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[2023] ZAECMKHC 27
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Van Graan N.O and Others v Waisman and Others (2509/2022) [2023] ZAECMKHC 27 (21 February 2023)
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Certain
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IN THE HIGH COURT OF
SOUTH AFRICA
(EASTERN CAPE DIVISION
– MAKHANDA)
CASE NO.: 2509/2022
Matter heard on:
19 January 2023
Judgement delivered
on: 21 February 2023
In the matter between: -
JENNIFER ELIZABETH VAN
GRAAN N.O.
First Applicant
(as Trustee of the
Godfrey van Graan Family Trust)
JENNIFER ELIZABETH VAN
GRAAN N.O.
Second Applicant
(as Trustee of the Gowan
Hill Trust)
JENNIFER ELIZABETH VAN
GRAAN N.O.
Third Applicant
and
MARILYN
ELIZABETH WAISMAN
First Respondent
CAROLYN ANNE
JOHNSON
Second Respondent
SANDRA LEE
BOSCH
Third Respondent
BERNICE ROSSLYN DICKIE
Fourth
Respondent
MARK ALISTAIR
BRADLEY
Fifth Respondent
GABRIELLE ANN
JOHNSON
Sixth Respondent
RYAN RICHARD
JOHNSON
Seventh Respondent
KAYLIE-ANN
BOSCH
Eight Respondent
DEVAN STOW
BOSCH
Ninth Respondent
ROSS DOUGLAS
DICKIE
Tenth Respondent
JUSTIN DYLAN
DICKIE
Eleventh Respondent
JENNIFER ELIZABETH VAN
GRAAN N.O.
Twelfth Respondent
(as Trustee of the
Godfrey van Graan Family Trust)
MARILYN
ELIZABETH WAISMAN
Thirteenth Respondent
(as Trustee of the
Godfrey van Graan Family Trust)
MARK ALISTAIR
BRADLEY
Fourteenth Respondent
(as Trustee of the
Godfrey van Graan Family Trust)
MASTER OF THE HIGH
COURT
Fifteenth Respondent
JUDGMENT
SMITH
J:
Introduction
[1]
At the heart of this matter lies a bitter family feud between a
mother and her daughters
regarding the management and control of two
family trusts. The deceased patriarch, Mr Godfrey van Graan, was by
all accounts an
astute and accomplished businessman who had amassed a
considerable estate during his lifetime, including two trusts, namely
the
Godfrey van Graan Family Trust (the Family Trust), which he
founded during 1989 and the Gowan Hill Trust, which he acquired
during
1990. He passed away during 2016.
[2]
As he was nearing the end of his life, he set about composing a
‘Letter of Wishes’
wherein he, amongst others, recorded
his wishes for the administration of his estate after his death. With
commendable meticulousness
and sensitivity, he gave directives for
the management of his various businesses and the family trusts, and
imparted words of wisdom,
sagaciously encouraging his family always
to ‘save part of what you earn for a rainy day’. At first
glance then the
epistle is an instructive and perhaps even moving
farewell by a man who had done everything in his power to ensure that
his family
would be well taken care of after his death. But, then an
incongruously harsh statement intrudes into the aura of beneficence
and
magnanimity that otherwise permeates the letter. Regrettably, it
seems that Mr van Graan had succumbed to that most basic and
chauvinistic
instinct that impels men to devise schemes aimed at
controlling their surviving spouses from beyond the grave. For, he
declares
with unexpected ferocity that in the event of his wife
remarrying or finding another romantic partner, she will ‘immediately
lose half of what is allocated to [her]’ and will have to move
out of their house. It is hardly surprising then that
when Mrs
Jennifer van Graan eventually did meet someone else, this unfortunate
statement would either precipitate or aggravate
an internecine enmity
between her and one of her daughters, Mrs Marilyn Waisman, rendering
the family trusts dysfunctional and
threatening to destroy the very
legacy that he had worked so hard to establish.
[3]
When it had become clear that the hostilities between her and Mrs
Waisman had deteriorated
to the extent that it imperils the
functioning of the trusts, Mrs van Graan instituted proceedings for
an order,
inter alia
, removing her and Mrs Waisman as trustees
of both trusts and appointing three independent trustees in their
stead. The application
was opposed by Mrs Waisman and her two
sisters, the second and third respondents, as well as other
beneficiaries, being the sixth
to ninth respondents.
[4]
Mrs Waisman, supported by the second to ninth respondents, brought a
counter -application
seeking,
inter alia
: (a) the removal of
Mrs van Graan as a trustee; (b) appointment of herself, the second
and third respondents, as well as her other
sister, Mrs Bernice
Dickie, as trustees; and (c) the appointment of an independent
trustee by the Master. The counter-application
was opposed by Mrs van
Graan and Mrs Dickie. Mrs Waisman also applies for certain portions
of Mrs Dickie’s opposing affidavit
to be struck out on the
basis that they constitute irrelevant and vexatious matter or
inadmissible hearsay evidence.
[5]
Mrs van Graan’s application is grounded in the contention that
the enmity between
her, on the one hand, and Mrs Waisman and her
other siblings on the other, ‘runs so deep that the court’s
assistance
is necessary to ensure that the two trusts, around which
all the disputes revolve, are saved from collapse.’
[6]
The Family Trust deed provides, inter alia for: (a) the appointment
as trustees of
Mr Graan, ‘failing for any reason his wife’,
Mrs Van Graan, their daughter Mrs Carolyn Ann van Graan and an
independent
trustee, one Mr Biggs of Pim Goldby; (b) distribution of
the nett income to beneficiaries; (c) trust resolutions to be taken
by
virtue of joint decisions, and in the event of differences between
the trustees, for disputes to be referred for arbitration; (d)
trustees to keep proper books of account and; (e) the submission of
audited financial statements to all major beneficiaries.
[7]
The current beneficiaries of the Family Trust are Mrs Van Graan, Mrs
Waisman and the
second to ninth respondents. Mrs van Graan and Mrs
Waisman are currently the only trustees, after the resignation of the
independent
trustee, Mr Mark Alistair Bradley, during 2020. The trust
assets, which include an engineering company, are valued between R60
million and R70 million. It is common cause that the last signed
audited financial statements of the Family Trust were approved
in
2018.
[8]
Mrs van Graan and Mrs Waisman are also the only current trustees of
the Gowan Hill
Trust. That trust deed provides,
inter alia
:
(a) for trust resolutions to be passed by majority decision; (b) in
the event of equality of voting, for a dispute to be referred
for
arbitration and; (c) that trustees have discretionary powers to
distribute nett income to beneficiaries.
[9]
The last financial statements of the Gowan Hill Trust were also
approved in 2018,
and they reflect an immovable property valued at
R15 million as the Trust’s only asset.
Mrs
van Graan’s application
[10]
Mrs van Graan contends that the relationship between her and Mrs
Waisman has deteriorated to
the extent that there is no possibility
of its restoration. According to her, the prevailing enmity has
resulted in conduct ‘so
egregious and prejudicial to the
administration of the trusts’ that the removal of the current
trustees is both inevitable
and necessary to avoid a complete
collapse of the trusts.
[11]
She cites a number of instances where communication between her and
Mrs Waisman points to a complete
lack of trust between them and an
irredeemable toxicity that threatens to destroy the trusts. She does
not seek to allocate blame,
and accepts her complicity in the current
impasse, but laments the fact that their relationship ‘had
reached a point of no
return.’ These hostilities are
regrettably not confined to her and Mrs Waisman, but also extent to
her other siblings, who
are now in different camps.
[12]
I do not believe that it is necessary for me to go into the detail of
the unfortunate communications
between mother and daughter, suffice
it to say that the epitaphs that Mrs van Graan has ascribed to them –
namely, ‘disgraceful’,
‘egregious’ and
‘toxic’ - are justified and apposite. They speak not only
to accusations of dereliction
of fiduciary duties, lack of mental
capacity but, more ominously, also of theft and fraud. No wonder then
that the simmering hostilities
have rendered the trusts
dysfunctional.
[13]
Mrs van Graan contends that the inability of her and Mrs Waisman to
communicate meaningfully
has resulted in the trustees not being able
to agree on the finalization of financial statements since 2018.
According to her,
financial record-keeping for both trusts ‘came
to a grinding halt during 2019, after the 2018 statements were
signed’.
In addition, the enmity has led to the freezing of the
trusts’ bank accounts, resulting in the trusts being unable to
make
any payments for a few months.
[14]
She asserts that the situation can only be salvaged by the removal of
both her and Mrs Waisman
as trustees and the appointment of three
independent trustees, namely Mr Parker, the managing director of the
law firm, Rushmere
& Noach, Mr van der Merwe, a chartered
accountant and Mr Wood, a quantity surveyor and expert in the field
of property management.
[15]
In addition, she seeks ancillary relief that will,
inter alia
,
facilitate investigations into the trusts’ financial affairs,
finalization of financial statements and regularization of
the
trusts’ tax obligations.
Mrs
Waisman’s counter-application
[16]
As mentioned, in her counter-application, Mrs Waisman seeks an order
removing Mrs van Graan as
trustee of both trusts, appointing her and
her siblings as trustees and directing the Master to appoint an
independent trustee
for both trusts.
[17]
Mrs Waisman lives and works in the United Kingdom and has been
employed by a commercial and residential
investment company for more
than 25 years. She is also a trustee of two charitable trusts,
positions which she contends have enabled
her to become well-versed
with the fiduciary duties of trustees.
[18]
Deprecating the allegations in Mrs van Graan’s founding
affidavit as ‘emotive invective’
and ‘devoid of
necessary factual averments’, she finds succour in Mr van
Graan’s last will and testament, and
more particularly, the
‘Letter of Wishes’, which she contends explains the
latter’s ‘intention and his
rationale’ in creating
the Family Trust.
[19]
She contends that if regard is had to those documents, it is clear
that the Family Trust deed
exemplifies the fact that Mr van Graan
intended the trusts to be controlled by family members. While the
deed empowers the trustees
to employ or consult professionals where
necessary, it does not empower them to appoint such professionals as
trustees (Clause
7.4.4 of the Family Trust deed). She maintains that
if regard is had to other relevant provisions of the trust deed, it
is manifest
that her father intended that only one independent
trustee should be appointed.
[20]
In respect of the Gowan Hill Trust, she contends that even though her
father was not involved
in the drafting of the trust deed, it is
evident from resolutions adding her, her siblings and Mrs van Graan,
and eventually the
Family Trust, as income and capital beneficiaries;
that her father intended to incorporate also that trust into the
legacy he was
building for his family.
[21]
While conceding that the trusts are dysfunctional, Mrs Waisman
asserts that the situation is
not beyond remedy and that whatever
dysfunctionality there may be is not as a result of a family feud, as
contended by Mrs Van
Graan, but is rather caused by the latter’s
conduct and her complete disregard for her fiduciary duties as
trustee of both
trusts.
[22]
The following are some of the irregularities allegedly perpetrated by
Mrs van Graan. During 2017,
Mrs van Graan unilaterally approved a
loan of R650 000 to herself for the purchase of an immovable
property. The property
was subsequently registered in her name. She
has also actively concealed the transaction. Mrs van Graan allegedly
also attempted
to prevail upon Mrs Waisman to sign a resolution
authorizing her to purchase another property during 2020. Despite the
fact that
Mrs Waisman refused to sign the resolution, Mrs van Graan
nevertheless proceeded with the purchase. She subsequently discovered
that six payments from the Family Trust account, totalling
R1 300 000, were made to attorneys in connection with the
purchase of the immovable property. Mrs van Graan had accordingly
unlawfully utilized trust funds to pay for the property.
[23]
During August 2020, a further amount of some R399 000 was
withdrawn by Mrs van Graan, presumably
to pay the balance of the
purchase price. Mrs van Graan has accordingly acted to the prejudice
of the trust by diminishing its
fixed interest earning investments in
order to fund her own personal acquisitions. She has therefore, in
flagrant breach of her
fiduciary duties, placed her own personal
interest above that of the trust.
[24]
In addition, Mrs van Graan, using outdated Letters of Endorsement
showing removed and deceased
trustees, fraudulently misrepresented
that she was entitled to represent the trusts in dealings with a
security company. This conduct,
Mrs Waisman contends, is another
example of her mother’s flagrant disregard for her fiduciary
duties.
[25]
Mrs Waisman also asserts that her mother has shown poor judgment in
her dealings with her partner,
Mr Parker. She has given him
unauthorized access to highly confidential trust information without
the other trustees’ knowledge
or consent. This is another
indication of her poor judgment when it comes to the affairs of the
trusts. According to Mrs Waisman,
her mother continually demonstrates
a potential to be influenced by others and her acts have served to
imperil trust assets.
[26]
Furthermore, in a letter penned by former trustee Mr Bradley, he
bemoans Mrs van Graan’s
irregular ‘moving significant
monies from one Investment Portfolio to another without knowledge or
consent from all the trustees’.
And in an email that Mr Bradley
addressed to her on 11 March 2020, he expresses his concern for Mrs
van Graan’s lack of regard
for her fiduciary duties as a
trustee.
[27]
Mrs van Graan opposed the counter-application, but curiously elected
not to answer the specific
allegations levelled by Mrs Waisman and
aimed at impugning her suitability to perform her fiduciary duties.
She has instead labelled
the application a ‘guise’ by Mrs
Waisman to take control of the trusts and to run them as her own
fiefdom. She also
asserts that the allegations proffered by the
former in support of the counter-application only serve to
substantiate her contention
that the trusts are dysfunctional and
require the court’s emphatic and effective intervention. To the
extent that material
disputes of fact may have arisen on the papers,
she contends that those should be referred for oral evidence.
Application
to strike out
[28]
As mentioned, the fourth respondent, Mrs Dickie, opposed the
counter-application and filed a
more comprehensive answering
affidavit than that filed by Mrs van Graan. Before I consider the
contents of the affidavit, I must
first deal with the application to
strike out. Mr
Goodman
SC, who acted for the applicants in the
counter-application, has applied to strike out numerous portions of
that affidavit on the
grounds that they constitute unsubstantiated
hearsay evidence or are scandalous, vexatious or irrelevant. In my
view, the impugned
portions indeed fall to be struck out on the
grounds advanced by Mrs Waisman.
[29]
There was some attempt by Mrs Dickie belatedly to file confirmatory
affidavits, but as Mr
Goodman
correctly pointed out, they did
not remedy the defect. Mrs Dickie did not disclose the source of the
hearsay information, neither
did she say how she acquired it. She
also did not apply for the hearsay evidence to be admitted in terms
of
section 3
of the
Law of Evidence Amendment Act, 45 of 1988
or the
common law. Those portions of her affidavit that have been impugned
on this ground accordingly fall to be struck out.
[30]
There can also be little doubt that the impugned scandalous and
vexatious matter are prejudicial
to the applicants in the
counter-application. The proceedings are by their very nature highly
emotionally charged and parties should
be discouraged from
unnecessary emotional assertions which have no factual basis and bear
no relevance to the issues that fall
for decision. Those portions of
the affidavit assailed on this basis accordingly also fall to be
struck out.
Discussion
[31]
The striking out of substantial portions of Mrs Dickie’s
affidavit leaves insufficient
factual challenges to Mrs Waisman’s
allegations in the counter-application so as to raise bona fide
disputes of fact. And
as I mentioned earlier, Mrs van Graan has not
made any attempt to challenge Mr Waisman’s averments regarding
the alleged
breaches of her fiduciary duties. In consequence the
counter-application must be decided on the basis of the allegations
contained
in Mrs Waisman’s affidavit.
[32]
However, having said that, I do not believe that there is any factual
basis for the assertion
that Mrs van Graan has been guilty of theft,
fraud or any unlawful appropriation of trust assets. And I do not
think that Mrs Waisman
herself was genuinely of this view. If she
indeed believed this to be the case she would not have waited until
Mrs van Graan brought
her application before filing a
counter-application for her removal as trustee. The undisputed facts
contained in Mrs Waisman’s
affidavit do, however, establish
that she has, at the very least, been guilty of dereliction of her
fiduciary duties as a trustee.
[33]
Our law demands exacting standards of trustees in their dealings with
trust property, requiring
greater care from a trustee than she might
have shown in dealing with her personal property. A trustee’s
fiduciary
duties require of her ‘in dealing with and investing
the money of the beneficiary, to observe due care and diligence, and
not to expose it in any way to any business risks.’
(
Sackville-West v Nourse
1925 AD 516
, at 533 to 516) When
measured against these exacting standards, Mrs Waisman’s
undisputed imputation of Mrs van Graan’s
conduct, compellingly
points to a negligent disregard of her fiduciary obligations as a
trustee.
[34]
A court may remove a trustee, both in terms of the provisions of the
Trust Property Control Act,
57 of 1988 (the Act) or in terms of its
inherent common law powers. Section 20 (1) of the Act provides as
follows:
‘
A trustee may, on
the application of the Master or any person having an interest in the
trust property, at any time be removed from
his office by the court
if the court is satisfied that such removal will be in the interest
of the trust and its beneficiaries.’
[35]
The power to remove a trustee must be exercised with circumspection,
the primary consideration
being to ensure that the trust remains
functional and that trust property is not imperilled. (
Gowar and
Another v Gowar and Others
2016 (5) SA 225
(SCA) Thus a trustee
may be removed from office, even though she is not guilty of
misconduct or has not acted maliciously, if her
continued tenure as a
trustee will endanger trust property. The mere existence of enmity
between trustees is not in itself a ground
for removal, the test
being ‘whether such disharmony as exists imperils the trust
estate and its proper administration. (
Tijmstra N.O. v
Blunt-Mackenzie
2002 (1) SA 459
(TPD)
[36]
In appointing a trustee, the court, while striving to achieve a
harmonious body of trustees,
enjoys a wide discretion, the overriding
consideration being the best interests of the trust and the
beneficiaries. While the court
will take into account objections to a
particular appointment, it is not an overriding consideration and may
be outweighed by other
factors. (
Port Elizabeth Assurance Agency v
Estate Richardson
1965 (2) SA 936
(C), at para 122)
[37]
I am of the view that the evidence clearly establishes that the
current enmity between the parties
has rendered the trusts
dysfunctional and is thus imperilling their proper functioning as
well as the trust assets. Moreover, the
parties are
ad idem
that there is a need for the court to intervene emphatically in order
to break the impasse. The only question is whether it should
be done
on the basis contended for by Mrs van Graan or by virtue of the
solution proffered by Mrs Waisman in her counter-application.
As
mentioned earlier, the fact that Mrs Waisman’s allegations
regarding Mrs van Graan’s failings as a trustee remain
unchallenged, compels me to order her removal in terms of section 20
(1) of the Act.
[38]
I am, however, not convinced that the order sought by Mrs Waisman
will be in the best interests
of the trusts or all the beneficiaries.
While Mrs Waisman is clearly not short of confidence and
unapologetically promotes herself
as the solution to all the trusts’
ills, one cannot help but fear for Mrs van Graan if she were allowed
free rein to control
the trusts, as she clearly intends to do. It is
manifest that she has nothing but disdain for her mother. Apparently
spurred on
by her father’s unfortunate declaration in the
‘Letter of Wishes’ regarding the consequences for Mrs van
Graan
if she were to find another partner, she brazenly denigrates
her mother’s ability to act independently of Mr Parker and
patronizingly
and unfairly seek to portray her as a naive,
love-struck woman who will blindly compromise trust assets at the
former’s behest.
An order in the terms sought by her would
therefore only aggravating matters.
[39]
I also do not agree with Mrs Waisman’s contention that the
Family Trust deed envisages
that there must be only one independent
trustee at any point in time. In my view this construction of the
deed is contrived and
self-serving. Clause 3 thereof provides in
explicit terms that ‘the Trustees by majority shall be entitled
to revoke the
appointment of any Trustee and to appoint other
Trustees in addition to or in substitution of the Trustees then in
office.’
It is also instructive that Clause 7.4.8 of the deed
provides for the ‘compensation of attorneys and accountants
appointed
as Trustees.’ Mrs Waisman’s contention that the
words in Clause 7.4.9, to the effect that ‘any person being a
Trustee under this Deed and being a person engaged in any profession
or business or any firm’ denote an intention to have
only one
independent trustee is not sustainable and is fundamentally
irreconcilable with the very explicit provisions of the deed.
In any
event, under the common law, I am entitled to substitute one trustee
for another even if the trust deed does not sanction
it. I am
accordingly satisfied that I am entitled to appointment more than one
independent trustee if I consider such appointments
to be in the best
interests of the trusts and the beneficiaries. And in the light of
the fact that Mrs van Graan will no longer
be a trustee, I think it
will be necessary to appoint at least two independent trustees in
order to discourage any inclination
on the part of the family
trustees to take decisions out of vindictiveness. While there may
understandably be some concern about
Mr Parker’s impartiality
given his relationship with Mrs van Graan, there can be no reasonable
objections to the other two
names proposed by Mrs van Graan. They are
both highly skilled and experienced professionals and I have no doubt
that they will
carry out their fiduciary duties as trustees
impartially and to best of their abilities.
Costs
[40]
Insofar as the issue of costs is concerned, I think the appropriate
order would be for the trusts
to be bear all the costs occasioned by
both the main application and the counter-application. I do not agree
with Mr
Woodman’s
submission that Mrs van Graan’s
application and Mrs Dickie’s opposition to the
counter-application were ill-advised
and deserving of adverse costs
orders. In my view, they were both motivated by a bona fide desire to
find a judicially sanctioned
solution for an impasse that poses a
serious threat to the continuation of the trusts.
Order
[41]
In the result the following order issues:
1.
Those portions of the Fourth Respondent’s answering affidavit
mentioned in the First Respondent’s
application to strike out,
are hereby struck out.
2. The
Third Applicant, Jennifer van Graan, is hereby removed from her
office as trustee of the Godfrey van Graan
Family Trust (Master’s
reference T[...]) and the Gowan Hill Trust (Master’s Reference
T[...]) (the Trusts), with immediate
effect.
3. The
following persons are hereby appointed as trustees of both Trusts:
(a) Carolyn Anne
Johnson (the Second Respondent);
(b) Sandra Lee
Bosch (the Third Respondent);
(c) Bernice Rosslyn
Dickie (the Fourth Respondent);
(d) Mr J P van der
Merwe of Bradley & van der Merwe Chartered Accountants; and
(e) Mr M J Wood of
Bloch Quarmby Higgs & Partners.
4. The
persons mentioned in paragraph 3 must, within 10 (ten) days from the
date of this order, accept the appointments
in writing, comply with
all relevant statutory requirements and submit the necessary
documents to the Master of the High Court.
5. The
Master of the High Court is directed to issue Letters of Authority to
the persons mentioned in paragraph
3 within 30 (thirty) days from the
date on which they have complied with the requirements mentioned in
paragraph 4.
6. The
Godfrey van Graan Family Trust shall be liable to pay the costs of
the main application and the counter-application
on the party and
party scale.
JE
SMITH
JUDGE
OF THE HIGH COURT
Appearances:
Counsel
for the Applicants:
Adv.
DJ Coetsee
Millers
Inc.
C/o
Netteltons Attorneys
118A
High Street
MAKHANDA
(Ref.:
Ms. I Pienaar/Sam)
Counsel
for the Respondents:
Adv.
RG Goodman SC
(First,
Second, Third, Sixth,Seventh, Eighth & Ninth)
Smith
Attorneys
C/o
Neville Borman & Botha Attorneys
22
Hill Street
MAKHANDA
(Ref.:
Mr. Powers)
Counsel
for the Fourth Respondent:
Adv.
DA Smith
Louise
Bain Incorporated
C/o
Netteltons Attorneys
118A
High Street
MAKHANDA
(Ref.:
Ms. I Pienaar)