About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Free State High Court, Bloemfontein
SAFLII
>>
Databases
>>
South Africa: Free State High Court, Bloemfontein
>>
2023
>>
[2023] ZAFSHC 4
|
|
Tshabalala N.O. and Others v Lepee and Others (1263/2022) [2023] ZAFSHC 4 (17 January 2023)
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,
FREE
STATE DIVISION, BLOEMFONTEIN
Case
number: 1263/2022
Reportable:YES/NO
Of
interest to other Judges: YES/NO
Circulate
to Magistrates: YES/NO
In
the matter between:
NOMPI
TRIPHINA TSHABALALA N.O.
1
st
Applicant
NOMPI
TRIPHINA TSHABALALA
2
nd
Applicant
ERIC
SIMANGELE
MBELE
3
rd
Applicant
MADITSEBE
EMMA MTHEMBU
4
th
Applicant
MANTOA
MOLOI
5
th
Applicant
TSHEPO
MTHEMBU
6
th
Applicant
MADITABA
MARIA MOLOI
7
th
Applicant
And
NONDLADLA
JOHANNA LEPEE
1
st
Respondent
TEMBISA
GLORIA NYOLA
2
nd
Respondent
THE
MASTER OF THE FREE STATE HIGH COURT,
3
rd
Respondent
BLOEMFONTEIN
HEARD
ON:
01 SEPTEMBER
2022
JUDGMENT
BY:
DANISO, J
DELIVERED
ON:
This
judgment was handed down electronically by email to the parties'
representatives and by release to SAFLII. The date and time
for
hand-down is deemed to be 14h00 on 17 January 2023
[1]
This matter involves a dispute between trustees namely, the first
applicant, the first
and second respondents over the management of a
Trust registered with the third respondent (“the Master”)
on 8 October
2008 under name Nyola Trust (“The Trust) with
registration number IT[…].
[2]
The Trust was established by the respondents’ mother the late
Mirriam Nyola
(“the deceased”). Ms Nyola passed away on 7
November 2012 and upon her demise, the first applicant, first and
second
respondents remained as co-trustees and income and capital
beneficiaries.
[3]
The third to seventh applicants respectively, are the children and
grandchildren of
the first applicant. They are also the beneficiaries
of the Trust.
[4]
In the applicants’ notice of motion the following relief is
sought:
“
1.
That the First Respondent is removed as trustee of the Nyola Trust-
IT[...];
2.
That the Second Respondent is removed as trustee of the Nyola Trust-
IT[...];
3.
That leave is granted to the First Applicant to appoint co-trustees
in their
stead within 30 days of the Order as there shall at all
times not be less than two (2) Trustees;
4.
That the Third Respondent appoints and grant Letters of Authority to
such trustees
as contemplated in paragraph 3 above, alternatively to
such person or persons whom the Third Respondent deems fit and proper
to
be a trustee of the Trust;
5.
That the Trust be ordered to pay the cost of the application; and
6.
That, in the event that the application be opposed by any of the
First and Second
Respondent/s, such Respondent/s be ordered to pay
the costs of the application...”
[5]
The application is opposed by the second respondent only.
[6]
The applicants rely on the provisions of s9 and 10 of the
Trust Property Control Act
[1]
(“The
Act”) on the basis that, the respondents have neglected their
duties to act with due care and diligence
in administering the Trust.
The applicants accuse the respondents of lack of disclosure in
respect of the financial affairs of
the Trust, failing to keep proper
accounting systems of the affairs of the Trust and the
misappropriation of the funds of the Trust.
[7]
In terms of s20(1) of the Act alternatively, the common law the onus
is on the applicants
to satisfy the court that the removal of the
respondents as trustees will be in the interests of the Trust and its
beneficiaries
or their continuance in office of the trustee will be
detrimental to the beneficiaries or prevent the Trust from being
properly
administered.
(
Gowar
and Another v Gowar and Others
[2016] ZASCA 101
;
[2016] 3 All SA 382
(SCA);
2016 (5) SA 225
(SCA);
Haitas v Froneman and Others
[2021] ZASCA 01
).
[8]
It is the applicants’ case that from the inception of the
Trust, no proper records
including financial statements of the Trust
have been kept by the respondents. On 26 September 2012 the first
applicant, through
its attorneys transmitted a letter to the deceased
requesting to be furnished with the Trust’s financial records.
The records
were not provided, the follow up letter on 13 November
2019 also did not yield a favourable result.
[2]
[9]
The Trust owns a farm described as portion 21 of Farm 1[…]
situated in the
district of H[…] in the Free State. The
applicants complain that the respondents have been engaged in
negotiations to conclude
lease agreements in respect of portions of
the farm to various entities including Cell C, Eskom, South African
Revenue Services
and Genesis Eco-Energy for the erection of
sub-stations, mobile phone towers and cable lines. The details of
these transactions
including the circumstances under which the
agreements are to be concluded are unknown to the applicants.
[10]
The respondents also leased portions of the farm to Mr Ntsane for
livestock grazing for the period
May 2014 to April 2015 at an amount
of R400.00 per month. The arable land was leased to
Mr
Maree of Toekomst Boedery, he paid R33 600.00 on
12 August 2014. Then during October 2017 to October 2019 Mr and
Mrs
Mbhele leased hectares of the farm at an amount of R83 200.00
per annum.
[11]
Mr Ntsane and Maree’s rental payments were deposited into the
Trust’s banking account,
while Mr Mbhele’s rental
payments were deposited into the respondent’s personal bank
account. None of these payments
were disclosed to the
applicants and they were also not paid the dividends in that regard.
[12]
The Trust’s banking account has since been closed by the bank
due to inactivity and non-compliance
with the Financial Intelligence
Centre Act.
[13]
As a result of the respondents’ conduct, the applicants lodged
a complaint with the Master.
Having found that the applicants’
complaint involves “factual disputes and unproven allegations”
which can only
be resolved by the court the Master recommended that
the dispute be referred to court.
[14]
According to the applicants, the only meeting held to address the
issues relating to the administration
of the Trust was convened at
the instance of the first applicant on 9 September 2013 and 19
October 2019 and it was only then,
that the first applicant was paid
her share of the dividends from the rental payments made by Mr
Ntsane. Mr Mbhele has also been
paying his rent into the applicants’
attorney’s trust account since October 2019.
[15]
In the answering affidavit, it is conceded that the Trust has not
been properly managed. The
second respondent states that initially,
the Trust was administered solely by the deceased. After her demise,
none of the Trustees
effectively managed the Trust and this is due to
the fact that all the trustees are lay persons and at the time they
assumed their
responsibilities as trustees they had not received any
training nor attended any programs regarding the administration of
Trusts.
It is due to this lack of knowledge that the trustees
permitted the deceased to administer the Trust alone when she was
still alive
thereafter, the responsibility was delegated to the first
respondent.
[16]
With regard to the alleged misappropriation of the Trust’s
funds, the second respondent
denies that Mr Mbhele was instructed to
pay the rent into the respondents’ personal banking account and
points out these
allegations are in any event unsubstantiated. Mr
Mbhele has not filed a confirmatory affidavit in that regard the
court must thus
disregard the allegations as inadmissible hearsay.
[17]
The second respondent admits receiving payments totalling an amount
of R15 000.00 (fifteen
thousand rand) from the Trust as an
allowance. The payment was made to her by the first respondent in her
(the first respondent)
capacity as the chairperson of the Trust and
in terms of the resolution taken at the meeting that was convened by
the first applicant
on 9 September 2013.
[18]
According to the second respondent, Mbhele has been depositing rental
payments into the trust
account of the applicants’ attorneys on
the instructions of the first applicant from 2017 to 2019. The
payments have been
distributed to the first applicant and the other
applicants with the exclusion of the respondents.
[19]
The second respondent contends that despite her concessions, her
conduct does not warrant removal
as a trustee, it is the
responsibility of all the trustees to manage the Trust therefore, the
first applicant is jointly liable
with the respondents for the breach
of their fiduciary duties with the Trust. The application must
accordingly be dismissed.
[20]
The second respondent’s contention that all trustees have a
joint fiduciary duty to administer
a Trust is well-founded and
affirmed by
s9 (1) of the Act which states that:
“
9
Care, diligence and skill required of trustee
(1) A
trustee shall in the performance of his duties and the exercise of
his powers act with the care, diligence
and skill which can
reasonably be expected of a person who manages the affairs of
another.
(2) Any
provision contained in a trust instrument shall be void in so far as
it would have the effect of exempting a trustee
from or indemnifying
him against liability for breach of trust where he fails to show the
degree of care, diligence and skill as
required in subsection (1).”
[21]
Clause 16 of the Trust Deed
[3]
provides thus:
“
DUTIES
OF TRUSTEES
16.
Subject to common law or any other statutory obligations attached to
the office of trustee,
the trustees are obliged-
16.1….
16.2…
16.3.
to open, immediately, in compliance with the Act, a banking account
in the name of the trust and to deposit all
monies received by the
trust into such account;
16.4.
to take all possession of and hold for safe keeping (where
applicable) all the assets, title deeds and documents
concerning the
trust;
16.5.
to keep, or appoint someone to keep, detailed books of account of the
affairs of the trust;
16.6.
to keep the trust property separately at all times and to register it
separately, enabling it always to be identified
as such;
16.7.
not to dispose of trust assets for their own advantage to act
continuously with care and consideration as is reasonably
expected of
a person who handles the affairs of another.”
[22]
I hold that for the first applicant to extricate herself from her
joint fiduciary duties and
lay the blame for the inefficiencies in
the administration of the Trust squarely on the respondents is quite
disingenuous. “
They are all in this together
.”
[23]
As regards the allegations of misappropriation of the Trust’s
funds, it has been said that
where financial gain by means of
improprieties on the part of a trustee has been established the court
is entitled to interfere
and remove the dishonest trustee.
[4]
In this matter what can be judged from the papers is that genuine
factual disputes have been raised by the second respondent
with
regard to the funds received on behalf of the Trust, how they were
managed and disbursed.
[5]
[24]
These disputed facts cannot be resolved by way of affidavits. They
were apparent well before
this application was launched in that, they
were pointed out in the Master’s report as the basis for
referring the matter
to court. By choosing to proceed with this
matter by way of motion proceedings the applicants confined
themselves to have the prevailing
disputes of facts decided on the
affidavits alone
landing them in an unenviable position of not being able to discharge
the onus of proving
that the respondents have obtained
some financial gain as a result of their misconduct. It is important
to note that, on her own
admission the first applicant has also
diverted rental payments due to the Trust to her attorneys’
trust account without
the consent of the respondents.
[25]
It is indisputable that the trustees including the first applicant
have neglected their obligations
as trustees therefore, to remove the
respondents and effectively place the first applicant in control of
the Trust would be unsound.
I am not persuaded that the applicants
have made out a case for the relief sought, the application ought to
fail.
[26]
There is no reason why the costs should not follow the result. I
accordingly make the following
order:
1.
The application for the removal of the first and second respondents
as trustees of the Nyola Trust IT[...] is dismissed with costs.
N.S.
DANISO, J
APPEARANCES:
Counsel
on behalf of Applicant:
Adv. P.R. Cronje
Instructed
by:
O.J. van Schalkwyk
BLOEMFONTEIN
Counsel
on behalf of the 2
nd
Respondent:
Adv. Tlelai
Instructed
by:
Rasegoete & Associates
BLOEMFONTEIN
[1]
Act No, 57 OF 1988.
[2]
Annexure “J” and “X1” of the applicant’s
founding affidavit.
[3]
See p
ara
16.3 to 16.7.
[4]
See
Haitas
at
para 35.
[5]
Room
Hire Co (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd
1949
(3) SA 1155
(T).