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[2020] ZAWCHC 112
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Du Preez v Du Preez NO and Others (10832/2020) [2020] ZAWCHC 112 (21 August 2020)
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION)
Case
no: 10832/2020
In
the matter between:
CHARLES
GORDON DU
PREEZ APPLICANT
and
ANNETTE
DU PREEZ N.O. FIRST
RESPONDENT
CHARLES
GORDON DU PREEZ N.O. SECOND
RESPONDENT
JEAN
PIERRE DU PREEZ N.O. THIRD
RESPONDENT
(In
their capacities as Trustees for the time
being
of the Du Preez Familie Trust IT 384/05)
Coram:
Norton AJ
Heard:
13 August 2020
Order:
14 August 2020
Reasons:
21 August 2020
REASONS
FOR ORDER
Norton
AJ
[1]
In an urgent
application heard on Thursday 13 August 2020, the applicant sought an
order interdicting the respondents from proceeding
with a meeting of
the trustees of the Du Preez Family Trust, Trust No. IT 384/05 (the
Trust) scheduled to be held on Friday 14
August 2020.
[2]
On Friday 14 August
2020 I made an order dismissing the application and directing the
applicant to pay the costs of the application,
and advised that my
reasons would follow. These are my reasons.
[3]
The Trust is an inter
vivos family trust established by Johannes Hermanus Du Preez (the
founder) on 18 January 2005. The first trustees
of the Trust were the
founder himself and his eldest son Hendrik Du Preez. Following the
death of Hendrik Du Preez, an amended
trust deed, which is the trust
deed pertinent to this application, was executed on 3 March 2008.
[4]
Clause 5.1 of the trust
deed provided that the trustees of the Trust would be (a) the
founder; (b) the founder’s wife
Annet Du Preez (who is cited in
her official capacity as the first respondent in this application);
(c) the founder’s son
Charles Gordon Du Preez (the applicant,
who is also cited in his official capacity as the second respondent
in this application);
and (d) the founder’s son Jean Pierre Du
Preez (who is cited in his official capacity as the third respondent
in this application).
[5]
The applicant, the
founder, Annet Du Preez and Jean Pierre Du Preez (the first trustees)
were granted letters of authority to act
as trustees of the Trust on
16 May 2008.
[6]
Since the death of the
founder on 9 March 2018, the applicant, Annet Du Preez and Jean
Pierre Du Preez have served as the trustees
of the Trust. In clause
4.1 of his will executed on 18 June 2007, the founder directed that
on his death, his children (with the
exception of those who were
already serving trustees) would automatically be appointed trustees
of the Trust. No further children
of the founder have to date been
appointed trustees of the Trust.
[7]
Arising from a
breakdown of the relationship between the applicant and the other
trustees (which is common cause on the papers and
which the other
trustees say has made the effective administration of the Trust
impossible), the applicant was notified on 7 July
2020 that the other
trustees intended to remove him as a trustee in terms of the power
granted to the trustees to remove a trustee
by majority vote under
clause 5.5 of the trust deed.
[8]
The reasons furnished
for the proposed removal of the applicant were that the applicant
fails to provide feedback on essential aspects
of the effective
management of the Trust and repeats unsubstantiated allegations
against the other trustees.
[9]
On 4 August 2020 the
applicant was given notice of a trustees’ meeting to be held on
14 August 2020, at which his removal
in terms of clause 5.5 of the
trust deed would be sought.
[10]
In correspondence which
followed, the applicant’s attorney recorded the applicant’s
view that the other trustees were
not entitled to remove him as a
trustee by majority vote in terms of clause 5.5.5 of the trust deed,
and on 12 August 2020 the
other trustees’ attorney advised that
they intended to proceed with the meeting on 14 August 2020 and to
seek the applicant’s
removal at that meeting.
[11]
The applicant
approached this court urgently seeking an order (a) interdicting the
respondents from proceeding with the trustees’
meeting
scheduled for Friday 14 August 2020; (b) that a rule nisi be issued
calling for the respondents to show cause why an order
should not be
made (i) declaring that the respondents are not empowered in terms of
clause 5.5.5 of the trust deed to remove the
applicant by way of
majority vote; and (ii) directing the first and third respondents to
pay the costs of the application in their
personal capacities; and
(c) declaring that pending the return day of the rule nisi the
applicant is entitled to act as a trustee
of the Trust.
[12]
I am satisfied that the
applicant has made out a case for urgency.
[13]
The determination of
the interdictory relief sought by the applicant turns on the question
whether the other trustees have the power,
in terms of clause 5.5.5
of the trust deed, to remove the applicant as a trustee by way of
majority vote. This is a matter of interpretation
of clause 5.5.5
read with clause 5.3 of the trust deed.
The
proper interpretation of clause 5.5.5 read with clause 5.3
[14]
A trust deed must be
construed in accordance with the established rules governing the
interpretation of written contracts (
Harvey
NO and Others v Crawford NO and Others
2019 (2) SA 153
(SCA) para 45;
Sea
Plant Products Ltd v Watt
2000 (4) SA 711
(C) 720-2).
[15]
Those rules were
elucidated in
Natal
Joint Municipal Pension Fund v Endumeni Municipality
2012 (4) SA 593
(SCA) para 18, as follows:
‘
Interpretation
is the process of attributing meaning to the words used in a
document, be it legislation, some other statutory instrument,
or
contract, having regard to the context provided by reading the
particular provision or provisions in the light of the document
as a
whole and the circumstances attendant upon its coming into existence.
Whatever the nature of the document, consideration must
be given to
the language used in the light of the ordinary rules of grammar and
syntax; the context in which the provision appears;
the apparent
purpose to which it is directed and the material known to those
responsible for its production. Where more than one
meaning is
possible each possibility must be weighed in the light of all these
factors. The process is objective, not subjective.
A sensible meaning
is to be preferred to one that leads to insensible or unbusinesslike
results or undermines the apparent purpose
of the document. Judges
must be alert to, and guard against, the temptation to substitute
what they regard as reasonable, sensible
or businesslike for the
words actually used. To do so in regard to a statute or statutory
instrument is to cross the divide between
interpretation and
legislation; in a contractual context it is to make a contract for
the parties other than the one they in fact
made. The inevitable
point of departure is the language of the provision itself, read in
context and having regard to the purpose
of the provision and the
background to the preparation and production of the document.’
[16]
I am required to
interpret the relevant clauses of the trust deed on the papers before
me, which do not disclose any pertinent facts
regarding the
circumstances in which the trust deed was executed or any subsequent
conduct.
[17]
Clause 5.5.5 of the
trust deed provides that a trustee will cease acting as a trustee if
the majority of the trustees in office
decide to remove that trustee,
save that the power to remove a trustee by majority vote may not be
exercised in respect of the
founder or any trustee nominated by the
founder in terms of clause 5.3 of the trust deed. The precise wording
of the clause, which
is in Afrikaans, is as follows:
‘
5.5 ‘n Trustee hou op om
as trustee te ageer:
…
5.5.5 as die meerderheid van
die trustees in amp besluit om hom as trustee af te dank welke magte
nie sal geld ten opsigte
van JOHANNES HERMANUS DU PREEZ of enige
trustee deur hom benoem in terme van 5.3 hierbo.’
[18]
On its ordinary
meaning, clause 5.5.5 provides for a protected category of trustees
who may not be removed by a majority vote of
the serving trustees,
being the founder himself and any trustee nominated by him in terms
of clause 5.3 of the trust deed.
[19]
Clause 5.3 provides
that the trustees are entitled to nominate and appoint additional
trustees of their choice, subject to qualifications
which include the
following: (a) the founder, during his lifetime, has the sole right
to nominate trustees of his choice, to serve
as a co-trustee or to
replace him as a trustee; and (b) the founder has the right to
nominate succeeding trustees in his will.
The precise wording of the
clause and the relevant sub-clauses, which are in Afrikaans, is as
follows:
‘
5.3 Die trustees is geregtig
om bykomstige trustees van hulle keuse te benoem en aan te stel,
onderhewig aan die volgende beperkende
bepalings:
…
5.3.2 Gedurende sy lewe, het
JOHANNES HERMANUS DU PREEZ die alleenreg om trustees van sy keuse te
benoem, om of as mede-trustee
op te tree of om hom te vervang as
trustee;
5.3.3 JOHANNES HERMANUS DU
PREEZ het die reg om opvolgende trustees by wyse van sy Testament te
benoem.’
[20]
On its ordinary
meaning, clause 5.3 provides that (a) during the lifetime of the
founder, he is the only trustee who has the power
to nominate and
appoint additional trustees, either as co-trustees or to replace him
as trustee; (b) after the death of the founder,
additional trustees
may be nominated and appointed by the other trustees; and (c)
succeeding trustees may be nominated by the founder
in his will.
[21]
Read together, clauses
5.5.5 and 5.3 on their ordinary meaning protect from removal by
majority vote (a) the founder; (b) any additional
trustee nominated
by the founder during his lifetime as a co-trustee or to replace him
as a trustee; and (c) any succeeding trustee
appointed as a result of
being nominated by the founder in his will. With the exception of the
founder, the first trustees recorded
in clause 5.1 of the Trust deed
are excluded from the protected category of trustees.
[22]
The power granted to
trustees to remove a trustee by majority vote has as its apparent
purpose the provision of an efficient mechanism
for the removal of a
trustee.
[23]
Clause 11.1 of the
trust deed states that the powers granted to the trustees are powers
with which the trustees are vested in order
to put them in a position
to manage the trust fund for the benefit of the beneficiaries, and
that the generality of the powers
vested in the trustees must always
be so interpreted that the purpose of the Trust is to benefit the
trust beneficiaries.
[24]
The benefit of the
beneficiaries is plainly served by a clause empowering the trustees
to remove a trustee who is an obstacle to
the effective management of
the Trust, without having to do so through the more cumbersome
provisions of the Trust Property Control
Act 57 of 1998.
[25]
The apparent purpose of
the ‘protected category’ of trustees is to ensure that
neither the founder nor trustees nominated
by the founder may be
removed by the mechanism of a majority vote.
The
applicant’s contentions on interpretation
[26]
The applicant’s
contention that he cannot be removed by a majority vote of the
trustees is based on two alternative grounds.
[27]
The first is that the
applicant falls within the protected category delineated in clause
5.3 by virtue of having been (a) nominated
by the founder as one of
the first trustees; and (b) nominated as a trustee in the founder’s
last will and testament.
[28]
This contention is at
odds with the language of clause 5.3 and the scheme of the trust deed
overall.
[29]
The trust deed (in
clauses 5.3 and 6 in particular) expressly distinguishes between the
following classes of trustees: (a) the first
trustees (‘eerste
trustees’) recorded in clause 5.1 of the Trust deed; (b)
additional trustees (‘bykomstige trustees’)
nominated by
trustees in terms of clause 5.3; and (c) succeeding trustees
(‘opvolgende trustees’) nominated by the
founder in his
will in terms of clause 5.3.3.
[30]
In the definition of
‘trustees’, a distinction is drawn between the first
trustees and ‘later trustees’.
[31]
Clause 5.3 plainly
deals with the nomination of trustees additional to the first
trustees, and trustees who will succeed trustees.
It takes as a given
that the first trustees are in place and provides for the necessary
powers to supplement or replace them.
[32]
The founder had no
power in terms of clause 5.3 to nominate as an additional trustee a
person who was already a trustee of the Trust.
Nor could the
applicant become a succeeding trustee by virtue of his nomination
under clause 4.1 of the founder’s will, in
circumstances in
which that clause expressly excluded from its application persons who
were serving trustees.
[33]
To find that the
applicant is, simultaneously, one of the first trustees, an
additional trustee and a succeeding trustee, would
be to disregard
the express language and scheme of the trust deed.
[34]
The second ground
relied on by the applicant, is that the exclusion of the first
trustees (other than the founder) from the protected
category, which
means that the family members who are the first trustees may be
removed more easily than trustees nominated subsequently,
does not
make sense.
[35]
The applicant relies in
this regard on the statement in
Endumeni
that ‘[a]
sensible
meaning is to be preferred to one that leads to insensible or
unbusinesslike results or undermines the apparent purpose
of the
document’.
[36]
Neither the trust deed
nor the papers disclose any apparent reason why the trust deed
provides for greater protection for the later
trustees than the first
trustees. What is however clear, from the language and the context of
the relevant provisions, is the purpose
of distinguishing (in respect
of removal) between, on the one hand, the founder and trustees
nominated by the founder after the
trust deed was executed, and on
the other hand, the first trustees other than the founder, and
trustees nominated by those trustees
after the trust deed was
executed.
[37]
It is also apparent
that if it was not intended that the first trustees should be subject
to removal by a majority vote in terms
of clause 5.5.5 of the trust
deed, there would have been no reason for the founder to be expressly
exempted from such removal in
the same clause.
[38]
I must also take into
consideration that the instrument which I am called upon to interpret
is not a commercial contract but the
deed of an inter vivos family
trust in which the will of the founder, as the donor, looms large and
should not lightly be disregarded
on the ground that it does not
appear to be sensible or reasonable.
[39]
In
Harvey
NO and Others v Crawford NO and Others
2019 (2) SA 153
(SCA) the Supreme Court of Appeal rejected an
interpretation of a private trust deed which would involve
disregarding the donor’s
manifest intention on the grounds that
that intention did not accord with public policy. The Court
recognised that the donor in
respect of a trust enjoys a similar
freedom to that of a testator in determining how to dispose of his or
her property (paras 56
and 64) and expressly distinguished the
position in respect of a private trust from the principles which
would apply in interpreting
a public charitable trust (paras 60 to
62).
[40]
I am of the view that
the plain purpose of the removal scheme – to provide for
removal by majority vote for all trustees other
than the founder and
trustees nominated by him after the execution of the trust deed –
should not be frustrated by a construction
which is at odds with the
language of the relevant clauses in their context, based on what the
applicant or the court might regard
as a more sensible scheme.
Conclusion
[41]
The applicant has
failed to establish a right (clear or prima facie) upon which final
or interim interdictory relief may be granted
preventing the other
trustees from removing him in terms of their powers under clause
5.5.5 of the trust deed. The application
must accordingly fail.
____________________
Michelle Norton
Acting Judge of the High Court
Western Cape Division
APPEARANCES:
For
the applicant: P Bothma
Instructed
by
Steyn
Attorneys Inc.
Cape
Town
For
the first and
third
respondents: V Manser
Instructed
by
Malan
Lourens Viljoen Inc.
Cape
Town