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[2021] ZAGPJHC 396
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B.R.R v M.B.J and Others (2020/11552) [2021] ZAGPJHC 396; [2021] 4 All SA 383 (GJ) (30 June 2021)
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REPUBLIC
OF SOUTH AFRICA
IN THE HIGH COURT OF
SOUTH AFRICA
GAUTENG DIVISION,
JOHANNESBURG
REPORTABLE:
Yes
OF
INTEREST TO OTHER JUDGES: No
DATE:
30/6/2021
Case
No.: 2020/11552
In
the matter between:
B.R.R
Applicant
and
M.B.J
First Respondent
FERREIRA,
GEOFF
Second Respondent
THE
MASTER OF THE HIGH COURT, JOHANNESBURG
Third Respondent
JUDGMENT
This
judgment was handed down electronically by circulation to the
parties’ legal representatives by email and is deemed to
be
handed down upon such circulation.
Gilbert
AJ:
1.
This is a dispute between the trustees of a
testamentary trust. The testator, an attorney and a mother of three
children, executed
a Will on 30 August 2016. The testator passed
away on 22 February 2018. Pursuant to the Will, the whole of the
deceased estate
(other than personal effects) devolved on the
trustees of a testamentary trust. The trustees are required to
administer the trust
in their discretion for the care, upbringing,
maintenance, education and benefit of the three minor children. The
testator appointed
as trustees her father (who is the first
respondent), her husband (who is the applicant) and the second
respondent, an attorney
of Pretoria.
2.
With effect from September 2019 the trust has paid
R20 000.00 per month to the three minor children as
beneficiaries, effectively
as maintenance. The applicant as the
father of the minor children is dissatisfied with this, and seeks a
monthly contribution towards
maintenance of R41, 760.00 from the
Trust. The first and second respondents as trustees have declined to
pay the increased amount,
contending that the applicant has not
provided them with the necessary documents and information to enable
them to responsibly
determine an increase.
3.
This has pitted the applicant who is a trustee
against the first and second respondents, the remaining trustees.
4.
The applicant seeks a variety of relief in these
application proceedings launched by him during May 2020. The
applicant seeks the
removal of the first and second respondents as
fellow trustees, contending that they have conducted themselves in
such a manner
that justifies their removal. The applicant seeks that
the Master be directed to appoint independent trustees to the trust,
after
consultation with interested parties. The applicant seeks
declaratory relief declaring that the minor children are capital
beneficiaries
of the trust. The applicant also seeks an order
directing the trust to make an interim monthly payment of R43 533.27
to the
beneficiaries until the newly appointed trustees are able to
assess the monthly amount to be paid.
5.
I refer to the first and second respondents as
“the respondents”.
6.
It is unclear from the applicant’s founding
affidavit in what capacity he seeks these various forms of relief.
During argument,
the applicant’s counsel clarified that the
applicant seeks relief as a trustee as well as in his capacity as the
father and
legal guardian of the minor children as beneficiaries.
7.
The
respondents are clearly cited in their personal capacities, which is
necessary as the applicant seeks their removal as trustees.
[1]
Although not entirely clear, I accept that the applicant has also
cited the respondents in their official capacities as trustees.
THE
APPLICANT’S CLAIM FOR AN INTERIM MONTHLY PAYMENT
8.
The applicant claims what is effectively interim
maintenance on behalf of minor children as beneficiaries of the
Trust. The applicant
seeks payment of a specific monthly amount, and
does not seek declaratory relief as to the obligations of the trust,
if any, to
make payment.
9.
The applicant does not advance a legal basis upon
which the trust can be ordered to make payment.
10.
Clause 4.1 of the Will provides that:
“
The
whole of [the testator’s] estate (including immovable property)
shall devolve upon the trustees of the Trust hereby created
who shall
retain and stand possessed thereof to be administered in trust by
them
in
their discretion
for
the care, upbringing, maintenance, education and benefit of [the
minor children] and my further children to be born, in accordance
with the terms and stipulations of the Trust
”
.
(my emphasis)
11.
Clause 4.3 of the Will provides that:
“
The
Trustees of the Trust shall have all the powers, in their widest
sense to provide for the advancement and maintenance of such
beneficiary/ies subject to all the provisions of the Trust Property
Control Act Number 57 of 1988”.
12.
Such rights as the minor children beneficiaries
may have (and which can be asserted by the applicant as their legal
guardian) are
contingent or discretionary rights. Such payments that
are to be made to the beneficiaries are clearly expressed in the Will
to
be in the discretion of the trustees.
13.
In
Cameron
Honore’s
South African Law of Trusts
[2]
the
authors describe a trust as discretionary not only if the trustees
have the discretion whether to pay income or distribute capital
at
all but also if the trustees have a discretion
how
much
to pay or distribute.
[3]
In
both those instances the beneficiaries will have contingent rather
than vested rights. To similar effect, is the description
by the
authors in Geach & Yeats
Trusts:
Law and Practice
[4]
that a beneficiary has a discretionary right if the beneficiary will
benefit
to
the extent
that
the discretion has been exercised in their favour.
14.
The minor children’s rights as beneficiaries
to payment from the trust is contingent upon the trustees exercising
a discretion
in their favour to pay them. The trustees have not
exercised their discretion to pay the beneficiaries the amount
claimed on their
behalf by the applicant, and so the minor children
qua
beneficiaries
have no right to payment of that amount.
15.
A
further difficulty is that the applicant, in seeking relief on behalf
of the beneficiaries, has not cited himself as a respondent
in his
capacity as a trustee. A trite principle is that all trustees must be
sued jointly when relief is sought against the trust.
[5]
In
Trustees
of Wright v Executors of Wright
(1871-1872)
2 Roscoe 84
the then Supreme Court of Appeal of the Cape of Good Hope
held that the plaintiff as testamentary trustee was obliged to cite
himself
as defendant where he was also the executor of the deceased
estate, albeit that he would then be both plaintiff and defendant but
in different capacities.
[6]
Whether this is an overly formalistic approach need not be resolved
in light of the other reasons why the relief cannot be granted.
16.
To the extent that the applicant contends that as
a trustee, rather than as the legal guardian of the beneficiaries, he
is entitled
to insist that the remaining trustees pay the increased
amount to the beneficiaries, likewise no legal basis has been made
out
for such relief against his fellow trustees.
17.
Clause 4.4 of the Will provides that “
[a]ll
decision by the Trustees shall be taken either by consensus or
majority vote (if there are three Trustees)”
.
The applicant as one of three trustees is bound by the majority
decision of the respondents.
18.
There appears to have been some conflation in the
papers between what rights the minor children may have against the
trust as beneficiaries
of the trust (which is regulated primarily by
the law of trusts) and what rights they may have against the trust
for maintenance
proper based upon a possible duty of support owed by
the trust to them. This is apparent from the applicant seeking that
the court
embark upon an enquiry into what would constitute payment
of reasonable maintenance, which belongs in the realm of enforcing a
maintenance obligation arising from a duty of support.
19.
The
parties accept that the purpose of the trust is to maintain the
children. The papers and argument appear to be directed at the
trust
making payment to the minor children as beneficiaries of the trust in
achieving that purpose. No attention had been directed
in the
affidavits or heads of argument to whether payments are to be made to
the children arising from any duty of support that
the trust may owe
to the children, conceivably on the basis that the trust is a
substitute or surrogate for the children’s
deceased mother who
had a primary duty of support to her children. Accordingly I make no
finding whether the trust owes any duty
of support to the children,
and which may be enforceable in the usual ways that maintenance
obligations are enforced, such as in
terms of and/or through the
mechanisms in the
Maintenance Act, 1998
.
[7]
20.
The testator’s clearly expressed intention
of the discretionary nature of the trustee must be seen as
deliberate. If the relief
were granted, and so the trust becomes
obligated to pay the increased amount with the consequence that the
beneficiaries then have
a vested right to that amount each month that
may have consequences, such as from a taxation perspective. This is
one of the difficulties
that may arise without proper consideration
having been given by the applicant to the formulation of his relief
and to the interplay
and potential overlap between a claim for
maintenance per se against the trust (assuming that there is a duty
of support owed by
the trust to the minor children) and a claim for
payment on behalf of the minor children
qua
beneficiaries of the trust.
21.
The respondents’ counsel submission in her
heads of argument that this relief claimed by the applicant is
inappropriate
as “the applicant
basically requests the court to take over the function of the
trustees
”
and that “
the
claim is not based on any sound legal principles”
is
correct. Although the respondents’ counsel’s further
submission that “
no high court
should be used as maintenance court”
may
be pitched somewhat too widely, in the context of the present matter
where no legal basis has been advanced by the applicant
for the court
to engage in an maintenance enquiry, the court cannot engage in that
enquiry.
22.
In the circumstances, the applicant’s claim
against the trust for the payment of an increased monthly amount
fails.
THE
APPLICANT’S DECLARATORY RELIEF
23.
The applicant seeks an order declaring his three
minor children as capital beneficiaries of the trust.
24.
The dispute as perceived by the applicant on this
issue, as appears from his founding affidavit, is that in the
administration of
the trust for the purposes of the care, upbringing,
maintenance, education and benefit of the children, the respondents
have adopted
the position that the trust is an educational trust and
that payments are only to be made out of interest and not from the
trust
capital while that applicant contends that payments can also be
made from the trust capital.
25.
It is to address this perceived dispute that the
applicant seeks declaratory relief that the three children are
capital beneficiaries.
26.
As appears from their answering affidavit, the
respondents accept that the minor children are capital beneficiaries
and that the
trust is not an educational trust. Nor have they at any
stage asserted otherwise. The applicant disputes this in his replying
affidavit,
with reference to certain WhatsApp messages from the first
respondent. Although the first respondent is particularly concerned
with the education of the beneficiaries, as appears from the WhatsApp
messages, those messages do not show, in my view, that the
respondents insist that the trust is an educational trust or that
payment can only be made to the beneficiaries from income.
27.
The respondents’ position is that the
children are both capital and income beneficiaries and that
reasonable payments should
be paid first from any income, but, if
necessary, also from capital. The respondents’ position is also
that the extent that
there is any capital remaining when a child
turns twenty-one years of age, then such of the capital as the
trustees may decide
in their discretion shall be distributed to that
beneficiary.
28.
Clause 4.2 of the Will provides that:
28.1.
“
The Trust hereby created shall
continue in respect of any beneficiary until that beneficiary attains
the age of 21 (twenty one)
in which event the Trust shall in
respect of that beneficiary terminate and the trustees shall
distribute to such beneficiary so
much of the capital of the Trust as
they in their discretion may decide without being obligated to apply
the principle of equality.
29.
A discretionary capital beneficiary is entitled
upon the exercise of a discretion in his or her favour to a
distribution of capital.
A discretionary income beneficiary is
entitled upon the exercise of a discretion in his or her favour to
payment of income of the
trust.
30.
The trust assets earn income. Given the stated
purpose of the trust, it cannot be seriously doubted that the
trustees can use the
income to make payments to the beneficiaries.
The testator could not have intended that the income earned on the
assets be retained
in the trust and capitalised, and only paid out to
the beneficiaries upon the distribution of the capital when each turn
twenty-one.
The purpose of the trust, being the care, upbringing,
maintenance, education and benefit of the children, would be defeated
if
they were not income beneficiaries as the need of the testator’s
minor children to be maintained would be when they are not
yet
twenty-one years old. That the testator was alive to income being
used to pay beneficiaries, appears from the express exclusion
in
clause 5.4 of the Will of income being subject to any beneficiary’s
marital proprietary regime. The beneficiaries are
clearly income
beneficiaries.
31.
The beneficiaries are also capital beneficiaries.
The testator envisaged that there may be capital remaining when the
beneficiaries
turn twenty-one as the Will specifically provides in
clause 4.2 for a distribution of capital in the discretion of
the trustees
to each beneficiary when they turn twenty-one.
32.
The respondents are accordingly correct that the
beneficiaries are both capital and income beneficiaries. The relief
sought by the
applicant that the beneficiaries are capital
beneficiaries, without any reference to them also being income
beneficiaries, therefore
cannot be granted. Perhaps the applicant
intended to seek a declarator that the beneficiaries are both capital
and income beneficiaries,
but that is not the relief sought (no
request was made for amended relief) and in any event, as I have
found, the respondents have
not disputed that this is so.
33.
It appears from the founding affidavit that the
issue that the applicant wants addressed is rather whether the
trustees are entitled
to distribute the capital in fulfilling the
purpose of the trust in maintaining the children should the income be
insufficient
to do so. Apart from this issue not being addressed by
the formulated relief sought by the applicant, there is no dispute
between
the parties that the trust capital can be used if the income
is insufficient. Although the applicant perceived there to be such
a
dispute, I have already found that the respondents accept that
payments can be made from both capital and interest. I agree with
the
respondents that there is no need in these circumstances, where there
is no dispute between the parties and where there was
not full
argument on this aspect, to make an order to this effect.
34.
An ancillary issue arose between the parties
regarding the distribution of the capital. The applicant contends
that the trustees
are obliged to distribute the capital (and
presumably also the income, although this is not made clear) so that
by the time the
children turn twenty-one, the trust capital will have
been depleted, i.e. that there will be nothing left in the trust
to
distribute as by then all the capital must have been distributed
to their benefit, and particularly towards their maintenance.
Actuarial calculations mandated by the applicant calculate what
amounts can be paid to the beneficiaries, together with such income
as the trust can be expected to generate, in order to achieve this
outcome. The respondents disagree, contending that the trust
specifically envisages capital remaining for distribution when the
children turn twenty-one.
35.
The declaratory relief sought by the applicant
that the children are capital beneficiaries was motivated at least
partially to resolve
this issue. But the declaratory relief if
granted would not resolve this issue because it does not follow upon
a declaration that
the minor children are capital beneficiaries that
the outcome advanced by the applicant is correct.
36.
In any event, I do not interpret the Will as
reflecting the testator having intended that the capital of the trust
must be depleted
by the time her children turn twenty-one years of
age. I refer again to clause 4.2 of the Will that specifically
envisages a distribution
of capital to the children when they turn
twenty-one, which presupposes that there may be capital remaining for
distribution.
37.
In any event, I envisage various difficulties in
administering the trust to achieve the applicant’s asserted
outcome. For
example, the applicant’s actuarial calculations
have as a key assumption that each child will receive the same
monthly amount
until age twenty-one. But the assumption is incorrect
as the Will does not so provide nor in my view did the testator so
intend
.The eldest minor child turns twenty-one considerably earlier
than the younger twins. The needs of the children are variable, such
as for their education. The eldest child, who I understand is in high
school, was born in 2005 while his twin sisters were born
in 2014. It
is understandable that the respondents as trustees may wish to retain
funds in the Trust to cater for such contingencies
as may arise, and
which provides considerable scope for capital remaining when the
twins turn twenty-one depending upon what contingencies
materialise.
This is consistent, in my view, with what the testator intended.
38.
For these various reasons, the applicant’s
claim for declaratory relief fails.
DOES
THE RESPONDENTS’ CONDUCT IMPERIL THE TRUST’S ASSETS OR
ITS PROPER ADMINISTRATION AND SO JUSTIFY THEIR REMOVAL AS
TRUSTEES?
39.
What remains is the applicant’s claim for
the removal of the respondents as trustees.
40.
It is necessary to go beyond what are legal
conclusions asserted by the applicant why the respondents should be
removed as trustees
and to distil the impugned conduct of which the
applicant complains.
41.
The applicant contends that the first respondent
as the grandfather of the beneficiaries is in effective control of
the assets of
the trust and uses that control as leverage to advance
his own personal agenda. That agenda, the applicant contends, is to
coerce
the applicant into giving the first respondent contact access
to his grandchildren and to appease the first respondent’s
insistence that his grandchildren go to private school in
circumstances where the applicant contends that private school is
unaffordable.
42.
Allied to this, the applicant complains that there
is a conflict of interests between the second respondent’s
professional
business interests as an attorney and his fiduciary
obligations to the trust as a trustee. The applicant contends that
the second
respondent as an attorney gets most of his legal work from
the first respondent or companies allied to the first respondent and
that for fear of losing this workstream, the second respondent, to
use the words of the applicant, is the ‘puppet’
of the
first respondent. In this manner the applicant contends that the
first respondent is in effective control of the trust and
its assets.
43.
The applicant complains that the respondents
deliberately delay considering the information made available by him
to them to enable
an appropriate payment to be made by the trust to
the beneficiaries as maintenance.
44.
The applicant also raises as issues justifying the
removal of the respondents:
44.1.
the respondents’ failure to inform the
applicant, although he is a trustee, of the transfer of the
deceased’s half share
in an immovable property (which is
co-owned by the applicant in his personal capacity) to the trust;
44.2.
the respondents’ failure to appoint auditors
and other investment advisors to the trust; and
44.3.
the respondents’ failure to obtain the
repayment of a deposit paid to a private school.
45.
Before examining these complaints, the threshold
that must be satisfied before the court will remove a trustee should
be emphasised.
The Supreme Court of Appeal recently in
Fletcher
v McNair
[2020] ZASCA135 (23 October
2020) reaffirmed in paragraph 18 that a court has an inherent power
to remove a trustee from office
at common law as well as in terms of
section 20(1) of the Trust Property Control Act, 1998 (“the
Act”).
46.
Section 20 of the Act provides that:
“
A
trustee may, on the application of the Master or any person having an
interest in the trust’s property, at any time be removed
from
his office by the court if the court is satisfied that such removal
will be in the interests of the trust and its beneficiaries.”
47.
The
Supreme Court of Appeal distilled in paragraph 19 the following
principles from a previous examination of the authorities undertaken
by Petse JA in
Gowar
and another v Gowar and others
2016
(5) SA 225 (SCA),
[8]
“
(a)
the court may order the removal of a trustee only if such removal
will, as required by section 20
of the Act, be in the interest
of the trust and its beneficiaries;
(b)
the power of the court to remove the trustee must be exercised with
circumspection;
(c)
the sufficiency of the cause for removal is to be tested by a
consideration of the
interests of the estate;
(d)
the deliberate wishes of the deceased person to select persons in
reliance upon their ability
and character to manage the estate,
should be respected, and not be likely interfered with;
(e)
where there is disharmony, the essential test is whether it imperils
the Trust estate or
its proper administration;
(f)
mere friction or enmity between the trustee and the beneficiaries
will not in
itself be an adequate reason for the removal of the
trustee from office;
(g)
mere conflict amongst trustees themselves is not a sufficient reason
for the removal of a trustee
at the suit of another;
(h)
neither mala fides nor even misconduct are required for the removal
of a trustee;
(i)
incorrect decisions and non-observance of the strict requirements of
the law,
do not of themselves, warrant the removal of a trustee;
(j)
the decisive consideration is the welfare of the beneficiaries and
the proper
administration of the trust and the trust property.”
48.
Particularly instructive for assessing whether the
conduct complained of is sufficient to justify the removal of the
respondents,
are the following
dicta
from
Volkwyn NO
v Clarke and Damant
1946 WLD 456
at
464:
“
To
my mind it is a matter not only of delicacy (as expressed in
Letterstedt’s case [Letterstedt v Broers
(1884) 9 AC 371
(PC)
at 387]) but of seriousness to interfere with the management of the
estate of a deceased person by removing from the control
thereof
persons who, in reliance upon their ability and character, the
deceased has deliberately selected to carry out his wishes.
Even if
the executor or administrator has acted incorrectly in his duties,
and has not observed the strict requirements of the
law, something
more is required before his removal is warranted. Both the statute
and the case cited indicates that the sufficiency
of the cause for
removal is to be tested by a consideration of the interests of the
estate. It must therefore appear, I think,
that the particular
circumstances of
the
acts complained of are such as to stamp the executor or administrator
as a dishonest, grossly inefficient or untrustworthy person,
whose
future conduct can be expected to be such as to expose the estate to
risk of actual loss or of administration in a way not
contemplated by
the trust instrument”;
and
later at 474:
“…
the
essential test is whether such disharmony as exists imperils the
trust estate or its proper administration.
49.
The Supreme Court of Appeal in
Gowar
with reference to
Volkwyn
concluded in paragraph 31 that:
“
Thus,
the overriding question is always whether or not the conduct of the
trustee imperils the trust property or its proper administration.
Consequently, a mere friction or enmity between the Trust and the
beneficiaries will not in itself be adequate reason for the removal
of the trustee from office. (See also in this regard Tijmstra NO v
Blunt-MacKenzie NO and others
2002 (1) SA 459
(T) at 473 E-G).
Nor, in my view, would mere conflict amongst trustees themselves be a
sufficient reason for the removal of a trustee
at the suit of
another.
”
50.
And so what I must determine is whether the
conduct complained of by the applicant imperils the trust property or
its proper administration.
The
complaint that the first respondent is using the assets of the trust
as leverage to advance his personal interests
51.
The applicant contends that the first respondent
has failed to administer the Trust for the sole and exclusive benefit
of the beneficiaries
and has only taken his, and the second
respondent’s, personal interests into consideration, and in
particular is using the
trust’s assets to advance his personal
interests.
52.
The applicant does not seek to make out a case
that the first respondent is making use of the trust assets for his
own financial
gain. Rather, the applicant contends, the personal
interests that the first respondent seeks to advance are
non-financial, particularly
that the applicant restores contact
access between the first respondent and his grandchildren (as the
applicant has stopped the
contact) and to appease his personal
insistence that the grandchildren go to private school.
53.
The applicant’s contention is that the first
respondent, with the second respondent as his puppet, holds the purse
strings
and he is able to control the flow of funds from the trust to
the beneficiaries, and that unless the first respondent gets his way,
he will exercise that control contrary to the purpose of the trust,
which is to maintain the minor children. This explains why,
the
applicant continues, the respondents have failed to make a monthly
payment towards maintenance any greater than R20, 000.
54.
It is common cause that the applicant terminated
contact between the beneficiaries and the first respondent as their
grandfather
during August or September 2019. The first respondent in
his personal capacity has launched proceedings for restoration of
that
contact, which is still to be decided.
55.
It is also clear from the affidavits that the
first respondent is eager that his grandchildren attend private
school. The first
respondent contends that such private schooling was
an express wish of his daughter, the testator, so much so that he has
personally
offered and paid for private schooling for the children.
56.
The applicant contends that these personal
interests of the first respondent relating to his grandchildren
conflict with his fiduciary
duty as trustee to act in the bests
interests of the children as beneficiaries of the Trust. The
applicant argues that the first
respondent must be entirely
impartial.
57.
The applicant contends that as the first
respondent as the grandfather has permitted his personal interests in
relation to his grandchildren
to intermingle with the exercise of his
discretion as a trustee as to the maintenance to be paid by the trust
to the children,
he is not impartial and so unfit to be a trustee.
58.
The applicant further contends that second
respondent, who is a senior practising attorney, as well as the
second respondent’s
attorneys firm VFV Attorneys of which the
second respondent is a partner, are puppets of the first respondent.
This, the applicant
argues, is demonstrated by way of an analysis of
the evidence.
59.
The applicant referred to a series of WhatsApp
messages and emails sent by the first respondent dealing with issues
relating to
his grandchildren. This includes his eldest grandchild’s
school fees and how he has personally contributed towards those
school fees. The applicant also refers to an offer by the respondents
as trustees for the applicant and the children to stay in
the
property which is half-owned by the trust (the applicant being the
other half owner) free of charge as an interim solution
until the
property was sold. This, the applicant argues, is a conflation by the
first respondent of his personal interests and
those of the Trust.
60.
This is further evident, the applicant argues,
from the correspondence that emanates from the offices of
VFV Attorneys, of
which the second respondent is a partner. VFV
Attorneys acts for the first respondent personally in his application
seeking restoration
of access to his grandchildren. The applicant
argues that this correspondence is problematic in that the second
respondent is meant
to be an independent trustee acting in the best
interests of the trust beneficiaries and so cannot be acting for the
first respondent
in his personal capacity.
61.
The letters that are attached to the papers
demonstrate that VFV Attorneys represent the first respondent in his
personal capacity.
The applicant refers, for example, to a letter
addressed by VFV Attorneys to the applicant’s attorneys on
21 October
2019 which, on the one hand, deals with issues that
relate to the first respondent’s personal relationship with his
grandchildren,
such as various problematic Facebook posts of pictures
of the grandchildren, contact between the minor children and their
grandparents
and issues relating to school, and on the other hand,
with issues relating to the trust, such as the payment of
maintenance.
62.
As appears above, the overriding question is
whether the respondents’ conduct as trustees imperil the trust
property or its
proper administration.
63.
In my view, the first respondent’s
understandable concerns to maintain contact with his grandchildren
and their schooling
does not imperil the trust property or its proper
administration. There are no incidents described in the affidavits in
which the
first respondent states that unless he gets his wishes, he
will use his powers as a trustee to stifle the flow of any payments
to the beneficiaries. The beneficiaries are his grandchildren, and it
is common cause that the grandfather has spent hundreds of
thousands
of rands from his own funds on their private schooling.
64.
These
are motion proceedings. As the applicant seeks final relief on
motion, the usual
Plascon-Evans
approach
applies in relation to any factual disputes that may arise, where the
respondents’ version is effectively to be preferred
over that
of the applicant
[9]
unless the
respondents’ version can be rejected as far-fetched and
fanciful.
[10]
65.
In the circumstances, I cannot draw the conclusion
on the papers that the first respondent has used or will use his
position as
trustee as leverage to advance his own personal agenda.
66.
Total impartiality is not required. That there are
circumstances that have the potential for a trustee to be partial
does not automatically
disqualify him or her from being a trustee. It
is unrealistic to expect trustees to be totally impartial at all
times. While it
may be that professional trustees who are appointed
as independent trustees can perhaps be expected to be impartial, in
many trusts,
including testamentary trusts, the majority if not all
the trustees may be family members or other persons who have a close
connection
to the beneficiaries. Although it is desirable for there
to be what has been termed an independent trustee or even to have a
majority
of independent trustees, it does not follow that every
trustee must be so detached from the beneficiaries that they are
totally
impartial.
67.
In the present instance, the testator, who herself
was an experienced attorney, deliberately chose to appoint the three
trustees.
Two of those trustees were close family members, being her
father, the first respondent and her husband, the applicant. These
two
trustees were no doubt chosen by the testator because of their
close relationship with the grandchildren and so to expect of these
close family members to the grandchildren to be totally impartial is
unrealistic and detached from the testator’s intention.
It is
inherent in the appointment of a trustee that is a close family
member or friend that there may be a conflation of personal
interests
and what may be in the best interests of the beneficiaries. The
challenge is to manage that tension, such as by the appointment
of
independent trustees.
68.
The Supreme Court of Appeal in
Parker
above in considering the nature of a
family trust emphasised the desirability for independent trustees,
particularly in ensuring
that there is an adequate separation of
control by the trustees from enjoyment by the beneficiaries. This is
particularly necessary
where the trustees and beneficiaries are the
same. In the present instance, the first respondent is not a
beneficiary, even indirectly
and therefore this tension does not
exist. This can be contrasted to the position of the applicant who as
the father and legal
guardian of the children does have an indirect
financial interest in the trust’s affairs as the payments made
to the children
as beneficiaries of the trust are used by him as
their legal guardian to maintain them. The greater the monthly
payment by the
trust, then less the contribution required from the
applicant as the father of the children. It is clear from the papers
that there
is a tension between that which he must financially
contribute as the children’s father to support them and the
contribution
he requires of the trust, of which he is a trustee, to
contribute to their maintenance.
69.
The suggestion by the Supreme Court of Appeal in
Parker
above
at paragraphs 35 and 36 that there be an appointment of an
independent outsider as a trustee to every trust in which the other
trustees may lack a sufficiently independent interest in the
observance of substantive and procedural requirements arising from
the trust deed presupposes that those other trustees may be lacking
in independence. It does not follow that those trustees are
to be
removed because of their relationship with the beneficiaries, and
more so where the trustees enjoy no direct or indirect
financial
benefit as a beneficiary.
70.
To similar effect is
Hoppen
and others v Shub and others
1987 (3)
SA 201 (C) at 217F where there too it was inherent in the
identity of certain of the trustees that they had a
close
relationship with the beneficiaries. What is required of a trustee is
not total impartiality or no connection to the beneficiaries,
but
rather that he or she is capable of bringing the necessary
independent mind to bear on the business of the trust and of deciding
what is in the interests of the trust and its beneficiaries.
71.
Although a situation can or does arise where the
personal interests of a trustee conflict with those of the trust,
that is insufficient
in and of itself to justify the removal of the
trustee. What is required is that the trustee must have acted or is
at risk of acting
in a manner that imperils the trust’s assets
or its proper administration.
72.
In my view, the applicant has failed to
demonstrate this in relation to this complaint by him.
The
complaint that the second respondent is conflicted in respect of his
professional financial interests and his fiduciary duties
as a
trustee
73.
The parties refer to the second respondent, as a
practising attorney, as an independent trustee. But what that entails
is in dispute.
74.
The Supreme Court of Appeal had this to say in
Parker
in
paragraph 36:
“
The
independent outsider does not have to be a professional person, such
as an attorney or accountant, but someone who, with proper
realisation of the responsibilities of trusteeship, accepts office in
order to ensure that the trust functions properly, that the
provisions of the trust deed are observed, and that the conduct of
trustees who lack a sufficiently independent interest in the
observance of substantial and procedural requirements arising from
the trust deed can be scrutinised and checked. Such an outsider
will
not accept office without being aware that failure to observe these
duties may risk action for breach of trust.
”
75.
Geach
& Yeats
[11]
have this to
say in relation to the appointment of independent trustees:
“
Exactly
what would be an independent trustee is neither defined nor
prescribed, but it is submitted that common sense should prevail
and
that it is usually fairly obvious for a person who is truly
independent of another. … What often happens in practice
is
that a planner appoints existing professional advisors as trustees.
So for example, a planner may be the shareholder in the
company to
which business is conducted, and may appoint the auditor of that
company and a person who gives legal advice to the
company as
trustees of the planner’s family trust. In reality, these
persons may not be ‘independent’ in the
sense required,
because they are likely to accede to the wishes and demands of the
planner without objectively taking into account
all beneficial
interests and all circumstances before arriving at a decision. The
risk of losing lucrative audit and consulting
fees must simply be too
great if these trustees oppose the views or wishes of the planner,
and hence they may not act in the manner
that should legitimately be
expected of a trustee.
”
76.
The applicant asserts that the second respondent,
a senior attorney and partner of VFV Attorneys suffers from a
conflict of
interests in that he obtains most of his legal work from
the first respondent or companies associated with the first
respondent.
The applicant argues that because of this valuable
workstream, the second respondent is unlikely to jeopardise that
workstream
by not doing that which is required of him by the first
respondent in relation to the affairs of the trust and that therefore
he
is not only conflicted but, to use the words of the applicant, is
the first respondent’s “puppet”.
77.
This is a serious assertion to make, particularly
of a senior practising attorney. It is a serious matter for the court
to remove
someone from a position of trust, as appears from
Volkwyn
above, and especially a professional trustee such
as a senior attorney. Sound evidence would be necessary for a court
to remove
a trustee, which is not a particularly easy task when that
relief is sought in motion proceedings.
78.
The applicant says the following in his founding
affidavit:
“
...
the second respondent obtained the majority of his business in his
capacity as an attorney from the First Respondent …
This is to
the extent that, in the administration of the Trust, the Second
Respondent acts as a ‘puppet’ for the First
Respondent,
as should he act independently, he would stand to then lose business
from the First Respondent.
”
79.
The first and second respondents each deny these
allegations.
80.
There is no cogent evidence to support the
applicant’s bold averment that the second respondent does the
first respondent’s
bidding because of fear of the second
respondent or the firm of which he is a partner losing the custom of
the first respondent
or any companies associated to him, or that he
does not bring an independent mind to bear on the affairs of the
trust.
81.
The first respondent confirms a professional
relationship exists between the second respondent and himself, and
also between his
employer company and its various affiliates, and the
second respondent. These averments are confirmed under oath by the
second
respondent.
82.
The testator nominated the second respondent,
knowing of the existing professional relationship between the second
respondent and
her father, the first respondent. The professional
relationship was inherent in the testator’s choice of the
trustees. The
testator’s choice of trustees is to be respected.
That this professional relationship may render the second respondent
not
fully independent does not, in my view and in the context of the
prevailing facts, justify his removal.
83.
The applicant complains that a conflict of
interests on the part of the second respondent arises because the
second respondent acts
for the first respondent personally in the
first respondent’s legal disputes with the applicant in
relation to the grandchildren,
such as in relation to restoration of
contact, while at the same time being a trustee that owes a fiduciary
duty to the trust.
84.
The respondents point out that the second
respondent does not represent the first respondent in his personal
disputes with the applicant
but rather another attorney from
VFV Attorneys, Hein Beukes. The respondents point out that the
correspondence that emanates
from VFV Attorneys in relation to
the first respondent’s personal litigation is from Beukes, in
contrast to the emails
that emanate from the second respondent
relating to the affairs of the Trust. The respondents argue that it
cannot be said that
the second respondent is acting for the first
respondent in his personal capacity.
85.
The applicant’s retort is that just as the
second respondent is the puppet of the first respondent, so too is
Beukes a puppet
as he is from the same attorneys firm. Again, no
evidence is adduced of this serious assertion. The applicant points
to the letters
addressed by Beukes which, the applicant argues,
conflate the first respondent’s personal interests relating
inter alia
to
the restoration of contact with his grandchildren and their school
fees with issues relating to the trust, such as maintenance
and that
this demonstrates the control that the first respondent exercises
over the second respondent, and so the argument goes,
over Beukes. I
have already dealt with this correspondence and have difficulties
with the logic of this argument. It is not clear
to me why attorneys’
correspondence that may deal with both the first respondent’s
personal issues and those of the
trust is demonstrative of the first
respondent controlling the second respondent, and his firm.
86.
It is not necessary to determine whether the
second respondent is entirely independent. The second respondent and
his firm VFV Attorneys
do have a professional relationship with the
first respondent and, with regard to the caution sounded by Geach &
Yeats, to
this extent cannot be said to be truly independent. But
then, as set out above, the testator was aware of this when
appointing
the second respondent. The first respondent was an
attorney at a large law firm in Johannesburg and would have had
access to any
number of professionals to appoint as trustees but
instead elected to appoint the second respondent. This deliberate
choice of
trustees by the testator is to be respected, together with
the testator’s knowledge of the professional relationship
between
the first and second respondents. Although as a general
proposition a trustee must so far as possible avoid a position where
private
interests conflict with his or her duty as a trustee, as
stated in Cameron at page 315, the practical reality is to be
appreciated,
such as in
Jowell v
Bramwell-Jones and others
2000 (3) SA
274
(SCA) at para 16, that a conflict may be inherent in or created
by the will itself, and that such a conflict itself does not
necessarily
justify a removal of the conflicted trustee. While in a
perfect world it may be preferable that the second respondent had no
relationship
at all with the first respondent and that the firm did
not represent the first respondent in any litigation, the reality is
that
this is idealistic.
87.
Ultimately, I am unable to find that such
relationship as exists between the first and second respondents
amounts to the second
respondent being a puppet of the first
respondent or that the relationship imperils the trust’s assets
or its proper administration.
Have
the respondent trustees deliberately delayed paying maintenance to
the beneficiaries?
88.
The applicant contends that the respondents as
trustees have deliberately frustrated the calculation and payment of
maintenance
in an appropriate amount. The applicant initially sought
maintenance, in April 2019, in an amount of R60 000.00 per
month.
In July 2019 the applicant, after queries by the respondents
together with requests for documents and information, reduced the
request for maintenance to R41 760.00. The respondents sought
still further documents and information. In December 2019 the
trust
began paying maintenance of R20 000.00 per month, backdated to
September 2019. These monthly payments have since been
made more or
less regularly.
89.
The applicant contends that these payments are too
little and that the respondents are deliberately as trustees not
doing what is
necessary to properly calculate the reasonable
maintenance requirements of the beneficiaries and to make payment of
an increased
amount.
90.
The respondents contend that they have sought
documentation from the applicant to enable them to undertake this
calculation, including
details of the beneficiaries’ reasonable
maintenance needs, details of the applicant’s income as it is
common cause
that he is to contribute to the maintenance of his
children proportionate to his income as well as details of the
contributions
made by the applicant’s wife (as the applicant
has since married) to the household necessaries of the family unit
consisting
of the applicant, his wife and the three minor children.
91.
The applicant contends that much of this
information as is reasonably required has been provided while the
respondents contend not.
For example, in a series of supplementary
affidavits filed in the months before the hearing of this
application, the respondents
state that they have requested the
applicant to furnish proof of his new income as he had since changed
jobs but that this has
not been forthcoming.
92.
Bearing in mind that these are motion proceedings
and that the respondents’ version is to be accepted over that
of the applicant
unless the first and second respondents’
version can be rejected as far-fetched and fanciful (which I cannot),
I am unable
to resolve these factual disputes.
93.
I am unable to conclude that the respondents in
seeking this information from the applicant before calculating an
increased monthly
payment necessarily imperils the trust’s
assets or its proper administration. Self-evidently as the applicant
complains that
the trust is paying too little rather than too much,
the trust in making the payments that it does cannot imperil the
assets. Presumably
what the applicant seeks to assert is that the
respondents’ failure to properly calculate the monthly
maintenance and to
make payment thereof to the beneficiaries imperils
the proper administration of the trust given that the purpose of the
trust is
the care, upbringing, maintenance, education and benefit of
the minor children as the beneficiaries. I am unable to find that the
respondents have conducted themselves in a manner that is contrary to
what is required of them as trustees. Added to this is the
difficulty
discussed earlier in this judgment of the discretionary nature of the
payments to be made by the trust and the applicant’s
conflation
of this with what appears to be a perception on his part that the
trust is obliged to pay maintenance in the usual sense
arising from a
legal duty of support.
94.
That the respondent trustees, as a recognised
majority in terms of the Will, exercise their discretion in a
particular manner as
to what monthly payments are to be made to the
beneficiaries cannot constitute conduct justifying their removal
because the applicant,
even in his capacity as trustee, may disagree.
95.
Much of the applicant’s affidavit is from
the perspective of the surviving parent looking for assistance to
discharge his
financial obligation to support his children rather
than from the perspective of a trustee acting in the best interests
of the
trust. But it must not be overlooked that the applicant is one
of the three trustees, with powers and duties of a trustee. As a
trustee, he is able to call upon the respondents as fellow trustees
to attend trustees’ meetings and formally engage with
them on
the issue of maintenance. These trustees’ meetings would
provide a forum at which documents and information can be
exchanged
and debated in seeking to agree on an appropriate amount to be paid
to the children as beneficiaries, based upon their
reasonable needs
and what the trust can afford. This would be preferable to a
letter-writing campaign between the parties’
respective
attorneys.
96.
The applicant has not sought to call a trustees’
meeting other than a singular request on 5 December 2019. The
applicant’s
explanation for not calling for trustees’
meetings is that it would be pointless as the respondents have set
themselves against
him and as the second respondent is the puppet of
the first respondent.
97.
After the launch of these proceedings, during
January 2021 the respondents requested the applicant to attend a
trustees’ meeting
to be held on 29 January 2021. The
applicant explains in a supplementary affidavit that upon legal
advice and taking into
account the pending litigation, he declined to
attend the meeting on the basis that:
97.1.
the respondents continuously request financial
information which he has already provided to them but to no avail;
97.2.
the respondents had refused to step down as
trustees and were not acting independently in the best interests of
the children;
97.3.
the second respondent is a puppet of the first
respondent based upon their business relationship and that he did not
foresee any
change in that relationship.
98.
I cannot find, on these papers in motion
proceedings, that the reasons advanced by the applicant for not
attending a trustees’
meeting are factually sound. And even if
there is some factual foundation to what the applicant asserts, it is
incumbent upon the
applicant to engage with his fellow trustees at
trustees’ meeting and to formally place these issues on the
record. The applicant
as a trustee cannot decide not to attend
trustees’ meetings but still complain that the Trust is not
being conducted properly
by the other trustees, especially when he
has been invited to engage with them at a meeting. Similarly, that
the applicant has
launched legal proceedings against the respondents
in their personal capacities seeking their removal does not in my
view absolve
the applicant from attending trustees’ meetings to
see whether the contentious issues can be addressed, such as the
calculation
and payment of an increased amount as maintenance.
99.
In the circumstances, I am unable to find that the
respondents have deliberately conducted themselves in a dilatory or
obfuscatory
manner to frustrate the purpose of the trust.
The
applicant’s further grounds of complaint
100.
The applicant and the testator, his wife, co-owned
the immovable property that served as their home. When the testator
died, her
half-share formed part of her deceased estate and which
devolved in terms of the Will to the trust, with the applicant
remaining
a co-owner.
101.
The applicant’s complaint is that he was not
told of the formal transfer of the deceased estate’s half-share
to the
trust and that this shows that the respondents are side-lining
him. The respondents maintain that this was an oversight but that
had
the applicant engaged with them as a trustee such as at the trustees’
meetings, he would have learnt of this. In any
event, it would have
been plain from the liquidation and distribution account of the
deceased estate that this was to take place
and the applicant could
not have been surprised at the half-share being formally transferred
from the deceased estate to the trust.
Further, as incorrect
decisions and non-observance of the strict requirements of the law,
do not of themselves, warrant the removal
of a trustee, as found in
Volkwyn
at
464 and affirmed in
Gowar
at
para 30 and
Fletche
r
at para 19, then so too an oversight of this nature. In any event, I
fail to see how the trust assets or its proper administration
is
imperilled by this conduct.
102.
What
is problematic in relation to the immovable property now co-owned by
the trust and the applicant personally, and as raised
by the
respondents, is that the applicant without the consent and knowledge
of his fellow trustees concluded a lease agreement
to rent the
property to a third person. The applicant is the co-owner of the
property with the trust and was obliged to act jointly
with the
respondents as trustees in renting the property. But he did not do
so. The applicant explains that he entered into the
lease agreement
in his personal capacity as he is a co-owner, but this is not a
satisfactory explanation as the trust is a co-owner
of the property.
Neither has the applicant accounted for the rental that he has
collected. Co-owners are entitled to the fruits
of the co-owned
property, including rent, in undivided shares.
[12]
The applicant contends that because he has paid the expenses relating
to the property and the trust has not contributed to those
expenses,
he is entitled to take these into account in justifying his retention
of the rental. But at the very least the applicant
is to account to
the trust. There is no evidence that the applicant has done any
accounting or is likely to do so.
103.
The applicant therefore appears to be making use
of the trust’s assets in the form of its half-share of the
immovable property
for his own benefit, but without a proper
accounting.
104.
Although the respondents belatedly in
supplementary affidavits filed in the month preceding the court
hearing indicated that they
would seek the removal of the applicant
as a trustee, at the outset of the hearing their counsel indicated
that they would not
be doing so, presumably, and understandably,
because of the lateness in asking for such relief. The conduct of the
applicant nonetheless
remains relevant, as will appear below, to
whether it would be in the interests of the beneficiaries to remove
the respondents
as trustees, leaving the applicant as a trustee.
105.
The applicant complains that the respondents have
not appointed auditors or other investment advisors for the trust.
Again, this
is an issue that should have been taken up by the
applicant at a trustees’ meeting. There is no requirement in
the Will or
the Act that an auditor, or any other advisor, be
appointed. On the evidence in the affidavits, it does not appear that
the non-appointment
of an auditor investment advisor has imperilled
the assets of the trust or its proper administration.
106.
Allied to this is the applicant’s complaint
that it is only he who has engaged the services of an actuary, who
has compiled
two actuarial reports as to what the trust can afford,
while the respondents have not appointed an actuary. I have briefly
commented
on these actuarial reports procured by the applicant and
why in my view the reasoning that underlies those calculations does
not
accord with the purpose of the trust. I cannot on the evidence
before me fault the respondents, at least not to the extent that
they
should be removed, for having adopted the view that the applicant
needs to engage with them in seeking to reach agreement
on the
reasonable needs of the children as the starting point to the
calculation of appropriate payments to be made by the trust
to them,
before engaging in actuarial exercises.
107.
The applicant complains that the respondents have
not taken steps to recover a deposit paid to a particular private
school and/or
to arrange for that deposit to be transferred to
another school which the beneficiaries may be attending. Having
considered what
evidence there is, I cannot quite see what the
complaint is in this regard and certainly not to the extent that
justifies the removal
of the respondents as trustees.
108.
In any event, it is not every failure by a trustee
that will result in a trustee being removed from office. Ultimately,
the removal
will only be ordered in the event that the removal will
be in the interests of the trust and its beneficiaries.
Why
it would not be in the interests of the trust and the beneficiaries
to remove the respondents as trustees
109.
As to the overriding question whether the conduct
of the respondents imperils the trust property or its proper
administration, I
find that the respondents have not so conducted
themselves.
110.
To the extent that there can be said to be any
deficiency in their conduct or that it might (but not necessarily) be
desirable that
the second respondent or his firm does not act for the
first respondent in his personal litigation, I am not of the view
that it
would be, to use the phraseology from section 20(1) of the
Act, “
in the interests of the
trust and its beneficiaries”
to
remove the respondents. Should leave be granted in the form sought by
the applicant in his notice of motion seeking the removal
of the
respondents coupled with an order directing the Master to appoint
independent trustees to the Trust after consultation with
interested
parties, the applicant would be the only trustee in office pending
the appointment by the Master of those further trustees.
This
presents various difficulties and fortifies why a removal of the
respondents would not be in the interest of the trust and
its
beneficiaries.
111.
The
Will in clause 2 provides that there shall at all times be not less
than two nor more than three trustees of the trust and,
if the number
falls below two, the remaining trustees shall forthwith assume
another or others to act with them. If the relief
sought by the
applicant is granted, the trust will be incapacitated as there will
be less than two trustees in office.
[13]
112.
Should the applicant as the remaining trustee
exercise the power of assumption, it will be left to him to decide
who the remaining
trustees would be who are to be so assumed.
Effectively, control of the trust will end up with the applicant,
which is an undesirable
state of affairs.
113.
As set out above, the applicant’s conduct in
leasing the property of which the trust is a half-owner and his
failure to account
for the revenue generated by the property is
concerning. Further, the applicant has an indirect financial interest
in payments
to the beneficiaries given that as the father of the
beneficiaries with a duty of support, he is financially interested in
any
contribution to the support of the children that the trust may
make. The greater the trust’s monthly contribution, the lesser
his financial outlay to support his children. If the applicant is in
effective control of the trust, there would be no checks and
balances
in place to address any conflict between the applicant’s
personal financial interests and his interests to act in
the best
interests of the trust.
114.
That this is a real concern appears from an email
attached by the applicant to his founding affidavit. On 4 December
2018 the second
respondent in his capacity as a trustee addressed an
email to the applicant as well as to the first respondent. This
appears to
be correspondence between the trustees. In this email the
second respondent raises what he describes as the primary issue being
the maintenance of the children and the monthly contribution that is
expected from each of the trust and the applicant, with the
best
interests of the children as beneficiaries being the primary
consideration. In this email the second respondent recorded that
there is a joint duty between the applicant and the trust to
contribute towards the reasonable needs of the children and that this
must be apportioned according to the means of the parties based upon
the joint disposable income of the respective parties. This,
the
second respondent records, requires a consideration of the
applicant’s monthly earnings. The second respondent then
proffers his view as to what are unnecessary expenses in relation to
the children.
115.
The applicant’s wife, who he married after
the death of the testator, commented on these issues raised by the
second respondent
in his capacity as a trustee in the form of making
comments within the body of the second respondent’s email and
then forwarding
those comments to the applicant’s attorneys.
Effectively the email attached by the applicant to his founding
affidavit contains
the response by his wife to the second
respondent’s concerns, and which may have been intended for the
benefit of the applicant’s
attorney. It is strange that the
applicant chose to attach to his founding affidavit what may have
been a privileged communication
between attorney and client, but he
has nonetheless done so, waiving any privilege. In any event, the
applicant during argument
raised no objection to the email being
considered.
116.
What is instructive from these comments by the
applicant’s wife is that there is a clear tension between the
applicant’s
personal financial interests in seeking to obtain a
greater proportion of the maintenance contribution from the trust as
that would
alleviate his proportionate contribution and his fiduciary
interests as a trustee to advance the interests of the trust that he
as the surviving parent contributes his fair and proportionate share.
For example, the following comment from the applicant’s
wife is
found in the body of the email in response to the concern by the
second respondent that certain expenses including for
entertainment
are too high, and that savings must be achieved:
“
Again
it is R[....] [the applicant] that must cut out his FULL
entertainment costs (sorry, no dinners out or any form of lifestyle
for you R[....])
.”
117.
The relevance of these comments is that it would
undesirable for the applicant to be in effective control of the
trust, even for
an interim period the Master goes about appointing
independent trustees given the clear tension that exists between
appeasing his
personal financial interests as expressed by his wife
(from which the applicant does not distance himself) and those of his
appropriate
contribution to the costs of maintaining his children.
There is also merit in the respondents’ concern that the
applicant’s
wife may be exerting undue influence over the
applicant. Although the applicant challenges the respondents as
having adopted an
irrelevant emotional approach at the applicant
having remarried and that this is apparent from their affidavits in
these proceedings,
their concern cannot be rejected particularly
where the applicant himself has adduced email correspondence
demonstrating the close
involvement of his wife in the affairs of
applicant and potentially of the trust through the applicant. I do
not make any positive
findings in this regard, other than to find
that a state of affairs exists that would not be in the interests of
the trust and
its beneficiaries to grant the relief sought by the
applicant.
118.
The applicant attached to his replying affidavit a
“without prejudice” settlement proposal dated 4 September
2020,
which is after the launch of these proceedings, and which the
applicant asserts was a reasonable settlement offer. The applicant
having decided to place this offer before the court, and so waive any
legal privilege that may have attached to the proposal, enables
the
court to consider the offer in context.
119.
Nearly a year earlier in October 2019 the first
respondent had suggested that both he and the applicant resign, that
the second
respondent remain a trustee and that two other independent
trustees (who are named) be appointed and that in the interim that
maintenance
of R20 000.00 per month be paid by the Trust. The
response by the applicant’s attorney on 25 October 2019 is that
the
applicant agrees in the interim to payment of a monthly amount of
R20 000.00 (backdated to September 2019) on a without prejudice
basis, and that the applicant agrees to resigning as a trustee and is
agreeable to the respondents’ proposal that second
respondent
remain a trustee (without any complaint that the second respondent is
‘a puppet’ for the first respondent)
and the two named
persons be appointed as independent trustees.
120.
Pursuant to this exchange of correspondence, the
trust subsequently commenced the monthly payments backdated to
September 2019.
According to the respondents, they then began
implementing the agreement that the applicant and the first
respondent resign as
trustees and that the independent trustees be
appointed.
121.
The respondents contend that the applicant then
reneged on the agreement in precipitously launching these
proceedings. The respondents
record that that it was with surprise
that they were served with this application during May 2020. There
was no preceding demand
or forewarning by the applicant for the six
months from December 2019 to May 2020 that proceedings would be
launched to
inter alia
seek
their removal as trustees. The first time that any challenge is made
in relation to the second respondent’s continued
trusteeship is
in the founding affidavit.
122.
The respondents explain in their answering
affidavit that after the application was launched in May 2020, they
nevertheless sought
to engage with the applicant’s legal
representatives to reach an amicable settlement and they proposed
that the previous
agreement be implemented that the applicant and
first respondent resign as trustees and certain identified persons as
independent
trustees be appointed. The first and second respondents
state that the applicant was no longer willing to execute the
previous
agreement, that he no longer considered himself bound to
that agreement and that such counter-proposals as were made by the
applicant
were “
wholly
unrealistic
”
and were not
accepted.
123.
The applicant’s response is that having
subsequently reconsidered his position, he decided it was not in the
best interest
of the trust that he proceed with agreement.
124.
It is in this context that the applicant’s
settlement proposal of 4 September 2020 that he chose to attach to in
his replying
affidavit is to be considered. The applicant’s
proposal was that he resign as a trustee, that the first respondent
be removed
as a trustee, that two independent trustees chosen by him
be appointed, that the trust reimburse the applicant R1, 447, 038.76
and that the trust pay interim monthly maintenance for the children
at R43, 533.27.
125.
The applicant, referring to this proposal,
explains in his replying affidavit:
“
71.
In the settlement negotiations I was prepared to step down on the
basis that three independent trustees
be appointed, whom I could
elect.
[14]
72.
The reason for requesting same is based on the conduct of the Second
Respondent and my concern
regarding him working as a puppet as he had
been doing, for the First Respondent.
73.
This then, without the appointment of the two independent trustees
elected by myself will
not be of any favour and/or resolve the issue
before the Court.
74.
The Respondents refused this offer and further refused to accept our
proposed settlement
agreement. This once again demonstrated the fact
that the First and Second Respondents are afraid to lose the
financial control
of the Trust in order to dictate to the Trust what
they deem to be appropriate, which has not been exercised in terms of
their
fiduciary duty.
126.
The difficulties that emanate from the position
adopted by the applicant are readily apparent. The applicant insists
that it be
him who elects who the trustees are to be that are to be
appointed. This stance resonates with his approach in the present
proceedings
where should he be granted the relief that he seeks he
will remain the sole trustee of the trust and with the powers of
assumption
will be able to assume trustees of his choosing. The
relief that the applicant presently seeks goes one step further in
that now
the applicant will remain as a trustee, in contrast to his
previous proposal where he would step down but would choose two
independent
trustees to be appointed.
127.
The proposal made by the applicant is that the
trust reimburse him (in his personal capacity) an amount of
R1 447 048.76
and that the trust pay increased maintenance
on a monthly basis of R43 533.27. The conflicts of the
applicant’s personal
interests and those of a trustee are
manifest. The respondents argue, with justification, that the
applicant’s unreasonableness
is apparent from this proposal.
128.
I have already raised concern at the applicant’s
failure as trustee to invoke his powers and discharge his duties as a
trustee
such as convening trustees’ meetings and attending
trustees’ meeting when called upon to do so by his fellow
trustees.
129.
In the prevailing circumstances, it will not be in
the best interests of the trust and its beneficiaries to grant the
relief sought
by the applicant which effectively places the applicant
in control of the trust, even if on an interim basis. The applicant’s
counsel realising these difficulties during the course of argument
suggested various reformulated relief that the court could consider
granting in the form of further and/or alternative relief as prayed
for in the notice of motion. Without the applicant having formulated
such relief and having made out a case for that relief and having
afforded the respondents an opportunity to deal with such
reformulated
relief, it will not be appropriate to do so.
130.
While it is not an entirely satisfactory state of
affairs that the
status quo
remains given the discord between the trustees,
the Supreme Court of Appeal has recently in
Fletcher
,
in overturning the decision of the Full Bench in
McNair
v Crossman
2020 (1) SA 192
(GJ), made
it clear in paragraph 36 that a lack of trust, respect or
compatibility among trustees is not a basis for the removal
of
trustees unless the trust property is imperilled or the proper
administration of the trust is placed at risk.
131.
The Supreme Court of Appeal also made the
observation in paragraph 32 that if both sets of trustees were
responsible for the
state of enmity, lack of trust and respect, it is
inexplicable why the one set of trustees is to be removed but not the
other,
particularly in motion proceedings where a final order cannot
be granted where there is a real, genuine and
bona
fide
dispute of fact.
132.
In the present instance the applicant is at the
very least also responsible for such discord that may exist between
the trustees.
It is therefore not open to me to remove the
respondents but not him.
133.
I am not satisfied that the conduct of the
respondents imperils the trust or its proper administration or that
their removal would
otherwise be in the interest of the trust and its
beneficiaries.
134.
The removal of the respondents as trustees, with
related relief, is not granted.
135.
The applicant has not succeeded in any of the
relief sought. No submissions were made as to why costs should not
follow the result
or why if the applicant failed that the costs
should not be paid by him personally. Given the nature of the relief
sought by the
applicant, it is appropriate that he pay the costs.
136.
The
first and second respondents did not seek an order that in the event
that they succeeded that they be indemnified by the trust
in respect
of such costs as they incurred in opposing the litigation.
[15]
137.
The following order is made:
137.1.
The application is dismissed;
137.2.
The applicant to pay the first and second
respondents’ costs.
Gilbert
AJ
Date
of hearing:
2 June 2021
Date
of judgment:
30 June 2021
Counsel
for the applicant:
Ms
K Howard
Instructed
by:
Jennifer Scholtz
Attorney
Counsel
for the
first
and second respondents:
Ms
I Vermaak-Hay
Instructed
by:
VFV Attorneys
[1]
Stander
and others v Schwulst and others
2008
(1) SA 81
(C), para 32 to 34.
[2]
5
th
ed.
Juta (2002)
(‘Cameron’)
at
pp 557, 558.
[3]
See
also
Burger
v Commissioner for Inland Revenue
1956
(1) SA 534
(W) at 536G.
[4]
Juta
(2007)
(‘Geach
& Yeats’)
at
p 120.
[5]
Land
and Agricultural Bank of South Africa v Parker and others
2005
(2) SA 77
(SCA), para 15, and para 39 to 44 where this also applies
to litigation.
[6]
This
authority is cited as support for the proposition in
Cameron
at
p 420 that it would seem that all the trustees holding office at the
time should be joined as defendants or respondents, even
if this
means that the same person appears as plaintiff and defendant in two
separate capacities.
[7]
Section
2(1)
of the
Maintenance Act, 1998
provides that the provisions of
the Act shall apply in respect of the legal duty of any person to
maintain any other person,
irrespective of the nature of the
relationship between those persons giving rise to that duty.
[8]
Paragraphs
31 and 32.
[9]
Final
relief can only be granted on motion if the facts as stated by the
respondents, together with the admitted facts in the
applicant’s
affidavits, justify the granting of the relief:
Plascon-Evans
Paints Limited v Van Riebeeck Paints (Pty) Limited
[1984] ZASCA 51
;
1984
(3) SA 623
(A) at 634 E G, as reaffirmed in
National
Director of Public Prosecutions v Zuma
[2009] ZASCA 1
;
2009
(2) SA 277
(SCA) at 290 D-G. Effectively, any factual disputes ought
to be resolved by accepting the respondents’ version, save
where
such version is “
so
far-fetched or clearly untenable that the court is justified in
rejecting (it) merely on the papers”: Botha v Law Society,
Northern Provinces
2009
(1) SA 277
(SCA) at para 4, with reference to
Plascon-Evans
Paints
.
[10]
Once
the respondents’ version is rejected as far-fetched and
fanciful, there would only be one version before the court,
namely
that of the applicant and therefore the
Plascon-Evans
approach
would not come into play as there would no longer be conflicting
factual versions.
[11]
At p
41.
[12]
C G
van der Merwe with Ann Pope in Du Bois ed.
Wille’s
Principles of South African Law
,
9
th
edition
(2007) Juta at p 559.
[13]
Parker
at
para 11.
[14]
This
is somewhat inconsistent with the proposal.
[15]
Contrast
Stander
above,
para 58.