Brief Summary

Trusts — Charitable trust — Interpretation of will — Clause 10 of the will of Charles Harding contested regarding the appointment of trustees — Applicant, District Grand Lodge of South Africa, sought to assert its right to nominate trustees for the Charles Harding Charitable Trust — Dispute arose over whether the Board of General Purposes had the authority to nominate a trustee following the death of a co-executor — Court held that the intention of the testator was to allow the Board to nominate a trustee, thereby affirming the applicant's right to do so and allowing for the appointment of replacement trustees as needed.

Comprehensive Summary

Summary of Judgment

1. Introduction

This matter concerned an application in the Western Cape High Court (Cape Town) for the interpretation of a clause in a will and the consequences of that interpretation for the appointment of trustees to a long-standing charitable trust. Although part of the notice of motion was framed as a review of the Master’s “decision” under the Promotion of Administrative Justice Act 3 of 2000 (PAJA), the substance of the dispute was the correct construction of clause 10 of the late Charles Harding’s will, read with the codicil.

The applicant was The District Grand Lodge of South Africa (Western Division), a freemasons’ organisation referred to in clause 10 as having a role in nominating a person to serve as executor/administrator and, by operation of the will, as trustee of the Charles Harding Charitable Trust. The first respondent was The Master of the High Court, Cape Town, who had expressed the view that the applicant’s Board of General Purposes did not have the right to nominate a trustee on an ongoing basis. The other respondents were the Trustees for the time being of the Charles Harding Charitable Trust, Nedgroup Trust (Pty) Ltd (the successor to Syfrets Trust Company Limited, named in the will), and Mr F.E. Kröhnert, who held letters of authority as nominee for the corporate trustee.

The application was brought because of a concrete impasse: after a trustee (Mr Peter Ransom Duckworth) who had served as the applicant’s Board nominee ceased to hold office, the applicant nominated Mr Ian Norman Pringle as replacement, but Nedgroup Trust and the Master disputed that the will empowered the applicant’s Board to nominate replacements after the original individual appointee (Finlay McIntyre) had in fact taken office. The Master filed a report and abided the judgment. The other respondents supported the Master’s construction but also abided the court’s decision.

The general subject-matter was therefore the proper interpretation of a testamentary provision governing the administration of an estate and the ongoing governance of a perpetual charitable trust, including whether the trust was intended to be administered by two trustees (one linked to the corporate trustee and one linked to the applicant’s Board) or ultimately by a sole trustee nominated by the corporate trustee once the originally named individual trustee was no longer in office.

2. Material Facts

Charles Harding died on 30 May 1978. His will dated 29 April 1975 created a charitable trust, the Charles Harding Charitable Trust, and directed that the trust endure in perpetuity, distributing net income to charities in such manner and proportions as the trustees might decide, with certain charities identified as objects to be remembered in the exercise of that discretion. The will also provided, in clause 6, that the co-executors/co-administrators of the estate would be the trustees of the charitable trust, and the residue of the estate was bequeathed to that trust.

Clause 10 of the will appointed Syfrets Trust Company Limited and Finlay McIntyre, and then provided (in relevant part) that, “failing” McIntyre, a nominee appointed from time to time by the Board of General Purposes of the District Grand Lodge of Southern Africa, Western Division would act. A codicil executed on 11 August 1976 amplified clause 10 to add the testator’s nephew, David Charles Harding, as a co-executor and co-administrator on the same terms (including exemption from providing security). It was common cause that the words “failing whom” related to McIntyre, not to the corporate trust company.

The trust continued for decades and made substantial annual donations to charities. The testator was a freemason and had held a senior position within the applicant organisation, including service on the Board of General Purposes.

As to administration in practice, it was undisputed that, upon establishment after the testator’s death, the trust was administered by three trustees in accordance with the will and codicil: a trustee nominated by Syfrets, McIntyre, and David Harding. After McIntyre died in 1985, he was replaced by a senior freemason nominated by the applicant’s Board of General Purposes, and thereafter further replacements were nominated by that Board when incumbents ceased to serve. Similarly, Syfrets’ nominated trustee (Wagner) was replaced from time to time, and at the time of the proceedings Mr Kröhnert acted as the nominee of Nedgroup Trust under letters of authority.

It was also undisputed, and accepted as correct by the court, that no successor fell to be appointed in the place of David Harding after his death, because (unlike the arrangements relating to McIntyre and the corporate trustee) there was no express or implied provision in the will for anyone to succeed to David Harding’s trusteeship.

The material dispute was the meaning and effect of clause 10 after McIntyre had initially taken office but later ceased to be a trustee. The applicant contended that clause 10 empowered its Board of General Purposes to nominate a trustee from time to time, both initially if McIntyre did not assume office and later as replacements when the Board’s trustee ceased to hold office. Nedgroup Trust and the Master contended that the Board’s nominating role was only a contingency that operated if McIntyre did not take up the appointment at the outset, with the result that, once McIntyre had served and then died, the trust should thereafter be administered by a sole trustee nominated by the corporate trustee.

3. Legal Issues

The central legal question was a question of law, namely the correct interpretation of clause 10 of the will (read in context of the will as a whole and its evident scheme), and specifically whether clause 10 conferred an ongoing power on the applicant’s Board of General Purposes to nominate trustees from time to time to fill (and refill) the position originally occupied by Finlay McIntyre.

A closely related question involved the application of interpretive principles to the particular text and context: whether the phrase “failing whom” should be construed narrowly as meaning only “if he fails to take up office initially”, or more broadly as meaning “in the absence of” or “in his stead should he not assume, alternatively, cease to hold office”.

A further issue arose from the form of the relief: whether the Master’s stance constituted administrative action susceptible to review under PAJA, or whether the Master had merely expressed an opinion on construction and remained able to act (not being functus officio) once the meaning of the will was authoritatively determined.

4. Court’s Reasoning

The court approached the matter through the modern principles of interpretation applicable to all jural documents, including wills. It relied on the established approach that interpretation is not a purely textual or “word-isolated” exercise, but one requiring an integrated assessment of language, purpose, and context, recognising that drafting may be imperfect. The court emphasised that the interpretive enquiry is a unitary exercise in which the text is read in its documentary and factual setting, and that overly technical semantic analysis should not be allowed to defeat an evident practical object.

Turning to clause 10 itself, the court treated it as having two parts, with the second introduced by wording equivalent to “notwithstanding the fact…”. The court considered that the first part plainly conveyed an intention that there should be two trustees: one representing the corporate trust company’s nomination function, and the other initially intended to be McIntyre. The court accepted that the testator anticipated McIntyre might not take up the appointment and therefore expressly provided that, in that event, the applicant’s Board of General Purposes would nominate someone.

The respondents’ construction was assessed as textually plausible if the words were read narrowly, but the court found it produced an implausible and anomalous scheme when the will was read as a whole. On that approach, the trust would have two trustees only for as long as McIntyre remained in office, but thereafter would revert to a sole trustee nominated by the corporate trustee, unless McIntyre had failed to assume office at the outset (in which case the Board’s “from time to time” nominee would persist). The court regarded that as capricious and unbusinesslike, and inconsistent with the will’s pervasive assumption of plural “administrators” and with the trust’s intended existence in perpetuity. The court also considered clause 5’s structure (dealing with other trust arrangements and eventual reversion into the residue administered by the charitable trust) as indicating that, even after the nephew’s death, the will contemplated a continuing plurality of administrators/trustees constituted as envisaged in clause 10.

The court additionally derived contextual support from the will’s overall pattern of benefaction and the testator’s freemasonry. It observed that many bequests were to masonic charities or bodies and that the will suggested the testator wanted his estate, after family and specified lifetime needs had been met, to be administered in perpetuity for charitable purposes. Against that background, the court regarded it as probable that the testator sought to combine the administrative and investment expertise of the corporate trust company with the personal input of a senior freemason in directing charitable distributions. The court found no rational basis to confine that dual structure to McIntyre’s lifetime, or to make the ongoing presence of a freemasons-linked trustee depend arbitrarily on whether McIntyre did or did not take office initially.

On the linguistic question, the court held that in the peculiar context the phrase “failing whom” could reasonably bear the meaning “in the absence of” or “in his stead should he not assume, alternatively, cease to hold office”. The phrase was therefore treated as ambiguous to the extent that it might support competing readings, and the court preferred the meaning that cohered with the will’s scheme.

The court then addressed the Master’s reliance on the second part of clause 10, especially the phrase suggesting that if one or more appointees fail to assume, relinquish the trust, or die, “the remaining appointee/s shall act alone” without furnishing security. The court found this portion badly worded and cautioned against literalism. In the court’s view, that second part was not directed at creating or limiting a power to nominate trustees; instead, properly understood, it served two functions. First, it catered for the possibility that either nominating body (the corporate trust company or the applicant’s Board) might decline to fulfil its nominating role, in which case the other appointee would act alone. Second, it confirmed that even where only a single trustee acted, that trustee would not be required to furnish security despite the absence of a co-trustee’s checking effect. Interpreting the second part as disabling replacement nominations on death or resignation would, the court reasoned, contradict the scheme established in the first part of the clause.

Having reached a firm conclusion on interpretation, the court considered the form of relief. It held that the applicant’s prayer to “review and set aside” the Master’s stance was misconceived because the Master had, on the court’s analysis, merely expressed an opinion on the meaning of clause 10 and had not taken a decision that constituted “administrative action” under PAJA. The court further reasoned that the Master was not functus officio regarding the issuing of letters of authority to a duly nominated trustee. A declaratory order clarifying the nominating power would therefore adequately resolve the dispute and guide the Master’s future action (absent any other legitimate reason to object to the nominee’s suitability).

5. Outcome and Relief

The court granted declaratory relief confirming the applicant’s interpretation of clause 10. It declared that the applicant’s Board of General Purposes is entitled, under clause 10 of the will, to appoint a trustee to the Charles Harding Charitable Trust from time to time to serve together with a trustee appointed from time to time by Nedgroup Trust (Pty) Ltd as its nominee, and that if Nedgroup Trust fails to appoint a nominee, the applicant’s nominee may serve alone.

The court further declared that the applicant’s Board of General Purposes may nominate replacement trustees from time to time to replace trustees who held office by virtue of having been nominated by the Board, and it declared that Ian Norman Pringle had been duly nominated by the Board as a trustee.

As to costs, the court ordered that the applicant’s costs of suit (taxed or agreed) would be costs in the administration of the Charles Harding Charitable Trust.

Cases Cited

Novatis v Maphil Trading (Pty) Ltd 2016 (1) SA 518 (SCA)

Lloyds of London Underwriting Syndicates 969, 48, 1183 and 2183 v Skilya Property Investments (Pty) Ltd [2004] 1 All SA 386 (SCA)

Bothma-Batho Transport (Edms) Bpk v S Botha & Seun Transport (Edms) Bpk 2014 (2) SA 494 (SCA)

Rainy Sky S.A. and others v Kookmin Bank [2012] 1 All ER 1137 (SC)

Legislation Cited

Trust Property Control Act 57 of 1988, sections 6(1) and 6(4)

Promotion of Administrative Justice Act 3 of 2000, section 6

Rules of Court Cited

No rules of court were cited in the judgment.

Held

The court held that, on a proper contextual interpretation of clause 10 of Charles Harding’s will, the phrase providing for a nominee appointed “from time to time” by the applicant’s Board of General Purposes operated not only if Finlay McIntyre failed to assume office initially, but also in his absence once he ceased to hold office, including upon death. The trust was therefore intended to be administered on an ongoing basis by two trustees, one nominated by the corporate trust company and one nominated by the applicant’s Board, subject to the clause’s provision that a single trustee may act alone if the other nominating body does not fulfil its nominating role.

The court also held that the Master had not taken reviewable administrative action under PAJA merely by expressing an opinion on the construction of the will, and that declaratory relief was the appropriate mechanism to resolve the dispute and guide the issuing of letters of authority.

LEGAL PRINCIPLES

Interpretation of wills (and other jural documents) requires an integrated, contextual approach in which the language is read with proper regard to the instrument’s purpose, scheme, and the factual matrix, and the process is a unitary exercise rather than a staged one.

Where the text is capable of more than one meaning, a construction consistent with the document’s evident practical object and coherent administration should be preferred, and “sophisticated semantic analysis” should not be allowed to defeat an evident scheme.

Drafting imperfections may be accommodated where the intended meaning is otherwise discernible from the document read as a whole, and literal readings of ineptly worded provisions should not be permitted to generate outcomes inconsistent with the instrument’s broader design.

In the specific testamentary context, wording such as “failing whom” may, depending on context, bear the broader meaning of “in the absence of” or “in his stead should he not assume, alternatively, cease to hold office”, particularly where a narrower meaning would result in an arbitrary or irrational governance scheme for a trust intended to endure in perpetuity.

A stance by the Master that amounts to an opinion on the proper construction of a will does not, without more, constitute “administrative action” for purposes of PAJA review, and the Master may not be functus officio in relation to issuing letters of authority once the correct construction has been authoritatively established.

District Grand Lodge of South Africa (Western Division) v Master of the High Court, Cape Town and Others (19006/2015) [2016] ZAWCHC 15 (1 March 2016)