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[2019] ZAECPEHC 39
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Ferreira and Another v Van der Merwe N.O and Others (2727/2018) [2019] ZAECPEHC 39 (13 June 2019)
IN
THE HIGH COURT OF SOUTH AFRICA
EASTERN
CAPE LOCAL DIVISION, PORT ELIZABETH
Case
No: 2727/2018
Date
heard: 23 May 2019
Date
Delivered: 13 June 2019
In
the matter between:
RIANA
FERREIRA
FIRST
APPLICANT
GIDEON
JACOBUS VAN DER
MERWE
SECOND
APPLICANT
and
CHRISTO
VAN DER MERWE
N.O.
FIRST
RESPONDENT
MARICUS
CHRISTO VAN DER MERWE N.O.
SECOND
RESPONDENT
FRANSCOIS
ALWYN SASS
N.O.
THIRD
RESPONDENT
CHRISTINA
ADRIANA JACOBA VAN DER MERWE
FOURTH
RESPONDENT
ADRI
TROLLIP
FIFTH
RESPONDENT
MASTER OF THE HIGH
COURT, GRAHAMSTOWN
SIXTH
RESPONDENT
JUDGMENT
Mullins
AJ
[1]
The background facts to this dispute, which are either common cause
or not in dispute,
may be summarised as follows:
(a)
On 7 February 1984 one Aletta Getruida Janse van Rensburg (“the
Founder”) established
a trust, the Johannes van der Merwe
Trust, TM 794 (“the Trust” or “the Trust Deed”,
depending on the context),
nominating her son, Johannes Hendrik van
der Merwe, as the sole trustee (“the Original Trustee”);
(b)
On 22 March 1984, and apparently in accordance with sec 6 (1) of the
Trust Property Control
Act, 57 of 1988 (“the Act”), the
Master, which official is cited as the Sixth Respondent, authorised
the Original Trustee
to act as such and issued him with letters of
authority to this effect.
[1]
(c)
The Trust Deed contained the following provisions which are relevant
to this application:
(i)
In the event of the Original Trustee ceasing to be a trustee, for
whatever reason,
then his wife, Christina van der Merwe, who is cited
as the Fourth Respondent, would replace him and, failing her,
Volkstrust Ltd;
[2]
(ii)
On the death of both the Original Trustee and the Fourth Respondent,
and provided
the youngest of their four children had reached the age
of 28, the four children, who are cited as the First and Second
Applicants
and the First and Fifth Respondents respectively, would
become the trustees of the Trust;
[3]
(iii)
The income beneficiaries were the Original Trustee, the Fourth
Respondent and the four
children;
(iv)
The capital beneficiaries were the four children;
(v)
The Original Trustee had the power to deal with the Trust’s
assets as he saw
fit in order to achieve the purpose of the Trust;
(vi)
The Original Trustee was obliged to administer the Trust funds on
behalf of the Fourth
Respondent and the four children;
(vii)
On the death of the Original Trustee the primary income beneficiary
would be the Fourth Respondent;
(viii)
While still alive the Original Trustee and the Fourth Respondent
would have the right to distribute
the Trust’s capital to the
four children, with the proviso that on their death the assets would
be distributed to the four
children in such a way that, having regard
to assets already distributed, as far as possible they (the four
children) would each
receive an equal proportion of the assets;
(ix)
The above provision was subject to a further proviso, namely that
when each child reached
the age of 28, 25% of the assets were to be
distributed to that child and when the youngest child (the Fifth
Respondent) reached
28, the assets were to be distributed in equal
proportions;
(x)
The children could elect to leave an asset distributed to him/her in
the Trust, to
be administered on such terms and conditions as that
child may determine;
(xi)
Proper records were to be kept of all transactions and business of
the Trust, to be provided
to the children on demand;
(d)
As is evident from the above, the Trust Deed contained complicated,
vague and contradictory provisions
as to the manner in which the
Trust assets were to be administered and distributed.
Fortunately, for present purposes it
is not necessary to make sense
of this aspect. Suffice it to state that it would appear that
the intention of the Founder
was that, ultimately, as far as
possible, each of the four children was to receive 25% of the capital
assets of the Trust;
(e)
Of paramount importance to this application is that the Trust Deed
made no provision for
the amendment thereof;
[4]
(f)
The Founder died on 13 March 1994;
(g)
Although the reasons differ, it is not in dispute that over time the
relationship between
the Original Trustee, on the one hand, and the
First and Second Applicants, on the other hand, became strained and,
particularly
in respect of the Second Applicant, acrimonious;
(h)
It is not necessary to go into the allegations and
counter-allegations. The fact of
the matter is that there was a
fall-out between the Original Trustee and the First and Second
Applicants, whereas the relationship
between the Original Trustee and
the First Respondent appears to have been a very good one. The same
can be said for the Original
Trustee’s relationship with the
Fifth Respondent, although she appears to have played a minor role in
the events giving rise
to this dispute;
(i)
The poor relationship between the Second Applicant and the Original
Trustee is evidenced
by the fact that during August 2009 the Original
Trustee presented the Second Applicant with two documents entitled
“
AFSTANDOENING”
and
“
BEVESTIGING
VAN AFSTANDOENING”,
[5]
which he requested the Second Applicant to sign which, had he done
so, would have resulted in him renouncing his beneficial interest
in
the Trust. The Second Applicant refused to sign;
(j)
On 25 September 2004 the Original Trustee presented all the
beneficiaries (i.e.,
the Fourth Respondent and the four children)
with a document, entitled “
MEMORANDUM
VAN OOREENKOMS
”
[6]
which he requested them to sign. This document was, in effect, a
partial distribution of the Trust’s assets to the First
Respondent and to a lesser extent to the Fifth Respondent;
(k)
Despite the apparent favouritism afforded to the First and Fifth
Respondents, the First
and Second Applicants signed this document;
(l)
On 22 February 2007 the Original Trustee presented the beneficiaries
with the same
document, subject to one addition thereto, and
requested them to sign it which, once again, they did;
(m)
On 3 November 2009 the Original Trustee sent the four children a
lengthy letter,
[7]
most of the
emotional contents of which can be ignored. Of relevance is
that to this letter was attached another “
MEMORANDUM
VAN OOREENKOMS
”,
which they were requested to sign in the event of them being happy
with the contents thereof;
(n)
This proposed memorandum was intended as a further distribution of
the assets of the Trust;
(o)
On 13 November 2009 the First and Second Applicants and the Fifth
Respondent replied that
they were not prepared to sign the memorandum
and that they would in due course draft a response with their own
proposals;
(p)
On 19 November 2009 the Original Trustee sent the four children
another emotionally charged
letter in which he bemoans the fact that
he had not received a positive response to his memorandum;
(q)
On 20 November 2009 the Applicants and the First Respondent again
responded to the effect
that they would not be signing the
memorandum;
(r)
On 18 June 2010 the Original Trustee prepared a document entitled
“
LETTER OF WISHES
”, addressed to “
Trustees
for the time being of the Johannes van der Merwe Trust (TM794)
”
in which he informs the trustees,
inter alia
, that he has
executed a deed of trust in which they had been nominated as
trustees. This can only have been reference to
the Amended
Trust Deed, which is referred to below;
(s)
On 17 November 2010 the Original Trustee resolved to amend the Trust
Deed (“the
Amended Trust” or “Amended Trust Deed”,
depending on the context) in material respects, namely:
(i)
The beneficiaries of the Trust were henceforth to be the Original
Trustee, the First
Respondent, the Fourth Respondent, the Fifth
Respondent, the descendants of any of the above and any trust
established for the
benefit of the above-mentioned beneficiaries;
(ii)
Provision was made for there to be between two and five trustees;
(iii)
The requirement that, ultimately, there had to be an equal
distribution amongst the capital beneficiaries
was discarded, this
being left up to the discretion of the trustees;
(t)
The effect of the amendment was,
inter alia
, to exclude the
First and Second Applicants as beneficiaries altogether;
(u)
The Amended Trust Deed was lodged with the Master on 25 November
2010
[8]
;
(v)
Pursuant to the amendment, on 8 November 2011 the Master endorsed the
Trust Deed to
provide that the First Respondent and one Maurice
Lessing (“Lessing”) be authorised to act as trustees
together with
the Original Trustee;
[9]
(w)
The Original Trustee died on 30 January 2017 leaving the First
Respondent and Lessing as
the remaining trustees;
(x)
On 12 June 2017 the Master endorsed the Amended Trust Deed by
recording that the Original
Trustee (who was deceased) and Lessing
(who resigned) were no longer trustees and that the First Respondent,
the Second Respondent,
who is the First Respondent’s son, and
the Third Respondent, one Franscois Alwyn Sass, were authorized to
act as trustees
of the Amended Trust;
[10]
(y)
Although they appear to have been aware of these developments, or
some of them at
least, since 2013, the Applicants launched this
application on 7 August 2018.
[2]
So much for the background which, as stated above, is either common
cause or not in
dispute. However, the meaning, and the effect
to be given to events, in particular the documents referred to, is
very much
in dispute.
[3]
Before dealing with the merits it is necessary to make reference to
one troubling
aspect which only came to my attention after the matter
had been argued:
(a)
According to the Master’s original Letters of Authority, on 22
March 1984 he authorized
the Original Trustee to act as a trustee in
accordance with sec 6(1) of the Act;
(b)
As the Act was only promulgated on 31 March 1989, some five years
later, it was not possible
for the Master to have done so;
(c)
Ironically, both sides rely on the document in question and could
proffer no explanation
as to how and why it came into existence, nor
did they show any inclination to do so;
(d)
Fortunately, as both sides are
ad litem
that the Original
Trustee was authorized to act as a trustee of the Trust from its
inception, nothing turns on this anomaly.
[4]
I turn now to the merits.
[5]
On 7 August 2018 the Applicants launched this application (“the
Main Application”)
claiming the following relief:
“
1.
An order declaring the amendment of the trust deed of the Johannes
van der Trust, TM
794 (E) (“the Trust”) on or about 17
November 2010 and annexed to the founding affidavit marked annexure
“RF7”
to be invalid and of no force and effect.
2.
An order declaring the appointment of the First to Third Respondents
as trustees
of the Trust on or about 26 of May or 12 June 2017 to be
null and void.
3.
That the First to Third Respondents, in their capacities as trustees
of the Trust,
be ordered to pay the costs of this application and, in
the event that it is opposed by any other Respondent, jointly and
severally
by
(sic)
the First to Third Respondents, in
their capacities as trustees of the Trust, and by any other
Respondent who opposes this
application.
4.
Further and/or alternative relief.”
[6]
The Main Application is opposed by the First to Third Respondents
(who will for convenience
sake be referred to as “the
Respondents”, unless the context requires otherwise), who are
the current trustees of the
Amended Trust.
[7]
In addition to opposing the Main
Application, the Respondents, together with the Fourth
Respondent,
have brought a conditional counter- application (“the
Counter-Application”), in which, in its amended form,
the
following relief is claimed:
“
1.
An order confirming the appointment of Christina Adriana Jacob van
der Merwe as Trustee
of the Johannes Van Der Merwe Trust TN 944
[E]
[11]
in terms of clause 3 of the original Trust Deed dated 7 February 1984
and annexed to the Founding Affidavit marked “RF1”.
2.
An order that the First and Second Applicants pay the costs of the
Conditional
Counter-Application jointly and severally, the one
paying, the other to be absolved.”
[8]
The Applicants oppose the Counter-Application.
[9]
As I understand it, the Respondents contend that the Main Application
should be dismissed
with costs, in which event the
Counter-Application would simply fall away (subject to the issue of
costs). If I find for the Applicants
in respect of prayer 1, but
dismiss prayer 2, the same applies. However, in the event of me
finding in favour of the Applicants
in respect of paragraph 1
and
2 of the notice of motion in the Main Application, then paragraph 1
of the Counter-Application has to be successful (hence the
Counter-Application being conditional).
[10]
The first issue to resolve is whether the Trust Deed could be amended
when it was and in the
manner in which it was. To this end it is
relevant that the Founder died on 13 March 1994, the Trust Deed being
amended 0by the
Original Trustee on 17 November 2010.
[11]
Sec 4(2) of the Act requires that when a trust instrument is amended
the trustee(s) shall lodge
the amendment or a copy thereof with the
Master, so certified. Although it does not appear from the papers, it
is not in dispute
the amendment was lodged with the Master and
certified.
[12]
In
Erwee
NO v and Another v Erwee and Others NO
[12]
it was held that a trustee’s appointment arises from the trust
instrument itself and his/her authority derives from the terms
of the
trust deed. See also
Honore’s
South African Law of Trusts,
[13]
in which the following is stated:
“
Despite the
statutory formulation, it is clear that a trustee’s appointment
arises from the trust instrument itself, not from
the Master’s
authorisation, and that the authority of the trustees derives from
the terms of the trust deed. This is because
the office of trustees
is created by the trust instrument and not by the Master or even the
court in filling it.”
[13]
In
Land
and Agricultural Bank of SA v Parker and Others
[14]
the
Supreme Court of Appeal held that:
“
Except where
statute provides otherwise, a trust is not a legal person. It is an
accumulation of assets and liabilities. These constitute
the trust
estate, which is a separate entity. But though separate, the
accumulation of rights and obligations comprising the trust
estate
does not have legal personality. It vests in the trustees, and must
be administered by them –
and it is only through the
trustees, specified as in the trust instrument, that a trust can act.
Who the trustees are, the number,
how they are appointed, and under
what circumstances they have the power to bind the trust estate are
matters defined in the trust
deed, which is the trust’s
constitutive charter
.”
(My underlining).
[14]
It is clear that the trustees of a trust are bound by the four
corners of the trust deed and
have to give effect thereto. If a trust
deed does not make provision for something, as a general rule, it
cannot be done.
[15]
With reference to
Honore’s
work,
[15]
it is clear that even where a trust deed permits the amendment
thereof, the right to do so is not unfettered. Even the founder’s
ability to do so may be circumscribed in certain circumstances. Even
where a trust deed permits the trustees to amend the terms
thereof,
if the beneficiaries have a contingent interest in the trust assets
and/or have accepted the benefits thereof, if an amendment
will
adversely affect their rights, their consent is required.
[16]
It was argued by Mr
de
la
Harpe,
who appeared on behalf of the Applicants, that the Trust Deed, not
having made provision for the amendment thereof, and particularly
as
the Founder was deceased at the time the amendment was effected, any
attempt to do so would in all cases be a nullity.
[16]
[17]
I did not understand Mr
Ford,
who appeared together with Mr
Nepgen,
on behalf of the Respondents
,
to argue very
vociferously to the contrary, the opposition being aimed primarily at
paragraph 2 of the relief claimed by the Applicants
in the notice of
motion, namely the setting aside of the Master’s
appointment/authorisation of the Respondents as trustees
of the
Amended Trust, it being argued that it was an administrative act and
the Applicants should have brought an application to
review the
decision in accordance with sec 23 of the Act. In the
alternative it was argued that the Applicants had consented
to the
amendment and/or waived their rights as beneficiaries.
[18]
I am in agreement with Mr
de la Harpe
and find that the
amendment of the Trust Deed by the Original Trustee on or about 17
November 2010 was invalid and of no force
and effect. In my
view the law is clear in this regard.
[19]
Even if I am wrong, the Original Trustee’s power to amend the
Trust Deed were not, as already
alluded to, unfettered. Even
beneficiaries who have contingent rights have a vested interest in
ensuring the proper administration
of a trust and are entitled to
prevent the maladministration thereof. Mr
de
la Harpe
argued that the amendment of the Trust Deed in circumstances where it
was not permitted was the maladministration thereof. See
Gross
and Others v Pentz.
[17]
That
the Applicants had a contingent right in the Trust assets cannot be
gainsaid.
[20]
Mr
de la Harpe
argued that the Applicants’ case went
much further than merely claiming a contingent right, in that there
was evidence which
established that they had accepted the benefits
conferred on them in terms of the Trust Deed.
[21]
For the proposition that a trust deed cannot be amended without the
beneficiaries’ consent
once they had accepted the benefits
conferred on them, reliance was placed on
Potgieter
v Potgieter NO.
[18]
After
having considered the legal position at some length Brand JA (who
delivered the unanimous judgment) stated:
“
Succinctly
stated it is this: the variation of the trust deed was invalid
for lack of consent by the beneficiaries who had
previously accepted
the benefits bestowed upon them in terms of the trust deed.
Hence the original provisions of the trust deed, prior to
the purported amendment, must prevail
. Prima facie,
the appellants were therefore entitled to a declarator confirming
that conclusion, which is what they sought.”
(My
underlining).
[22]
The allegations relied upon by the Applicants to establish that they
had accepted the benefits
bestowed on them in terms of the Trust Deed
are the following:
(a)
The beneficiaries were required to perform work for no reward for the
Trust because they
were informed by the Original Trustee that they
would ultimately reap the benefits thereof;
(b)
The Second Applicant paid an inflated rental for a property owned by
the Trust on the basis
that he would ultimately reap the benefits
thereof;
(c)
The Second Applicant paid all the expenses, including the mortgage
bond in respect
of another property which was apparently ear-marked
as his;
(d)
The Second Applicant refused to sign the waiver (referred to above)
abandoning his rights
in respect of the Trust;
(e)
The First and Second Applicants signed the two documents (during 2004
and 2007), which effected
a partial distribution of the Trust’s
assets (albeit to the First and Fifth Respondents);
(f)
The First Respondent received the proceeds of the sale of a property
owned by the
Trust;
(g)
The First and Second Applicant’s, as well as the Fifth
Respondent, refused to sign
the memorandum (referred to above).
[23]
The Applicants maintain that, objectively viewed, their actions
clearly establish the acceptance
of the benefits bestowed upon them.
[24]
The Respondents’ response to the above allegations is at best
lukewarm. They either rely
on bold denials, profess to have no
knowledge of, or do not seriously challenge, them. In the
circumstances, in the event that
I am wrong in finding that when he
did so the Original Trustee was not permitted under any circumstances
to vary the Trust Deed,
I find that the Applicants not only had a
vested interest in the proper administration of the Trust, but that
they had also accepted
the benefits afforded to them in terms of the
Trust Deed and that,
if
the Trust Deed could be amended, which
I find it could not, at the very least their consent was required in
order to do so.
[25]
Finally, it was argued on behalf of the Respondents that the
Applicants had waived the benefits
bestowed upon them in terms of the
Trust Deed. This submission is based on the minutes of a
meeting of the Original Trustee
held on 17 November 2010, in which he
resolved to amend the Trust Deed. Under the heading “
DISCUSSED
”
the following is recorded:
“
2.
Discussed
2.1.
The Trustee of the Trust wishes to distribute the trust assets
amongst the beneficiaries of the
Trust.
2.2.
The Trustee has written letters to his four (4) children, who are
beneficiaries of the Trust,
enquiring whether any of them are
interested in taking over any of the properties held by the Trust
and, if so, that they accept
responsibility for the bond payments and
for the maintenance of the properties.
2.3.
Only Christo van der Merwe (to a greater extent) and Adri van der
Merwe (to a lesser extent)
have expressed any interest in owning any
of the properties.”
[26]
The letter referred to (in 2.2) is the one referred to above as the
“
LETTER OF WISHES
” and it is dated 18 June 2010.
[27]
It was submitted that the failure of the Applicants to respond to the
Original Trustee’s
invitation constituted a waiver.
[28]
It is trite that waiver is not easily inferred. See generally:
Contract:
General Principles; Van der Merwe et al
.
[19]
[29]
All the above-quoted passage says is that if the children were
interested in taking over any
of the Trust assets they could do so
provided they assumed financial responsibility therefor. It
does not spell out the consequences
of failing to take up the
opportunity and the Applicants’ silence is equally consistent
with a decision to wait until the
Trust assets were finally
distributed, at which time they were to receive 25% thereof (in
accordance with the original Trust Deed
prior to its amendment).
[30]
In any event, even if I am wrong in this regard, the Applicants deny
ever having received the
“
LETTER OF WISHES
”, their
first sight thereof being on receipt of the answering affidavits. In
the absence of any evidence to the contrary,
their version must
prevail and I must accept thier denial. I accordingly find that
the Applicants did not waive and/or abandon
the benefits conferred on
them in accordance with the Trust Deed.
[31]
One final observation must be made as to the Original Trustee’s
actions. It is trite
law that a trustee must act in the best
interests of the trust and the beneficiaries.
[20]
It is abundantly clear that the Original Trustee completely confused
his role as a father to his children and as a trustee
of the Trust,
in respect of which trust those children were beneficiaries.
He treated the trust assets as his own,
to be distributed as
he, in his sole discretion and without reference to the wishes of the
Founder, decreed. His cavalier
approach to the fiduciary duties
expected of a trustee is to be deprecated.
[32]
In the circumstances I am satisfied that the Applicants have made out
a case for the relief claimed
in paragraph 1 of the notice of motion.
[33]
I turn now to the second leg of the Applicants’ case, as set
out in paragraph 2 of the
notice of motion.
[34]
The relief sought in paragraph 2 of the notice of motion is framed as
a declarator. It
is the Applicants’ case, as it evolved,
that, if I grant paragraph 1 of the notice of motion, paragraph 2
follows as a matter
of course. It was argued by Mr
de la
Harpe
that despite having stated that he had acted in accordance
with section 7(2) of the Act, the Master could not have done so, the
authorization of the Respondents as trustees having taken place in
accordance with sec 6(1) of the Act.
[35]
Not so, submitted the Respondents, it being argued that the
Respondents had been authorized in
accordance with sec 7(2) of the
Act, which was patently an administrative act on the part of the
Master and, in the absence of
an application to review his decision
in accordance with sec 23 of the Act, the relief sought in paragraph
2 must fail.
[36]
Sec 6(1) of the Act provides as follows:
“
6(1)
Any person whose appointment as trustee in terms of a trust
instrument, section 7 or court order comes into
force after the
commencement of this Act, shall act in that capacity only if
authorised thereto in writing by the Master.”
[37]
Sec 7(2) of the Act provides as follows:
“
7(2)
When the Master considers it desirable, he may, notwithstanding the
provisions of the trust instrument, appoint
as co-trustee of any
serving trustee any person whom he deems fit.”
[38]
The chain of events giving rise to the Master’s authorisation
of the Respondents as trustees
of the Amended Trust may be summarised
as follows:
(a)
On 25 November 2010 the Original Trustee amended the Trust Deed and
lodged it with the Master,
who certified the amendment;
(b)
On 8 November 2011 the Master certified that the First Respondent and
Lessing were authorised
to act as trustees together with the Original
Trustee;
(c)
On 21 June 2017 the Master certified that the Original Trustee and
Lessing were no
longer trustees and that the Respondents were
henceforth authorised to act as trustees of the Trust.
[39]
Clause 9 of the Amended Trust Deed provides as follows:
“
9.
Replacement of Trustees
In the event of any
Trustee ceasing to hold office for whatsoever reason, such Trustee
shall be replaced by a person
nominated
by the
remaining Trustee(s).”
(My underlining).
[40]
Mr
de la Harpe
argued that on the death of the Original
Trustee and the resignation of Lessing, that is precisely what
happened: the remaining
trustee, the First Respondent, nominated the
Second and Third Respondents, whom the Master certified were
authorised in accordance
with sec 6(1) of the Act.
[41]
Countering this argument Mr
Ford
referred me to the Master’s
first report, dated 29 August 2018, paragraphs 4 and 5 of which read:
“
4.
Under cover of a letter dated 17 November 2010 the trustee, Johannes
van der Merwe,
[21]
lodged a resolution dated 17 November 2010 together with an annexure
thereto, both signed by him, in terms of which certain changes
were
made to the trust deed. This office acknowledged receipt thereof on 2
December 2010 in terms of
Section
4 (2) of the Trust Property Control Act No. 57 of 1988.
5.
The current trustees of the trust in terms of an Endorsement issued
by this office
on 21 June 2017 are:
(a)
Christo van der Merwe
(b)
Maricus Christo van der Merwe
(c)
Franscois Sass.
After
due consideration of the decision made in
Land and
Agricultural Bank of South Africa v Parker 2005 2 SA77
,
the fact that one of the prosed
(sic)
trustees was an
independent trustee and that there was only one trustee in office,
the Master made these discretionary appointments
in terms of
Section
7 (2) of the Trust Property Control Act No. 57 of 1988.
”
(Master’s emphasis).
[42]
The Master explicitly states that he acted in accordance with sec
7(2) of the Act and, according
to Mr
Ford
, if I were to find
otherwise I would have to find that the Master is misleading the
Court.
[43]
Mr
de la Harpe
dealt with this argument by referring to the
documents discovered by the Master in accordance with Rules 35(12)
and (14) of the
Uniform Rules of Court. These documents are:
(a)
A resolution of the then Trustees, dated 10 April 2017, in terms of
which it is recorded
that:
(i)
The Original Trustee was removed as a trustee due to his death;
(ii)
Lessing resigned as a trustee;
(iii)
The Second and Third Respondents were appointed as trustees in their
stead (together with
the First Respondent);
(b)
Two forms, headed “
ACCEPTANCE
OF TRUSTEESHIP BY TRUSTEE (INTER-VIVOS TRUST)
,
[22]
in terms of which the Second and Third Respondents:
“
Hereby apply
for authority in terms of section 6 (1) of the Trust Property Control
Act, 1988 (Act 57 of 1988) to act as a trustee
of the Trust known as
JOHANNES VAN DER MERWE TRUST (TM 794)…”
(c)
A “
TRUST
REGISTRATION AMENDMENT FORM
”
[23]
,
the relevant amendment to the Amended Trust Deed being recorded as
“
Trustee
Amendments”.
[44]
From the aforegoing it is evident that the authorization of the
Second and Third Respondents
was anything but a discretionary
appointment by the Master in terms of sec 7(2) of the Act. The
authorization was as a result
of a resolution of the remaining
trustee, the First Respondent, which resolution was endorsed by the
Master. He merely rubber-stamped
the trustee’s actions,
which actions were taken in accordance with the terms of the Amended
Trust Deed.
[45]
It is also relevant that it is not in dispute that the Second
Respondent is the First Respondent’s
son and the Third
Respondent is the First and Fourth Respondents’ “broker”.
It is highly improbable that the
Master would make discretionary
appointments of people he could have had no knowledge of.
[46]
Accordingly, I am unable to agree with Mr
Ford’s
submission
that in order to find that the Master did not act in terms of sec
7(2) of the Act I must find that he is intentionally
trying to
mislead the Court. No reason was advanced why this official
should want to do so. A perfectly reasonable
explanation is
that the Master is wrong in law, and I find this indeed to be so.
[47]
In conclusion on this point (paragraph 2 of the notice of motion) I
find that the authorisation
of the Respondents as trustees of the
Trust was not an administrative action on the part of the Master and
that it was not necessary
for the Applicant’s to review the
“decision” in accordance with section 23 of the Act.
[48]
The amendment of the Trust Deed having been declared a nullity, I am
of the view that paragraph
2 of the notice of motion follows as a
matter of course.
[49]
Support for this conclusion may be found, ironically, in
administrative law. In
Seale
v Van Rooyen NO & Others;
Provincial
Government, North West Province v Van Rooyen NO & Others
,
[24]
where it was held that where the initial invalid administrative act
is set aside, subsequent acts were also invalid. Seale
was
cited with approval in
Corruption
Watch NPC & Others v President of the Republic of South Africa
and Others
.
[25]
[50]
I turn now to the Counter-Application.
[51]
It is the Respondents’ case, the Fourth Respondent joining as a
party to the Counter-Application,
that in the event of me setting
aside the authorisation of the Respondents to act as trustees of the
Amended Trust, then the provisions
of the original Trust Deed must
automatically apply. In accordance with clause 3 of the Trust Deed,
on the Original Trustee ceasing
to be a trustee, the Fourth
Respondent would act as trustee and the relief sought is that her
appointment be confirmed.
[52]
The Applicants deal with this as follows:
(a)
There is no need to seek the appointment of a new trustee, in that
sec 7(1) of the Act provides
that if the office of trustee becomes
vacant and the trust instrument makes no provision for the
replacement thereof, the Master
shall, after consultation with
interested parties as he deems necessary, appoint a trustee(s);
(b)
The Master has no power at common law to appoint (or remove)
trustees, whereas the Court
does have this power;
(c)
The order the Respondents seek is not competent in that the Court
cannot order the
Master to appoint the Fourth Respondent, as this
would be tantamount to delegating its (the Court’s) common law
powers of
appointment to the Master;
[26]
(d)
Given the unfortunate circumstances, it would not be appropriate for
the Fourth Respondent
to assume the appointment, in that she is
biased and is physically and mentally incapable of fulfilling the
functions of trustee.
[53]
In answer to the first ground of opposition, there no suggestion that
the office of trustee
cannot
be filled and it is common cause
that the original Trust Deed makes provision for what is to happen in
the event of the Original
Trustee ceasing to be a trustee – the
Fourth Respondent steps into his shoes. Having succeeded with
the relief in paragraph
2 of the notice of motion in the main
application the Applicants can hardly argue that the provisions of
the original Trust Deed
are not applicable.
[54]
In answer to the second ground, I do not understand the Respondents
to be seeking an appointment
in terms of the common law, or statute,
for that matter. They seek the implementation of the terms of
clause 3 of the original
Trust Deed.
[55]
Due to the amendment to the notice of motion the third objection
largely falls away. The
Respondents no longer seek an order
that the Court direct the Master to appoint the Fourth Respondent,
but merely that her appointment
be confirmed. The amendment
does not entirely do away with the Respondents’ problems, in
that the Court does not confirm
appointments. The Master does.
However, it is clear what is intended and refusing the relief on this
basis would be
putting form before substance.
[56]
It was argued that at the age of 76 the Fourth Respondent’s
poor health and mental capacity
were such that she was incapable of
meeting the requirements of a trustee. The Fourth disputes the
Applicants’ allegation
in an affidavit in which she states
that,
inter alia
, she is quite willing and able to act as a
trustee of the Trust and sets out in detail why this is so. In
the absence of
specific evidence to contrary, as opposed to
generalized allegations, I am not prepared to go behind the Fourth
Respondent’s
detailed assertion that she is quite capable of,
and willing to, perform the functions of a trustee.
[57]
It was also argued that the Fourth Respondent had acted improperly in
the past in siding with
the Original Trustee and had also
demonstrated bias in favour of the First and Fifth Respondents.
This is not my impression.
The rambling, emotional, letters
written to the four children, some of them by “
Ma en Pa
”,
are clearly the views of the Original Trustee. When dealing
with the family feud the Applicants themselves concentrate
on their
poor relationship with the Original Trustee, their father, not the
Fourth Respondent. In addition, in her affidavit
in support of
her capability to fulfil the role of trustee the Fourth Respondent at
no stage resorts to mud-slinging, as it were.
[58]
It must be borne in mind that with the re-instalment of the Original
Trust Deed ALL the provisions
thereof are re-instated and the Fourth
Respondent, as trustee, is bound to comply therewith. She
cannot do as she pleases
(as the Original Trustee clearly believed he
was entitled to do) and will have to implement the provisions of the
original Trust
Deed. If she does not do so I have no doubt that
the Applicants, and hopefully also the Master, will hold her to
account.
[59]
Whether the Master deems it appropriate to appoint additional
trustees in accordance with section
7(2) of the Act, is for that
official to decide.
[60]
Finally, it was submitted that, in allowing the Original Trustee to
amend the Trust by appointing
others as trustees the Fourth
Respondent had “declined” the appointment. The
Fourth Respondent denies this and
states that the issue was never
raised nor discussed with her. Without more, I cannot go behind
her denial. In addition,
my comments above in respect of waiver
are apposite to this argument. Her ignorance of what the
Original Trustee was doing
is also support for the contention that
she was not an active party to the acrimonious disputes that arose
between the Original
Trustee and the Applicants (although she must
have been aware thereof).
[61]
Mr
de la
Harpe
urged me to exercise the Court’s inherent discretion and
appoint independent trustees. From my understanding of the
authorities, the Court will only exercise its discretion on rare
occasions and should not decide a case on the basis of what it
believes is reasonable and fair.
[27]
In
Ex
parte
Leandy
and Another, NNO
[28]
the issue was considered at length and the Court came to the
conclusion that it would not be done lightly.
[62]
In any event, without a specific care having been made out, properly
motivated, identifying the
person(s) to be appointed, and why, the
Court cannot exercise its discretion and
mero motu
take it
upon itself to appoint trustee(s). The Applicants should have
prayed for this relief in their notice of motion.
[63]
I am accordingly of the view that the Respondents (together with the
Fourth Respondent) are entitled
to the relief sought in paragraph 1
of the amended notice of motion in the Counter-Application.
[64]
That leaves the issue of costs. Both sides have been successful
and in the normal course
costs should follow the result.
However, Mr
de la Harpe
argued that the conditional
Counter-Application was unnecessary in that, if the Main Application
was successful, the relief sought
in the conditional
Counter-Application must, of necessity, follow. That begs the
question: why did the Applicants oppose
the conditional
Counter-Application so vigorously? They did so because they did
not want the Fourth Respondent to be authorized
as trustee of the
Trust. It was thus a wise precaution on the part of the
Respondents to bring the conditional Counter-Application.
[65]
Although the Counter-Application consists of fewer pages and took up
less time in argument, the
two applications are inextricably
inter-linked with many of the issues overlapping. While both
sides have tasted success,
they have also tasted defeat. In the
circumstances, in the exercise of my discretion, I intend to make no
order as to costs.
[66]
In conclusion I make the following order:
MAIN APPLICATION
1.
It is declared that the amendment of the trust deed of Johannes van
der Merwe
Trust, TM794(E) (“the Trust”) on or about the
17
th
of November 2010 and annexed to the founding
affidavit marked annexure “RF7” to be invalid and of not
force and effect;
2.
It is declared that the appointment of the First, Second and Third
Respondents
as trustees of the Trust on or about the 26
th
of May or the 12
th
of June 2017 to be null and void;
COUNTER
APPLICATION
3.
The appointment of Christina Adriana Jacobs van der Merwe as trustee
of the Johannes
van der Merwe Trust (TM794(E)) in terms of clause 3
of the original Trust Deed dated 7 February 1984, annexed to the
founding affidavit
marked “RF1” is hereby confirmed.
COSTS
4.
There will be no order as to costs.
________________________________
N.J.
MULLINS
ACTING
JUDGE OF THE HIGH COURT
Obo
the
Applicants:
Adv D de la Harpe
Instructed
by: Schoeman
Oosthuizen Inc.
167 Cape Road
Mill Park
PORT ELIZABETH
Obo
the
Respondents:
Adv EAS Ford SC and J Nepgen
Instructed
by: Pagdens
Inc.
18
Castle Hill
Central
PORT
ELIZABETH
[1]
I will return to this aspect below.
[2]
This entity no longer exists and the parties were
ad
idem
that this provision in the Trust Deed should simply be ignored.
[3]
By the time of the events giving rise to this application, the
youngest child had long since reached the age of 28.
[4]
The Act refers interchangeably to vary/variation and
amend/amendment. The parties have throughout used the term
“amendment”
and I will do the same.
[5]
Translated into English as "waiver" and "confirmation
of waiver".
[6]
Memorandum of Agreement
[7]
The letter is supposedly from “Pa and Ma”, although it
is not signed.
[8]
Although the Master’s stamp reflects the date as
being 2021-11-25!
[9]
Why this occurred only a year later is not explained.
[10]
There was an earlier endorsement in identical terms, save for a
typing error.
[11]
The reference number is incorrect. It should read: TM 794.
[12]
[2006] 1 All SA 626
(O)
[13]
The 6th Edition @page 206; para 110
[14]
2005 (2) SA 77
(SCA) @para 10
[15]
Chapter 11.
[16]
The exception would be an application in terms of sec 13 of the Act,
which does not apply in the present matter.
[17]
[1996] ZASCA 78
;
1996 (4) SA 617
(A) @628 I – J
[18]
2012 (1) SA 637
(SCA) @para 37
[19]
Pp. 452 – 456; para 13.3
[20]
See generally: Honoré; Chapter 6
[21]
The First Respondent.
[22]
Form J417
[23]
Form J401
[24]
2008 (4) SA 43
(SCA) @ para. [13]
[25]
Constitutional Court:
[2018] ZACC 23
@ paras 32 – 35;
pp. 19 - 21
[26]
In fairness to the Applicants, their answering affidavits were filed
before the Respondents amended the notice of motion, which
previously prayed for an order that the Court
direct
the Master to appoint the Fourth Respondent.
[27]
Potgieter, supra; para 34
[28]
1973 (4) SA 363
(N)