deed, common law, and
statutory provisions such as the Trust Property Control Act 57 of
1988. The key obligation of trustees is to act in the best interests
of the beneficiaries while ensuring the preservation of trust
assets. In this case, Lesego and Phumudzo, as trustees of the
Build Your Own Home Trust, have purchased a back actor for
the trust, despite the trust deed not explicitly authorising such an
acquisition. The central question is whether their actions comply
with their legal duties as trustees or constitute a breach of trust.
Duties of Trustees
Duty to Act in Terms of the Trust Deed
, A trust deed serves as the governing document that outlines the
powers and limitations of trustees. Trustees must strictly adhere
to the provisions of the trust deed. If the trust deed does not
explicitly authorise a particular action, trustees generally lack
the power to undertake it unless such action can be justified
within the scope of their fiduciary duties.
In this scenario, the trust deed does not explicitly authorise the
purchase of a back actor. Therefore, Lesego and Phumudzo's
decision to acquire this equipment could be questioned as an act
beyond their authority (ultra vires) unless they can demonstrate
that it aligns with the overall objectives of the trust and is
necessary for its proper functioning.
Duty to Preserve Trust Assets
Trustees have a fundamental obligation to preserve and manage
trust assets prudently. This duty is enshrined in section 9 of the
Trust Property Control Act, which requires trustees to act with
the care, diligence, and skill that can reasonably be expected of a
person managing the affairs of another.
Purchasing a back actor may be seen as an investment that
enhances the trust’s ability to carry out its construction-related
business. If the acquisition contributes to the long-term financial
health of the trust and serves its objectives, Lesego and
Phumudzo might argue that they acted within the scope of their
fiduciary duty. However, if the purchase poses a financial risk to
the trust or is not essential for its operations, it could be deemed
imprudent and a failure to preserve trust assets.
