About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Kwazulu-Natal High Court, Pietermaritzburg
SAFLII
>>
Databases
>>
South Africa: Kwazulu-Natal High Court, Pietermaritzburg
>>
2024
>>
[2024] ZAKZPHC 1
|
|
Schoonhoven N.O and Others v Schoonhoven and Others (7608/2020) [2024] ZAKZPHC 1; [2024] 2 All SA 250 (KZP); 2024 (4) SA 240 (KZP) (19 January 2024)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
redacted from this document in compliance with the law
and
SAFLII
Policy
IN THE HIGH COURT OF
SOUTH AFRICA
KWAZULU-NATAL
DIVISION, PIETERMARITZBURG
Case
No: 7608/2020
In
the matter between:
SAMUEL
ALFRED SCHOONHOVEN N.O.
FIRST APPLICANT
JOHANNES
FRANS ALFONSIES SCHOONHOVEN N.O.
SECOND APPLICANT
JEAN
JOHANNES SCHOONHOVEN N.O.
THIRD APPLICANT
FRANS
RIAAN MARX
N.O.
FOURTH APPLICANT
and
PIETER CORNELIUS
ANTONIUS SCHOONHOVEN
FIRST
RESPONDENT
NANETTE
VENTER
SECOND RESPONDENT
ANTOINE
SCHOONHOVEN
THIRD RESPONDENT
JOHANNES BERNARDUS
ALPHONSUS
SCHOONHOVEN
FOURTH RESPONDENT
BREGDA ELIZABETH
SCHOONHOVEN
FIFTH RESPONDENT
CHANEL
VEATER
SIXTH RESPONDENT
BREGDA ELIZABETH
SCHOONHOVEN
SEVENTH RESPONDENT
MARISKA
MOUTON
EIGHTH RESPONDENT
ALFONS
SCHOONHOVEN
NINTH RESPONDENT
ANJE
SCHOONHOVEN
TENTH RESPONDENT
JANE
SCHOONHOVEN
ELEVENTH RESPONDENT
THE MASTER OF THE
HIGH
COURT,
PIETERMARITZBURG
TWELFTH RESPONDENT
LINDIE
ODENDAAL
THIRTEENTH RESPONDENT
ORDER
The following order is
granted:
1.
The application is dismissed with costs.
JUDGMENT
E
Bezuidenhout J
Introduction
[1]
The four applicants are the trustees of the Schoonies Familie Trust
with
registration number I[...] (‘the trust’). The trust
was registered in 1998 by its founder, Mr Johannes Bernardus
Alphonsus
Schoonhoven. The first three applicants are his sons. He
passed away on 6 May 2015. The applicants seek the following
declaratory
relief:
‘
1.
It is hereby declared that the capital beneficiaries of the Schoonies
Familie Trust, I[...] 1[...]) (“the trust”),
shall be
determined by the Trustees of the Trust as at the date of the Trust’s
termination.
2.
It is further declared that the Trustees of the Trust as at the
Trust’s termination shall make the determination stated
in
paragraph 1 above, from the list of potential capital beneficiaries
set out in paragraph 1.2(b)(i) to (vii) of the Trust Deed,
under the
heading “Woordomskrywings”’.
It
is common cause that the trust will terminate in 2030.
[2]
The first to eleventh respondents are described as ‘potential
capital
beneficiaries’ of the trust and are mainly related to
the late Mr Schoonhoven (‘the deceased’). The fifth
respondent
was the deceased’s wife. The seventh respondent, who
bears the exact same name as the fifth respondent is in fact her
granddaughter,
her father being the first applicant. The second,
third, fourth, sixth, eighth, ninth, tenth and eleventh respondents
are grandchildren
of the deceased. The twelfth respondent is the
Master of the High Court, Pietermaritzburg. The first respondent is
the only respondent
who opposes the application, and is the brother
of the first and second applicants. He claims inter alia that not all
interested
parties have been joined as respondents and lists a
further seven individuals, his descendants, who were not joined. One
of them,
his daughter, Lindie Odendaal, whom he had adopted, was
subsequently joined as the thirteenth respondent, but his six
grandchildren
(the deceased’s great grandchildren) have not
been joined. I will deal with this issue later on.
[3]
The main issue that requires determination is the interpretation of
certain
clauses in the trust deed, read together with the deceased’s
last will and testament (‘the deceased’s will’),
and ultimately whether the declaratory relief being sought by the
applicants is consistent with what is contained in the relevant
clauses.
[4]
The matter was allocated to me as my first language is Afrikaans and
both
the trust deed and the deceased’s will were written in
Afrikaans. The application papers have been drafted in English. The
second applicant, who attested to the founding affidavit on behalf of
the trust, included a number of translations in the affidavit
itself
and furthermore attached what purports to be an English translation
of the relevant portions of the trust deed done by his
attorney and
counsel. A sworn translation of the trust deed and the will of the
deceased were subsequently attached to the replying
affidavit and
formed part of a separate bundle before me. I discovered to my
dismay, whilst reading the papers and the heads of
argument, that
there was a dispute between the parties regarding the correct English
translation of the relevant portions of the
trust deed and the will.
The first respondent, in his answering affidavit, supplied a
translation done by his attorney, upon which
he relied. The
applicants’ attorney apparently asked the first respondent’s
attorney to provide input regarding an
acceptable translation on a
number of occasions, which requests were allegedly ignored.
[5]
At the commencement of the hearing, I indicated to counsel that I did
not intend entertaining any argument on what the correct English
translation of the relevant documents was as I understood the meaning
of the relevant portions and that I would convey that meaning in my
judgment, which I intended writing in Afrikaans for the benefit
of
the parties, who themselves are Afrikaans speaking. Due to the
logistical difficulties associated with producing a judgment
in
Afrikaans, which would have to be translated into English, it being
the official language of record (as per a resolution by
the Heads of
Court in March 2017), I reconsidered my initial stance and have
accordingly proceeded with the judgment in English.
I will address
the different interpretations in my judgment if and when necessary.
Background
[6]
The relief being sought by the applicants has a direct bearing on the
interpretation of very specific clauses of the trust deed, which
trust deed has to be read in conjunction with the deceased’s
will, in particular with regard to how the trust funds would be
distributed amongst the capital beneficiaries when the trust
terminates.
[7]
As mentioned, the trust was registered in 1998. The deceased was
apparently
advised about the benefits of a family trust, which
included providing for the family in the future. The trust deed
attached to
the papers and which is the subject of the litigation is
actually an amended trust deed, described as the ‘Akte van
Wysiging
van Schoonies Familie Trust’. It was signed on 20
April 2006. It was
inter alia
stated in the preamble that the
founder and the trustees wanted to effect extensive amendments to
provide for changing circumstances.
At that time, the trustees were
the deceased, his wife and the first applicant. In the amended trust
deed, the second and third
applicants and the first respondent were
appointed as trustees. The third applicant is actually the biological
son of the first
applicant but was subsequently adopted by the
deceased and the fifth respondent as their adopted son.
[8]
It is clear from the papers that the relationship between the first
and
second applicants on the one hand, and the first respondent on
the other hand, is strained, to put it mildly. The relationship
between the first applicant and the first respondent appears to be
particularly acrimonious. The affidavits filed on both sides
contain
an unfortunate amount of snide, sarcastic and insulting remarks,
which should not be in court papers. Allegations of dishonesty,
adultery and the mismanagement of trust funds have been made which
further contribute to the general unpleasantness evident from
the
papers. The first respondent was initially a trustee of the trust but
was removed by way of a resolution on 25 March 2017.
Litigation
followed which culminated in an order granted by Seegobin J on 12
October 2018 in terms whereof the first respondent
would no longer be
a trustee. The first respondent, at the same time, instituted a
counter-application seeking
inter alia
the removal of the
first and second applicants as trustees and his reinstatement as a
trustee, which counter-application has been
referred to trial. It
has, however, not yet been heard, despite the passage of some time.
[9]
It is common cause that the trust holds many assets and that it is
the
sole shareholder of a number of companies and a shareholder in
another company. It is the first and second applicants’ version
that they have been running the business of the trust since 2008 when
the deceased moved to the Western Cape. This is disputed
by the first
respondent. He claims that the deceased exercised effective control
over the business of the trust up until he fell
ill again in 2014. He
also alleges that the first and second applicants seized control of
the trust after the deceased had passed
away.
[10]
It is also common cause that the deceased was a strong-minded and
astute entrepreneur who
managed his business interests with close
attention. Both the first and second applicants became directors of
the various companies
that made up the Schoonhoven family business.
The first respondent was initially employed in the family business
but went into
early retirement during May 2011 and settled in the
Western Cape. By this time, the relationship between the brothers had
broken
down. The first respondent remained a trustee of the trust
until the events of March 2017. The first respondent receives a
monthly
payment of R87 000 from the trust.
[11]
The applicants allege that timeous arrangements would have to be made
to ensure that the
companies of which the trust is a shareholder, can
continue to operate when the trust terminates in 2030. It will
involve complex
financial arrangements and the trustees will have to
undertake financial planning and therefore need to be aware of how
the capital
beneficiaries would be determined.
[12]
As mentioned above, the trust holds shares in a number of companies.
These companies hold
land on which businesses like hotels, petrol
stations, and office and mall developments are situated. The
applicants allege that
the businesses produce significant income and
estimate that the combined value of the trust’s assets are
between R700 million
and R800 million.
[13]
The deceased was diagnosed with cancer in 2010. He lost the use of
his vocal cords but
still communicated using a device. His cancer
went into remission but returned in 2014. At the time, he was
residing in the Western
Cape. He returned to Richards Bay in April
2015 and passed away on 6 May 2015. The deceased allegedly wanted to
make changes to
his will, and in particular wanted to remove the
nominated executor, a Mr Mandelstam and replace him with one Mr
Soldat. He wanted
to consult with his auditors but passed away before
he could do so. I will return to the issues surrounding the
deceased’s
will and its terms below.
[14]
As mentioned above, the applicants seek declaratory relief. They
assert that on a proper
interpretation of the trust deed, the
trustees are entitled to determine the capital beneficiaries of the
trust upon its termination
from the list of ‘potential’
capital beneficiaries set out in the trust deed. They also contend
that the trustees must
determine who meets the trust deed description
or definition of a capital beneficiary and who specifically are to be
capital beneficiaries
of the proceeds of the trust assets upon the
trust’s termination in 2030.
The
trust deed
[15]
The trust
deed is a lengthy document, comprising 39 pages. I will only
highlight the relevant clauses. Clause 1 deals with the definitions
(woordomskrywings). Clause 1.2 contains the definitions of a number
of words or phrases, but the definition of beneficiary or
beneficiaries (begunstigde of begunstigdes) is of particular
importance to the issues to be decided. ‘Begunstigde’ is
described as follows: ‘verwys na inkomste – en/of
kapitaalbegunstigdes na gelang’, which I am of the view refers
to income and/capital beneficiaries, as and when required.
[1]
[16]
The definition of ‘begunstigdes’ is quite lengthy and
consists of various subparagraphs.
It is best to quote it in full:
‘
Begunstigdes
- die uitdrukking begunstigdes in die trustdokument in ‘n
inkomste of kapitale konteks gebruik word, en sluit
die volgende
persone en trusts in:
(a)
Inkomstebegunstigdes
: Die begunstigdes wat, ingevolge die
diskresionêre magte waarmee die trustees beklee is, uit
inkomste van die trust bevoordeel
kan word, en welke begunstigdes
gekies kan word uit die geledere van:
(i)
Die kapitaalbegunstigdes;
(ii)
Die bloed en aanverwante van die kapitaalbegunstigdes;
(iii)
Enige trust geskep in enige land ten behoewe van enige begunstigde of
groep van begunstigdes vermeld in (i) en (ii) hierbo;
(iv)
Enige regspersoon in enige land waarvan enige begunstigde en/of sy
gade en/of
sy afstammelinge al die aandele of die totale belang hou;
(v)
Enige instelling wat belasting-vrystelling geniet ingevolge enige
bepaling
van die Inkomstebelastingwet Wet Nr. 58 van 1962, soos
gewysig.
(b)
Kapitaalbegunstigdes
: Die begunstigdes aan wie die trustfonds
gedurende die bestaan of by beëindiging daarvan, kragtens die
bepalings van die trustakte
oorgemaak sal word, en welke begunstigdes
ingevolge die bepalings van die trustakte aangewys sal word uit die
geledere van:
(i)
Johannes Bernardus Alphonsus Schoonhoven (ID. 3[...])
(ii)
Bregda Elizabeth Schoonhoven (ID. 4[...])
(iii)
1. Samuel Alfred Schoonhoven
2.
Johannes Frans Alphonsus Schoonhoven
3.
Pieter Cornelis Antonius Schoonhoven
4.
Jean Johannes Schoonhoven
(iv)
Die wettige afstammelinge van die begunstigdes genoem in (iii);
(v)
Enige trust geskep in enige land ten behoewe van enige begunstigde of
groep van begunstigdes vermeld in (i) tot (iv) hierbo;
(vi)
Enige regspersoon in enige land waarvan enige begunstigde en/of sy
afstammelinge
al die aandele of die totale belang hou;
(vii)
Die testate of intestate erfgename van
Johannes Bernardus
Alphonsus Schoonhoven
en
Bregda Elizabeth Schoonhoven,
slegs indien geeneen van die begunstigdes vermeld in (i) tot (iv)
hierbo op die vestigingsdatum van die trust in die lewe is of
bestaan
nie.’
In
my view, the most obvious difference between the definitions of
income and capital beneficiaries is the express reference in
the
definition of income beneficiaries to the trustees’
discretionary power to choose income beneficiaries from the
respective
categories listed in paras (i) to (v), who could benefit
from the income of the trust.
[17]
As far as the translation of the above definition of beneficiaries is
concerned, the first
respondent disputed the applicants’
translation of a number of the subparagraphs in the definition of
income beneficiaries.
His translation appeared as part of his
affidavit. I will not deal with the alleged differences as they are
not relevant to the
issues to be decided. The first respondent also
did not accept the applicants’ translation of ‘capital
beneficiaries’.
The applicants’ translation of the first
part, which is in my view the most important part, as it appears in
the founding
affidavit, reads as follows:
‘
(b)
Capital Beneficiaries: The beneficiaries which/whom the Trustees may
in terms of the Deed elect as recipients of the trust funds
whether
during the operation of the Trust or on termination of the Trust,
which election shall be made from the following persons
or
categories…’.
The
sworn translation attached to the applicants’ replying
affidavit, however, contained a different, and in my view more
accurate translation. It reads as follows:
‘
The
beneficiaries to whom the trust fund will be transferred during the
existence or on termination thereof, in accordance with
the terms of
the trust deed, and which beneficiaries will be elected in accordance
with the terms of the trust deed from the ranks
of…’.
The
use of the word ‘elected’ as the translation of
‘aangewys’ is in my view clearly only one of a number
of
possible translations. In the
Trilingual
Legal Dictionary
,
the word ‘aanwys’ is described as follows: ‘designate,
indicate, point out, show; allot, assign, allocate; select’.
[2]
HAT
describes ‘aanwys… het aangewys’ as follows:
‘…kies, benoem…’. In the
Oxford
Afrikaans-Engels Skoolwoordeboek,
[3]
the word ‘kies’ is described as ‘choose, select’.
In the
Trilingual
Dictionary,
‘elect’, in the context of heirs, is described as
‘keuse/eleksie deur erfgename’. In the
Oxford
South African Concise Dictionary
[4]
‘elect’ is described
inter
alia
as
‘chosen or singled out’.
[18]
The first respondent’s translation reads as follows:
‘
…
The beneficiaries
to whom the Trust Fund shall be transferred during its subsistence or
at its termination, by virtue of the provisions
of the Trust Deed,
and which beneficiaries shall be appointed in terms of the
stipulations of the Trust Deed out of the ranks of…’
The
Trilingual
Dictionary
describes ‘appoint’ as ‘aanstel, benoem; bepaal,
vasstel, aanwys’, ‘appoint an heir ‘n erfgenaam
benoem/instel’. In my view an appropriate translation of the
word ‘aangewys’ in the present context is ‘selected’,
which means, according to
Oxford
,
‘carefully chosen as being the best or most suitable’.
[5]
I am, however, also of the view that the word ‘appointed’,
used by the first respondent, is not entirely inappropriate,
nor is
the word ‘elected’ used by the applicants which
indicates an action whereby certain persons are chosen
or
singled out, at the expense of others. Not much turn on the different
translations of ‘aangewys’.
[19]
None of the parties have said much in their affidavits about the
meaning of the phrase
‘uit die geledere van…’,
translated as ‘from or out of the ranks of…’ ,
which is then followed
by the seven categories listed in the trust
deed. The use of these words alone indicate, in my view, a process
whereby beneficiaries
are chosen or selected from the ranks of the
mentioned categories. I have not been able to find any specific
authorities dealing
with the meaning and practical implications of
the phrase and its use in the context of trusts or wills, perhaps
because it is
so obvious. As far as the use of the phrase in
legislation is concerned, a good example is found in the Constitution
where in the
Afrikaans text, section 178(1)
(e)
reads as
follows:
‘
(1)
Daar is ‘n Regterlike Dienskommissie,
wat bestaan uit-
…
(e)
twee praktiserende advokate uit die geledere van die
advokateprofessie benoem om die professie as
geheel te
verteenwoordig…’
The
meaning of the phrase in this context is clear – two advocates
from the ranks of the profession will be nominated, not
all of the
advocates. The use of the phrase in the definition of capital
beneficiaries clearly shows an intention to select, appoint
or elect
beneficiaries from the ranks of the categories. What is not clear is
who would be doing the selection.
[20]
In returning to the trust deed, the word ‘kapitaal’,
meaning capital, is described
as being the capital of the trust
consisting of the trust property. The word ‘inkomste’,
referring to income, is defined
by stating that it should be
interpreted in a wide sense and includes all income or receivables
which is not capital in nature.
[21]
The powers of the trustees are set out in clause 11 and are very wide
ranging in nature,
as is the norm in most trust deeds. In terms of
clause 11.1, the powers afforded to the trustees are
inter alia
to enable them to deal with the trust fund for the benefit of the
beneficiaries and not for their own personal benefit. Clause
11.2
states that the trustees are empowered to at all times deal with the
trust property in their sole discretion, and to do whatever
they deem
necessary to control the trust property for the best benefit of the
beneficiaries.
[22]
Clause 12 deals with the utilisation of capital (aanwending van
kapitaal). Clause 12.2
is of relevance and reads as follows:
‘
Die
trustees is geregtig om in hulle absolute diskresie-
12.1
…
12.2 te
enige tyd tot met die beëindiging van die trust, dog onderhewig
aan die uitoefening van die testamentêre
voorbehoud in sub-
paragraaf 27.1 geskep die geheel of enige gedeelte van die trustfonds
aan te wend tot die voordeel van enige
een of meer van die
begunstigdes in sodanige verhouding of aandele, indien meer as een,
en op sodanige wyse en onderhewig aan sodanige
voorwaardes en
beperkings as wat die trustees van tyd tot tyd mag bepaal en ook
sonder om noodwendig die beginsel van gelykheid
tussen begunstigdes
te handhaaf. Die trustees se diskresie in die verband is finaal en
bindend op begunstigdes...’
Clause
12.2 makes it clear in my view that the trustees’ absolute
discretion to utilise the trust fund for the benefit of
the
beneficiaries, is only permissible or available up until the
termination of the trust and is also subject to the testamentary
proviso or reservation as set out in clause 27.1.
[23]
Clause 17 deals with the termination of the trust and the
distribution of the trust fund
to the beneficiaries. Clause 17.1
reads as follows:
’
17.1
Onderhewig aan die woordomskrywing van VESTIGINGSDATUM geld die
volgende bepalings by beëindiging van die
trust:
Behalwe
vir tussentydse kapitaaluitkerings wat die trustees na eie goeddunke
mag maak, duur die trust voort tot by die VESTIGINGSDATUM
en,
onderhewig aan paragraaf 17.2 van die trustakte, word die trustfonds
soos volg aan die begunstigdes oorgemaak:
17.1.1 indien voorskrifte
kragtens die bepalings van paragraaf 27 gegee is, geskied die
verdeling en oormaking van die trustfonds
aan die begunstigdes in
ooreenstemming met die voorskrifte;
17.1.2 by onstentenis van
enige sodanige voorskrifte, word die trustfonds gelykop tussen die
kapitaalbegunstigdes van die trust
verdeel.’
In
essence, clause 17.1 makes it clear that upon termination of the
trust, the trust fund will be made over or transferred to the
beneficiaries. Clause 17.1.1 states that if directives have been made
in accordance with clause 27, the trust fund is to be divided
in
accordance with those directives. Clause 17.1.2 deals with the
situation where there is an absence of directives in accordance
with
clause 27. In that event, the trust fund is to be divided equally
amongst the capital beneficiaries.
[24]
Clause 20 deals with the amendment of the trust deed (wysiging van
trustakte). It reads
as follows:
‘
Die
trustdokument kan deur ooreenkoms tussen die oprigter en trustees
gewysig word, en, as die oprigter nie in lewe is nie, deur
ooreenkoms
tussen die trustees en die meerderjarige begunstigdes in lewe op
daardie stadium.’
[25]
Clause 27 is of particular importance. It reads as follows:
‘
27.1
Daar word spesiaal bepaal dat
Johannes Bernardus Alphonsus
Schoonhoven
die reg sal hê om by wyse van sy testament:
27.1.1 die
vestigingsdatum ten opsigte van die trustfonds of enige gedeelte
daarvan te bepaal;
27.1.2 die formule voor
te skryf vir die verdeling van die trustfonds tussen die
kapitaalbegunstigdes by die beëindiging van
die trust, en
sodoende aan te dui welke kapitaalbegunstigdes welke deel van die
trustfonds moet ontvang en die toekennings hoef
nie noodwendig gelyk
in grootte, waarde of omvang te wees nie.
27.2
Indien die gemelde
Johannes Bernardus Alphonsus Schoonhoven
by
wyse van sy testament sy prerogatief uitoefen soos in paragraaf 27.1
aan hom verleen, geniet die testamentêre voorskrifte,
ondanks
enige andersluidende bepalings van die trustdokument, by beëindiging
van die trust voorrang en is bindend.
27.3
Indien geen voorskifte ingevolge 27.1 gegee is nie, word die
trustfonds verdeel in ooreenstemming met die
bepaling in paragraaf 17
vervat.
27.4
Slegs die kapitaalbegunstigdes mag, by die beëindiging van die
trust, uit die trustfonds bevoordeel
word en die persoon wat oor die
bogemelde bevoegdheid beskik kan dit nie aanwend om homself of sy
boedel uit die trust te bevoordeel
nie’.
[26]
The meaning of clause 27 is in my view rather obvious. The deceased
had the right by way
of a testamentary directive or stipulation, to
determine the vesting date of the trust fund and to direct (voor te
skryf) how the
trust fund was to be divided amongst the capital
beneficiaries upon the termination of the trust. He also had the
right to indicate
which (welke) capital beneficiaries were to receive
whatever portion of the trust fund, which portion did not have to be
equal
in size, value or extent. Importantly, in my view, it also
stated that the testamentary directives, stipulations or instructions
were binding and enjoyed preference over any provisions of the trust
deed. The words ‘testamentêre voorskrifte’
in
clause 27.2 is translated as ‘testamentary prescriptions’
in the applicants’ sworn translation, which is in
my view
clearly a direct but perhaps inaccurate translation. The
Trilingual
Legal Dictionary
defines ‘voorskrif’ as ‘direction,
directive, instruction, precept, regulation, stipulation’. The
word
‘voorskryf’ is defined as meaning ‘direct,
order, command, stipulate, prescribe, lay down, enjoin…’.
HAT
defines ‘voorskrif’ as ‘wat voorgeskryf
is, rigsnoer, reël, instruksie…’. It also refers to
a secondary meaning: a piece of paper containing a doctor's
prescription for medicine. The
Trilingual Dictionary
describes
‘stipulation’ as ‘in favour of a third party,
beding ten behoewe van ‘n derde’. ‘Stipulate’
is described as ‘beding, bepaal, stipuleer, voorskryf’.
In my view, the preferable translation for ‘testamentêre
voorskrifte’ is testamentary directives or stipulations.
The
will
[27]
The deceased attested to his last will and testament on 21 July 2010.
As far as the deceased’s
will is concerned, it is common cause
from the papers that the first and second applicants, as well as the
fifth respondent, unilaterally
decided to change the deceased’s
will. They did this by substituting the nominated executor, Mr
Mandelstam, with Mr Soldat,
who the deceased allegedly preferred.
They also changed the date of the will by deleting 21 July 2010 and
inserting 30 April 2015.
The second applicant signed the will as if
he was the deceased, in other words, he forged the deceased’s
signature. He alleges
that the content of the will remained the same
in all other respects. The first respondent was not initially aware
of the fact
that the first two applicants had altered the deceased’s
will. The true position was only established after the involvement
of
a handwriting expert. The first and second applicants eventually
brought an application to set aside the forged will and to
reinstate
the 2010 will. The deceased’s will established a testamentary
trust, the Johan en Bessie Schoonhoven Trust and
expressly nominated
eight of his grandchildren as capital beneficiaries. It also
contained the testamentary directives referred
to in clause 27 of the
trust deed. The will was furthermore a joint will of the deceased and
his wife, who was referred to and
signed the will as the ‘testatrise’
or testatrix.
[28]
Clause 5 of the deceased’s will deals with the trust. The
relevant portions read
as follows:
‘
In
terme van die SCHOONIES FAMILIE TRUST (soos gewysig), IT 1667/1998 en
wel klousules 5.3.2, 17 en 27 daarvan, het die Testateur
die reg om
sekere testamentêre opdragte te maak. Die Testateur gelas soos
volg:-
5.1
…
5.2
In terme van die bogemelde Trustakte en wel
klousule 27 daarvan het die Testateur die reg om by wyse
van
testament die vestigingsdatum van die Trust te bepaal. Die Testateur
bepaal hiermee dat die vestigingsdatum sal wees 15 (Vyftien)
jaar
vanaf datum van sy afsterwe.
5.3
Die Testateur het voorts in terme van klousule 27 van die gemelde
Trustakte, die reg om
voor te skryf die formule vir die verdeling van
die Trustfonds tussen die Kapitaalbegunstigdes by beëindiging
van die Trust.
Die Testateur bepaal hiermee dat die
Kapitaalbegunstigdes in gelyke dele die netto opbrengs van die Trust
sal ontvang.’
The
translation of clauses 5.2 and 5.3 are again relatively
straightforward. In terms of clause 5.2, the deceased determined the
vesting date, as he was entitled to do, to be 15 years from the date
of his death. In clause 5.3, the deceased exercised his right
to
prescribe the formula (die reg om voor te skryf) for the division or
distribution of the trust fund between the capital beneficiaries
upon
termination of the trust. The deceased, in my view, however failed to
indicate ‘welke kapitaalbegunstigde welke deel
van die
trustfonds moet ontvang’. The deceased simply determined that
the capital beneficiaries shall receive (sal ontvang)
in equal shares
the net proceeds of the trust. The deceased’s will did not
contain a definition for capital beneficiaries.
Such definition is
only found in the trust deed.
The
applicants’ contentions and submissions
[29]
The applicants submitted that instead of interpreting specific words
or sentences, an interpretation
exercise is required whereby the
relevant portions in the trust deed and the deceased’s will are
understood in the greater
context and purpose of the relevant
documents. The second applicant states that the question that arises
is not about the distribution
of the trust funds but rather about the
determination of the capital beneficiaries. He also drew the court’s
attention to
the fact that the word ‘trustees’ does not
appear in the Afrikaans text in the definition of capital
beneficiaries,
and submitted that the definition ‘has in mind a
clause 27 determination by the founder which would trump the
trustees’
power of selection’.
[30]
The applicants submitted that the trust deed only sets out a list of
‘potential’
capital beneficiaries, the ambit of which
included both natural and legal persons and that upon a proper
interpretation of the
deceased’s will, read with the trust
deed, the trustees have a discretion to determine the capital
beneficiaries from the
list of potential capital beneficiaries.
[31]
The second applicant stated that on a literal reading of the trust
deed, it provides that
the trustees are to determine the capital
beneficiaries to whom the trust capital will be paid in terms of the
trust deed. In my
view, a straightforward reading of the definition
of capital beneficiaries gives no indication of any involvement of
the trustees.
It is, however, clear as mentioned above, that someone
has to select or appoint the capital beneficiaries, from the ranks of
the
categories set out in subparagraphs (i) to (vii). The second
applicant contended that the capital beneficiaries are defined as
‘any of those persons listed in subparagraphs (i) to (vi)
thereof’. He further stated that the trust deed then describes
‘categories of potential beneficiaries and that the trustees
would elect from these categories the ultimate beneficiaries’.
The second applicant further stated that the deceased, whom he
described as an experienced businessman, who was well versed with
the
concept of a trust, was well aware of the open-ended nature of the
definition of capital beneficiaries and that such a wide
definition
allows the trustees a great deal of latitude in distributing the
trust’s assets. The deceased, adopting a common–sense
approach, determined that the final distribution would be to those
who the trustees had stipulated as capital beneficiaries. The
problem
with this contention is that this so-called common sense approach is
not borne out by the actual words of the deceased’s
will or the
trust deed.
[32]
The second applicant also stated that he and the first applicant had
been trustees for
over a decade and had successfully run the various
businesses of the trust. The deceased was furthermore well aware of
how they
conducted the businesses and it is therefore not unusual
that he elected to leave the determination of the capital
beneficiaries
in the hands of the trustees. The second applicant
further stated that
‘
at
the level of interpretation, the absurdity of including all members
of the categories on a head count is clear. A descendant
would then
increase his share by the expedient of creating say 50 shelf
companies. Unless the Trustees are given the power to election
from
the classes, the outcome is perverse.’
The
applicants’ counsel, Ms Olsen, argued along similar lines and
submitted that any number of the deceased’s descendants
or even
his wife could start registering entities such as trusts or close
corporations, which could lead to a debacle and whoever
had the most
entities would receive the biggest share. She submitted further that
the trustees did not want to exclude certain
persons but rather
certain juristic entities.
[33]
It was submitted on behalf of the applicants that the first
respondent’s contention
that the capital beneficiaries
comprised of all the capital beneficiaries listed in the trust deed
and that the trustees’
powers were substantively curtailed,
does not make commercial sense. It is also not what the trust deed,
read with the will, states.
It was submitted that once the trustees
have decided which persons or entities shall be the capital
beneficiaries of the trust,
they would be obliged, on termination of
the trust, to divide the capital assets equally ‘between those
selected beneficiaries’
in terms of the deceased’s will.
It was submitted that this interpretation would be true to the
literal meaning of the words
in the trust deed. It was also submitted
that if one simply reads the definition of capital beneficiaries,
they can be ‘elected’
from any one or more of those
persons or entities listed. It was further submitted that the first
respondent has failed to deal
with the meaning of ‘uit die
geledere van’ and in essence pretended that it did not exist
and wanted the court to disregard
it.
[34]
It was further submitted, with reference to the trustees’
powers as set out in clause
8.2 of the trust deed, that a unanimous
decision of all the trustees is required for the distribution or
division (verdeling) of
capital or income. Failing a unanimous
decision, the matter should be referred to a senior attorney or
auditor for a decision.
It was submitted that these ‘watchdog’
provisions would ensure that the trustees exercise their powers
‘diligently’.
How effective these ‘watchdog’
provisions would be when the trustees themselves, or at least three
of the four trustees,
are also listed as capital beneficiaries in
clause (iii) of the definition, is debatable.
[35]
It was also submitted that the deceased had provided the trustees
with wide discretionary
powers and had he wished to curtail their
discretionary powers in relation to the nomination of capital
beneficiaries, he could
easily have done so by providing a so-called
closed list of beneficiaries. The deceased was furthermore an
experienced businessman,
well conversant with the provisions of the
trust in respect of the trustees’ powers and he specifically
left it to the trustees
to determine the capital beneficiaries. It
is, however, by no means clear from the words of the trust deed that
the trustees indeed
have the power to nominate or to determine the
capital beneficiaries.
[36]
With reference to clause 27 of the trust deed, it was submitted that
the deceased, by electing
in his will to distribute the trust fund to
the capital beneficiaries in equal shares, did not determine the
identity of the capital
beneficiaries, but relied upon the definition
of capital beneficiaries in the trust deed, which provides for an
election out of
the ranks of various persons and entities. It was
also submitted that notwithstanding the deceased being specific in
his will by
naming the capital beneficiaries by name: being his
grandchildren, as well as the income beneficiary, his wife, he did
not do the
same in the trust deed. This is an indication that the
deceased had a clear intention not to select the capital
beneficiaries but
to leave such election to the trustees with the
stipulation that whomever they elected must receive an equal share of
the trust
fund. I am of the view that, bearing in mind that the trust
was to only terminate 15 years after the deceased’s death, and
the uncertainties that goes with that, the deceased prossibly
refrained from nominating or naming specific persons as capital
beneficiaries, instead referring to ‘capital beneficiaries’,
knowing it is defined in detail in the trust deed. The
other more
probable possibility is that the relevant clauses in the deceased’s
will dealing with clause 27 of the trust deed
were drafted in a vague
and somewhat sloppy manner, which did not live up to what was
expected or anticipated, bearing in mind
the wording of clause
27.1.2.
[37]
It was
further submitted that the text of the trust deed is clear in that
the trustees have a discretionary power to appoint income
beneficiaries. When it comes to the election of the capital
beneficiaries, the text is clear: they would be elected in accordance
with the trust deed from the ranks of the listed categories. This
demonstrates that it is not a closed list but rather a list of
potential beneficiaries, in respect of which the trustees have a
discretion. It was submitted that the implementation of the trust
deed by the deceased, in conjunction with the other trustees,
culminated in the trust acquiring a vast number of assets which
provides a clear indication that the deceased, as a reasonable
businessman, was well aware of the powers conferred on the trustees
to elect capital beneficiaries due to the open-ended framing of the
definition of capital beneficiaries. Reliance was placed on
Comwezi
Security Services (Pty) Ltd v Cape Empowerment Trust Ltd
.
[6]
I was also referred to
Honoré’s
South African Law of Trusts
where it is stated that ‘[i]f the class of beneficiaries is
described by the testator in broad terms, the trustees have both
a
duty and a discretion to decide which particular individuals fall
within those terms’.
[7]
That in, my view, presupposes that the trustees do have the power to
select those beneficiaries, which is not clear in the present
matter.
[38]
In conclusion, it was submitted that the trust deed was constructed
with a design in mind,
which allowed the trustees to manage the trust
assets on behalf of the beneficiaries with maximum flexibility, and
this included
the discretion to elect the capital beneficiaries. It
was submitted that the meaning of the words contained in the trust
deed,
properly understood in the context and purpose of the trust,
clearly indicates that the trustees are entitled to elect the capital
beneficiaries.
The
first respondent’s contentions and submissions
[39]
The first respondent submitted that the applicants have presented a
materially altered
definition of capital beneficiaries in their
English translation, meant to favour their case and to support the
relief sought.
The first respondent also made it clear that there is
no question as to who the capital beneficiaries are or should be as
the trust
deed, read with the deceased’s will, is quite
specific about the formula to be used for dividing the capital when
the trust
terminates.
[40]
The first respondent contended that due significance needs to be
attributed to the testamentary
reservation in clause 27. The effect
of the trust deed, as read with the deceased’s determination in
paragraph 5 of his will,
is that the capital beneficiaries are the
persons listed in the trust deed and include their legitimate
descendants (which include
adoptees) and who would all be entitled to
share equally when the trust terminates. A further effect of the
stipulation in the
deceased’s will is that the trustees no
longer had a right to choose, select or exclude individual capital
beneficiaries.
The first respondent stated that the deceased was a
very fair man who hated inequality and who would not have
countenanced a situation
in which any capital beneficiary was
excluded or benefitted by the trustees. Whilst the first respondent
describes the deceased
as someone hating inequality, which is a very
admirable trait, clause 12.2 of the trust deed permits the trustees
in their absolute
discretion, up until the termination of the trust
fund, to utilise the trust fund for the benefit of any one or more of
the beneficiaries,
without regard to the principle of equality
between beneficiaries.
[41]
The first respondent also contended that the deceased executed his
will in 2010, which
is when he exercised his testamentary reservation
and that the factors that he was aware of at that time must be taken
into account.
At the time, the deceased was aware of the animosity
between the first respondent and the first applicant, was aware that
the first
and second applicants had ‘ganged-up’ against
him, and were vying for his removal as a trustee. The first
respondent
alleges that the first applicant had an affair with his
spouse, which led to his divorce, which allegations are denied by the
first
applicant. According to the first respondent, the relationship
between him and the first applicant degenerated, ultimately to the
point of open hostility between the two of them.
[42]
The first respondent further contended that the deceased ‘obviously’
anticipated
that the first and second applicants would ‘redouble’
their efforts to rid themselves of him after the deceased’s
death and that they would take decisions calculated to prejudice him
and his descendants and that the wording of the exercise of
the
testamentary reservation was informed by these aspects.
[43]
It was submitted on behalf of the first respondent that the trust
deed must be read as
a whole and that the text, context and purpose
must be considered as part of the unitary interpretive exercise. The
reasons why
the trust was founded, namely for the benefit of the
family, and the exercise of the deceased’s testamentary
reservation
must be taken into account. Due weight must further be
accorded to the equal distribution that the deceased decreed –
which
he did knowing of the animosity between the first respondent
and the first and second applicants. It was submitted that the
applicants,
during the trust deed’s translation, reformulated
the wording of the trust deed to create the false impression that the
trustees
are entitled to choose the capital beneficiaries.
[44]
It was also
submitted that the definition of capital beneficiaries must be read
with clause 27, which empowered the deceased to
determine the formula
whereby the trust capital is to be divided. The deceased did not
single out any of the capital beneficiaries
for special treatment and
instead stipulated that ‘the capital beneficiaries shall
receive the net proceeds of the Trust
in equal shares’. There
is no indication that this direction did not include all the persons
actually listed in the trust
deed by name. It was also submitted that
the definition of capital beneficiaries must be read with the
definition of income beneficiaries.
The trustees are empowered to
select income beneficiaries and the same language could have been
used in respect of the definition
of capital beneficiaries, but it
was not. It was submitted that the change of language occurs in the
second of two consecutive
paragraphs, both dealing with the same
subject matter, in the same clause, in the same document. With
reference to
Cradock
v Estate Cradock,
[8]
it was submitted that a change of meaning was intended. When I
enquired who should select the capital beneficiaries and what the
meaning was of ‘aangewys’, Mr Tredoux, appearing on
behalf of the first respondent, submitted that it is the trust
deed
which has to indicate the capital beneficiaries but once the testator
exercised its powers, that had to be followed. He also
submitted that
one has to look at the intention of the deceased and the original
trustees. He urged me to have regard to what is
stated in
Honoré
with
regard to the interpretation and rectification of trust deeds.
[9]
I will return to this later.
[45]
It was lastly submitted that the deceased decreed that the capital
beneficiaries should
be treated equally and if the applicants were
entitled to choose the capital beneficiaries, the deceased’s
testamentary reservation
would be rendered meaningless and have no
practical purpose. This would be unbusinesslike, contrary to the
ethos of the trust and
simply unjust.
Approach
to the interpretation of legal documents
[46]
Both
parties submitted that the trust is an
inter
vivos
trust
and that the rules and principles of contractual interpretation
accordingly apply.
[10]
The
courts regularly commence an interpretation exercise by referring to
Natal
Joint Municipal Pension Fund v Endumeni Municipality
,
[11]
which held that when interpreting a document, ‘the inevitable
point of departure’ is the language used in the document.
A
court furthermore has to take the context and purpose into account
when interpreting a contract.
[12]
[47]
Counsel for
the applicants quoted liberally from
Capitec
Bank Holdings Ltd and another v Coral Lagoon Investments 194 (Pty)
Ltd and others,
[13]
where Unterhalter AJA, in dealing with the mechanisms of contractual
interpretation, held that:
‘
[25] . . . The
much-cited passages from
Natal Joint Municipal Pension Fund v
Endumeni Municipality (Endumeni
) offer guidance as to how to
approach the interpretation of the words used in a document. It is
the language used, understood
in the context in which it is used, and
having regard to the purpose of the provision that constitutes the
unitary exercise of
interpretation. I would only add that the triad
of text, context and purpose should not be used in a mechanical
fashion. It is
the relationship between the words used, the concepts
expressed by those words and the place of the contested provision
within
the scheme of the agreement (or instrument) as a whole that
constitute the enterprise by recourse to which a coherent and salient
interpretation is determined. As
Endumeni
emphasised,
citing well-known cases, “(t)he inevitable point of departure
is the language of the provision itself”.
[26]
. . .
Endumeni
is not a charter for judicial
constructs premised upon what a contract should be taken to mean from
a vantage point that is
not located in the text of what the parties
in fact agreed. Nor does
Endumeni
license judicial
interpretation that imports meanings into a contract so as to make it
a better contract, or one that is ethically
preferable.
’
(Footnotes omitted.)
[48]
Unterhalter
AJA also referred
[14]
to
University
of Johannesburg
where ‘the Constitutional Court affirmed that an expansive
approach should be taken to the admissibility of extrinsic evidence
of context and purpose’. The Constitutional Court held as
follows:
[15]
‘
Let
me clarify that what I say here does not mean that extrinsic evidence
is
always
admissible.
It is true that a court's recourse to extrinsic evidence is not
limitless because “interpretation is a matter
of law and not of
fact and, accordingly, interpretation is a matter for the court and
not for witnesses”. It is also
true that “to the
extent that evidence may be admissible to contextualise the document
(since ''context is everything'')
to establish its factual matrix or
purpose or for purposes of identification, one must use it as
conservatively as possible”.
I must, however, make it clear
that this does not detract from the injunction on courts to consider
evidence of context and purpose.
Where, in a given case, reasonable
people may disagree on the admissibility of the contextual evidence
in question, the unitary
approach to contractual interpretation
enjoins a court to err on the side of admitting the evidence. There
would, of course, still
be sufficient checks against any undue reach
of such evidence because the court dealing with the evidence could
still disregard
it on the basis that it lacks weight. When dealing
with evidence in this context, it is important not to conflate
admissibility
and weight.’ (Footnotes omitted.)
[49]
Unterhalter
AJA in
Capitec
further held as follows:
[50]
Endumeni
simply
gives expression to the view that the words and concepts used in a
contract and their relationship to the external
world are not
self-defining. The case and its progeny emphasise that the meaning of
a contested term of a contract (or provision
in a statute) is
properly understood not simply by selecting standard definitions of
particular words, often taken from dictionaries,
but also by
understanding the words and sentences that comprise the contested
term as they fit into the larger structure of the
agreement, its
context and purpose. Meaning is ultimately the most compelling and
coherent account the interpreter can provide,
making use of these
sources of interpretation. It is not a partial selection of
interpretational materials directed at a predetermined
result.
[51]
Most contracts, and particularly commercial contracts, are
constructed with a design in mind, and their architects choose words
and concepts to give effect to that design. For this reason,
interpretation begins with the text and its structure. They have a
gravitational pull that is important. The proposition that context is
everything is not a licence to contend for meanings unmoored
in the
text and its structure. Rather, context and purpose may be used to
elucidate the text.
’
Non-joinder
[50]
As mentioned
above, the first respondent raised the issue of non-joinder as none
of his six grandchildren had been joined. He alleged
that they are
capital beneficiaries by virtue of being descendants (afstammelinge)
as described in paras (b)(iii) and (iv) of the
definition of capital
beneficiaries in the trust deed. It was alleged that his
grandchildren have a real and direct interest in
the outcome of the
application ‘which seeks to exclude them as capital
beneficiaries of the Trust’ and they ought to
have been joined.
The applicants, of course, seek no such thing but the first
respondent nonetheless contends that it was therefore
a joinder of
necessity.
[51]
The second
applicant dealt with this issue only very briefly in his replying
affidavit. He confirmed that the applicants subsequently
joined Ms
Lindie Odendaal, the first respondent’s adoptive daughter, and
accordingly his descendant and a ‘potential’
capital
beneficiary in terms of subparagraph (iv) of the definition of
capital beneficiaries.
[52]
The second
applicant then proceeded in the next paragraph to deny that Ms
Odendaal is a capital beneficiary by virtue of the provisions
of
clauses 1.14 and 1.15 of the trust deed. There are no such clauses.
He presumably instead meant to refer to clauses 1.1.4 and
1.1.5. The
relevant parts read as follows:
‘
1.1
In hierdie trustakte, tensy dit uit die
samehang anders blyk:
…
1.1.4
Sluit kinders ook wettiglik aangenome kinders in en sluit
afstammelinge ook wettiglik aangenome afstammelinge en hulle
afstammeling
in;
1.1.5
Verwys kinders en afstammelinge na persone reeds gebore of wettiglik
aangeneem of nog gebore of wettiglik aangeneem te word
voor die
vestigingsdatum.’
[53]
The meaning of
clause 1.1.4 is clear in my view. A reference to children includes
legally adopted children. A reference to descendants
also includes
legally adopted descendants and their descendants.
[54]
The
second applicant denied that there was a need to join Ms Odendaal’s
descendants, quite clearly on an incorrect understanding
of what is
meant by ‘descendant’. The meaning of clause 1.1.4 is
furthermore in line with what has been found in a
number of cases. In
Ex
parte Sadie
[16]
the following was said with regard to the use of the word
‘afstammeling’ as opposed to ‘children’:
‘
The
testator used the word “afstammelinge” and not the word
“kinders”, thus indicating that he had in mind
remote and
not merely immediate descendants of the appellant.’
See
also
Ex
parte Swanevelder
[17]
where it was held that ‘afstammelingen’ generally
indicates ‘remote and not merely immediate descendants’.
In
Boswell
en andere v Van Tonder
[18]
it was held that ‘“afstammelingen” [dui op]
bloedverwante in die dalende lyn’.
[55]
Claassen’s
Dictionary of Legal Words and Phrases
describes
‘afstammelinge’ as indicating ‘remote and not
merely immediate descendants (kinders)’.
[19]
[56]
According
to
Erasmus
Superior Court Practice
,
[20]
‘
the
question as to whether all necessary parties had been joined does not
depend upon the nature of the subject matter of the suit,
but upon
the manner in which, and the extent to which, the court’s order
may affect the interests of third parties. The
test is whether
or not a party has a “direct and substantial interest” in
the subject matter of the action, that is,
a legal interest in the
subject matter of the litigation which may be affected prejudicially
by the judgment of the court. A
mere financial interest is an
indirect interest and may not require joinder of a person having such
interest.’ (Footnotes
omitted.)
See
also
SA
Riding for the Disabled Association v Regional Land Claims
Commissioner
[21]
where the court dealt with the test when applicants seek leave to
intervene.
[57]
Although the
first respondent’s grandchildren are in my view clearly
descendants for the purpose of the definition of capital
beneficiaries and are accordingly part of the ranks from where
capital beneficiaries can be selected, their parents, the second,
third, fourth and thirteenth respondents, are parties to the
application. They have, however, not taken part in the proceedings.
One could assume that these respondents would have wanted to protect
their children’s interests if they considered it necessary
or
have, as I suspect, left it to the first respondent to take part in
the application. This much was submitted by applicants’
counsel
in reply, namely that the first respondent’s children could
have raised the issue of non-joinder of their children.
It was also
submitted that the applicants’ grandchildren were likewise not
joined and that there was no intention to discriminate
against
anyone. This was, however, not the explanation given by the second
applicant in his replying affidavit.
[58]
I am not
convinced that the issue of non-joinder is fatal to the application.
I am, however, of the view that the second applicant’s
denial
of the issue relating to the descendants is wrong and based on a
misunderstanding of the meaning of ‘afstammeling’.
Discussion
and analysis
[59]
Clause 5.3 of the will and clause 27 of the trust deed, read with the
definition of capital
beneficiaries, are at the centre of the issues
to be decided.
[60]
It is the applicants' case that on a proper reading of the definition
of capital beneficiaries,
the trustees are to decide who the capital
beneficiaries are from the categories as set out in subparagraphs (i)
to (vii).
[61]
The first respondent, however, maintains that the deceased determined
the formula for the
distribution of the trust fund in his will, in
terms of which all the capital beneficiaries would be entitled to
share equally
when the trust vests.
[62]
There are a number of clearly distinguishable scenarios when
considering the trust deed,
in particular, what happens before the
termination of the trust and what happens upon its termination and
what the powers of the
trustees are up to its termination and
thereafter. The trust deed is very specific when it comes to the
election or choosing of
income beneficiaries. It cannot be clearer.
The trustees in accordance with their discretionary powers can elect
the beneficiaries
from five stipulated categories. This is conveyed
in no uncertain terms in the definition of income beneficiaries as
well as in
clauses 11 and 12. The trustees can furthermore do so up
until the termination of the trust.
[63]
The problem is, however, that the trust deed is silent on who is
entitled to or required
to appoint, select or elect the capital
beneficiaries. As mentioned above, I am of the view that the words
‘aangewys sal
word uit die geledere van’, clearly
presupposes an election from the ranks of those persons listed in the
categories set
out in subparagraphs (i) to (vii). Only persons or
entities falling within these categories would be eligible to benefit
from the
trust fund. The first respondent insists that in terms of
the deceased’s will, the capital beneficiaries, meaning all the
capital beneficiaries listed, shall receive equal shares of the net
proceeds of the trust fund. The deceased’s will does
not define
capital beneficiaries which brings us back to the definition as it
appears in the trust deed. In my view, the deceased
and the trustees
at the time, one of them being the first applicant, possibly
envisaged that the capital beneficiaries would be
appointed or
selected by the deceased in his will, when exercising the right
granted to him in clause 27 of the trust deed. This,
he, however
failed to do properly or with any certainty. All of this is, however,
pure speculation because the first applicant
has failed to provide
any evidence in respect of the context surrounding the amendment of
the trust deed.
[64]
It is
difficult to determine whether the failure in the trust deed to
specifically state who should appoint or elect the capital
beneficiaries was an omission or a deliberate decision. Regardless of
the reason for failing to be specific, one thing is clear,
someone
will eventually have to make the selection. Both sides stressed the
fact that the deceased was an astute businessman, who
was well aware
of how a trust functions. The trust deed was drafted in 2006, well
before the troubles began between the first applicant
and the first
respondent. There would accordingly not have been a need for the
deceased to protect the first respondent from his
brothers’
possible unfair actions. It was held in
Moosa
v Jhavery
[22]
by Caney J that
‘…
the
trust speaks from the time of its execution and must be interpreted
as at that time. It is the settlor's intention at that time
which
must be ascertained from the language he used in the circumstances
then existing. Subsequent events (and in these are
included statutes)
cannot, I consider, be used to alter that intention.
’
As
mentioned above, there is no evidence from the first applicant or
anyone else for that matter, involved in the drafting of the
amended
trust deed, as to the deceased’s intention at the time. The
deceased’s will was signed by him in 2010, when
relations had
already soured between the three brothers, but yet the deceased,
described as a fair man despising inequality, took
no special
precautions to ensure that there is no confusion over which capital
beneficiaries were to share in the trust fund.
[65]
Bearing in
mind what was held in
Capitec,
it is
not for me to pronounce on what the relevant clauses should be taken
to mean from a vantage point not located in the text
of the trust
deed. I also cannot import meanings into the trust deed to make it
better or more acceptable. It was submitted on
behalf of the
applicants that the trust deed was constructed with a design in mind,
which is a clear reference to what was held
in
Capitec
[23]
but it was further held that ‘interpretation begins with the
text and its structure’ and that ‘context and purpose
may
be used to elucidate the text’. The first respondent
furthermore makes a valid point when submitting that there was a
change of language from the express reference of the trustees’
discretion to
choose
income beneficiaries to no mention whatsoever of the trustees in the
definition of capital beneficiaries. In my view, there
are two
possible reasons for this. Either the deceased intended for the
trustees to select the capital beneficiaries from the stipulated
ranks, but failed to properly convey it or simply did not deem it
necessary at the time to be specific or it was anticipated that
the
deceased would make a clear determination in his will in respect of
the capital beneficiaries.
[66]
The
first respondent’s fear or anticipation of unfair treatment by
the first and second applicants is not unreasonable.
They clearly are
the dominant trustees making the decisions and control the trust’s
business. What is further of extreme
concern to me is the fact that
they are not only trustees but are also listed as possible capital
beneficiaries as mentioned above.
Honoré
states that a trustee should avoid a position where his private
interests conflict with those of trust beneficiaries.
[24]
It further states that where a trustee is also a beneficiary and acts
in such a way as to benefit himself at the expense of other
beneficiaries, the trustee’s acts ‘will be very narrowly
scrutinised’.
[25]
But
this is perhaps an issue that will be fully dealt with in the first
respondent’s pending litigation.
[67]
There is
another issue to consider. If the trust instrument ‘fails to
express correctly the intention of the founder or the
common
intention of the founder and the trustees . . . the trustee, founder
or other interested party . . . may apply for the rectification
of
the trust [deed]’.
[26]
It is unclear from the papers if the applicants gave any
consideration to instituting an action to claim rectification and it
was not raised before me, as it perhaps should have been.
Christie’s
Law of Contract
[27]
deals with declarations of rights and the power of a high court to
‘in its discretion, and at the instance of any interested
person, to enquire into and determine any existing, future or
contingent right or obligation…’. It states further
that
‘
A
claim for rectification of a contract which, because of the necessity
for full investigation of the facts, should be brought by
action not
by application, cannot be granted on an application that casts it in
the form of a claim for a declaratory order, thereby
concealing its
true nature.
’
[28]
[68]
Christie’s
placed reliance on
Hadiaris
v Freeman and Freeman
[29]
where it was held by Price J that a claim for rectification must be
made by way of action. In that matter, the applicant, by way
of
petition, asked for a declarator that the petitioner should be
declared entitled to exercise an option to renew a lease on certain
terms. The written agreement entered into between the parties did not
accurately set out the true agreement between the parties.
The court
was of the view that it amounted to a rectification. The prayer was
defective in that the petitioner should have asked
for an order
rectifying the agreement and for a consequential declaration in terms
of the corrected or rectified agreement. The
court also referred to
the safeguards available in action proceedings, such as cross-
examination and discovery, which is not available
in application
proceedings. It was held that ‘[i]f such contracts could be
rectified on motion when the allegation of mutual
mistake is not
admitted, the very foundation of the commercial structure would be
shaken’.
[30]
[69]
In my view, the declaratory relief sought by the applicants amounts
to a rectification
of the trust deed, and in line with the
authorities referred to above, I am of the view that they should have
instituted an action
to claim such rectification.
[70]
In the event that I am wrong in this regard, I am in any event of the
view that the applicants
have failed to provide sufficient evidence
to support their interpretation of the trust deed and will. The
meaning they seek to
ascribe to the definition of capital
beneficiaries, by seeking to import a discretion by the trustees to
determine the capital
beneficiaries, is in my view not borne out by
the words, context or purpose of the trust deed. There is in fact
very little evidence,
if any, to support their contentions. The
application should accordingly be dismissed.
Costs
[71]
As far as the issue of costs is concerned, it was contended by the
first respondent that
the trustees should be ordered to pay the costs
personally,
de bonis propriis,
on an attorney and own client
scale as the litigation was vexatious and had no prospects of
success. The second applicant in reply
stated that the trustees had
to obtain clarity on the interpretation of the trust deed in respect
of the determination of the capital
beneficiaries. It is clear from
the papers that there were attempts made to try to agree on the
interpretation of the trust deed,
without success. This matter was by
no means easy to decide on and it was certainly not a given that the
applicants had no prospects
of success. In my view, and in exercising
my discretion, there is no reason to deviate from the usual position
that costs follow
the result. I am further of the view that the
particular facts of the matter do not justify a punitive costs order
nor an order
that the trustees pay the costs personally.
Order
[72]
I accordingly make the following order:
1.
The application is dismissed with costs.
E
BEZUIDENHOUT J
Date
of hearing:
17 March 2023
Date
of judgment:
19 January 2024
Appearances:
For
the applicants:
Ms LK
Olsen
Mr S
Murray
Instructed
by:
Strauss
Daly Inc
9 th
Floor, Strauss Daly Place
41
Richemond Circle, Ridgeside Office Park
Umhlanga
Tel:
031 570 5605
Email:
nvolschenk@straussdaly.co.za
;
nconradie@straussdaly.co.za
c/o
Botha & Olivier Inc
239
Peter Kerchhoff Street
Pietermaritzburg
Tel:
033
342 7190
Ref:
Zelda
For
the first respondent:
Mr P
Tredoux
Instructed
by:
JB
Law
30
Caledon Street
Somerset
West
Tel:
087 700 0710
Email:
reception@jb-law.co.za
Ref:
BS 0283
c/o
Hay & Scott Attorneys
Top
Floor, 3 Highgate Drive
Redlands
Estate
1
George Macfarlane Lane
Pietermaritzburg
Email:
info@hayandscott.co.za
[1]
HAT:
Handwoordeboek van die Afrikaanse Taal
6 ed (2015) (‘
HAT
’)
describes ‘na gelang van’ inter alia in the context of
someone acting in accordance with the circumstances
or as required
in the circumstances, ‘hy handel na gelang van die
omstandighede’.
[2]
V G Hiemstra and H L Gonin
Trilingual
Legal Dictionary
3 ed (1992) (‘
Trilingual
Legal Dictionary
’).
[3]
Oxford
Afrikaans-Engels/English-Afrikaans Skoolwoordeboek/School Dictionary
2 ed(2017).
[4]
Oxford
South African Concise Dictionary
2
ed (2010).
[5]
Ibid.
[6]
Comwezi
Security Services (Pty) Ltd and another v Cape Empowerment Trust Ltd
[2012]
ZASCA 126
para 15.
[7]
Cameron et al
Honoré’s
South African Law of Trusts
6 ed (2018) at 176 (‘
Honoré
’).
[8]
Cradock
v Estate Cradock
1949
(3) SA 1120
(N) at 1123 where reference was made to
Port
Elizabeth Municipal Council v Port Elizabeth Electric Tramway Co Ltd
1947 (2) S.A.L.R 1269
.
[9]
Honoré
at
319-321.
[10]
Crookes,
NO and another v Watson and others
1956
(1) SA 277
(A) at 285E–287C;
Wilkinson
and another v Crawford NO and others
[2021] ZACC 8
;
2021 (4) SA 323
(CC);
Sea
Plant Products Ltd and others v Watt
2000 (4) SA 711
(C) at 720-722.
[11]
Natal
Joint Municipal Pension Fund v Endumeni Municipality
[2012] ZASCA 13
;
2012 (4) SA 593
(SCA) at 604C D (‘
Endumeni
’)
para 18.
[12]
University
of Johannesburg v Auckland Park Theological Seminary and another
[2021] ZACC 13
;
2021 (6) SA 1
(CC) para 66 (‘
University
of Johannesburg’)
.
[13]
Capitec
Bank Holdings Ltd and another v Coral Lagoon Investments 194 (Pty)
Ltd and others
[2021] ZASCA 99
;
2022 (1) SA 100
(SCA) paras 25-26 (‘
Capitec
’).
[14]
Capitec
para 39.
[15]
University
of Johannesburg
para
68.
[16]
Ex
parte Sadie
1940
AD 26
at 32.
[17]
Ex
parte Swanevelder
1949
(1) SA 733
(O) at 735-736.
[18]
Boswell
en andere v Van Tonder
1975
(3) SA 29
(A) at 35F-G; see also
Cohen
NO v Roetz NO and others
[1991] ZASCA 173
;
1992 (1) SA 629
(A) at 640A-B.
[19]
R C Claassen and M Claassen
Claassen’s
Dictionary of Legal Words and Phrases
(June
2023 – SI26).
[20]
D E van Loggerenberg
Erasmus:
Superior Court Practice
(RS
21, 2023) at D1-124 to D1-125.
[21]
SA
Riding for the Disabled Association v Regional Land Claims
Commissioner and others
[2017]
ZACC 4
;
2017 (5) SA 1
(CC) paras 9-11.
[22]
Moosa
and another v Jhavery
1958 (4) SA 165
(N) at 169D-E.
[23]
Capitec
para
51.
[24]
Cameron et al
Honoré’s
South African Law of Trusts
6 ed (2018) at 369-370.
[25]
Ibid
at 370.
[26]
Honoré
at
319-320.
[27]
GB Bradfield
Christie’s
Law of Contract
8
ed (2022) at 671.
[28]
Ibid
at 673.
[29]
Hadiaris
v Freeman and Freeman
1948 (3) SA 720
(W) at 724.
[30]
Ibid
at 727.