Samuel Alfred Schoonhoven N O and Others v Pieter Cornelius Antonius Schoonhoven and Others (791/2024) [2025] ZASCA 178 (28 November 2025)

Case Note

Samuel Alfred Schoonhoven N O and Others v Pieter Cornelius Antonius Schoonhoven and Others (791/2024) [2025] ZASCA 178 (28 November 2025)

Reportability

This case is reportable due to its significance in the interpretation of discretionary trusts, specifically addressing the rights of founders to designate capital beneficiaries. The ruling clarifies the scope of a founder's discretion in relation to testamentary reservations and asserts the importance of clarity in the drafting of trust deeds and wills. It also offers insight into how indeterminate classes of beneficiaries affect the validity of a founder's claims and intentions regarding distribution among beneficiaries.

The decision is significant for the legal interpretation of discretionary powers held by trustees and outlines the necessary steps to ensure that beneficiaries are accurately defined in both trust deeds and associated wills. This case not only affects those directly involved but also sets a precedent for future disputes relating to discretionary trusts.

Cases Cited

Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262 (SCA)

Capitec Bank Holdings Limited and Another v Coral Lagoon Investments 194 (Pty) Ltd and Others [2021] ZASCA 99; [2021] 3 All SA 647 (SCA)

Robertson v Robertson’s Executors 1914 AD 503

Braun v Blann and Botha NNO 1984 (2) SA 850 (A)

Smit v Du Toit en Andere 1981 (3) SA 1249 (A)

Legislation Cited

The relevant legislation includes the Trust Property Control Act, which governs the administration of trusts in South Africa, and other statutes impacting testamentary trusts.

Rules of Court Cited

No specific rules of court were cited in the judgment.

HEADNOTE

Summary

In this appeal before the Supreme Court of Appeal, the court addressed a dispute regarding the designation of capital beneficiaries in a discretionary trust established by the late Johannes Bernardus Alphonsus Schoonhoven. The court considered the validity of the founder's will provisions and whether they effectively designated capital beneficiaries as per the trust deed's requirements. The appeal ultimately was dismissed, affirming the High Court's ruling.

Key Issues

The key legal issues addressed in this case were: 1. Whether the will of the founder effectively designated the capital beneficiaries of the trust. 2. The implications of indeterminate classes of beneficiaries on the legal position of both the trust and its trustees. 3. The extent of the founder's discretion in making designations and whether this discretion allows for allocative inequality among beneficiaries.

Held

The court held that the founder had, in fact, exercised his rights under the trust deed to designate capital beneficiaries through his will. The court ruled that the designation included all listed beneficiaries within the trust deed's definition, thereby binding the trustees to distribute the trust assets accordingly. The appeal was dismissed, and costs were awarded to the first respondent.

THE FACTS

In 2006, Johannes Bernardus Alphonsus Schoonhoven established a discretionary trust known as The Schoonies Family Trust. Following the founder's death in 2015, a dispute arose among the trustees regarding their authority to designate capital beneficiaries at the trust's termination. The trustees, who were also the founder’s sons, sought a court declaration to confirm their right to select beneficiaries. However, the first respondent contended that the will of the founder had already determined the beneficiaries under the trust deed's terms.

The High Court concluded that the trust deed did not provide clear authority for the trustees to designate capital beneficiaries, leading to a dismissal of their application. The court's interpretation hinged on the precise meaning of the will and trust deed, particularly the founder's exercise of discretion and the nature of the beneficiary designations.

THE ISSUES

The court was tasked primarily with deciding whether the will of Johannes Schoonhoven sufficiently designated capital beneficiaries in accordance with the provisions of the trust deed. Additionally, the court had to consider the implications of including indeterminate classes of beneficiaries in that designation. This raised questions about the limits of discretion granted to the founder and the trustees in establishing beneficiary rights.

ANALYSIS

The court placed a strong emphasis on the principles of trust interpretation established in prior cases, notably those concerning the fidelity to the founder's intentions. The court held that while the will did not explicitly indicate an exhaustive list of beneficiaries, the reference made in the will to capital beneficiaries was broad enough to encompass all potential beneficiaries listed in the trust deed.

The court recognized that discretionary powers granted to founders typically include the authority to determine a wide range of beneficiaries, including those from indeterminate classes. The judgment highlighted that the existence of allocative inequality among beneficiaries could result from the founder's exercise of discretion, which does not violate the foundational principles of trust law.

The court ultimately underscored that both the trust deed and the will must be harmonized when interpreting the founder's intent, promoting a cohesive understanding of how the trust was intended to operate. This interpretation reflects the principle that the founder's designations must be respected, and the trustees are bound by these expressions of intention.

REMEDY

The remedy provided by the court was a dismissal of the appeal. The court found that the trustees did not possess the discretionary power to determine beneficiaries independently of the will's stipulations. As a result, the appellants were ordered to bear the costs of the proceedings, including the costs associated with two counsel.

LEGAL PRINCIPLES

The judgment established several key legal principles concerning discretionary trusts. Primarily, it reaffirmed the right of a trust founder to designate capital beneficiaries through a will, emphasizing that such designations can include both identifiable and indeterminate classes of beneficiaries. The ruling underscores the importance of clarity in drafting trusts and wills to prevent ambiguity and disputes.

Furthermore, the court clarified that the discretion of founders over beneficiary designations is substantial and allows for unequal distributions when exercising testamentary reservations, as it aligns with the intentions expressed in the trust deed. This reaffirms the flexibility inherent in discretionary trusts, highlighting that legal frameworks must allow for practical and equitable resolutions to beneficiary designations.

In conclusion, the decision serves as an important precedent for similar disputes in the context of South African trust law, emphasizing the need for clear drafting practices while maintaining the flexibility that discretionary trusts afford founders.