Die sorgsaamheidsplig van trustees in die uitvoer van hulle beleggingsbevoegdhede: Kan ons by die Engelse trustreg leer?

Abstract

It is settled law in South Africa that the trustee of a trust is unequivocally charged with the duty to invest the assets of the trust. However, in South Africa in the past, this duty has been qualified, with avoidance of risk seen as the trustee’s number one priority when investing. The legislature and the judiciary mainly focused on providing safeguards for beneficiaries, therefore trustees were to avoid all risk to the capital of the trust. Despite economic realities, such as the devaluation of currencies and progressive inflation, the courts have continued to favour investment in interest-bearing securities. Most of the time trustees erred on the side of caution, following the judiciary’s lead. Unfortunately, as it will be pointed out, this means that trustees are blind to their primary task, which is and always has been, to do the best for the beneficiaries.Trustees will have to expose the assets to at least some risk in order to outperform inflation, as the traditional investments are no longer sufficient. Change occured in English trust law with the introduction of the Trustee Act 2000. This Act removes the constraints that previous legislation imposed on trustees and imposes positive obligations on trustees which reflect the reality of modern investment practices. In this article, attention will be given to the legal position in South Africa regarding a trustee’s duty of care pertaining to trust investments. Subsequently, the legal position of a trustee in terms of English law will be discussed in order to advance recommendations for future developement in South Africa.