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[2022] ZAECELLC 39
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M.H obo H.J.W and Another v R.W.W and Others (EL 139/2020) [2022] ZAECELLC 39 (13 December 2022)
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Certain
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IN THE HIGH COURT OF
SOUTH AFRICA
(EAST LONDON CIRCUIT
COURT)
CASE NO.: EL139/2020
Heard on: 6 October
2022
Delivered
on: 13 December 2022
In
the matter between:
M[...]
H[...]
First Applicant
In
her representative capacity as mother and legal guardian of
H[…]-J[…]
W[…]
A[…]
T[…] W[…]
M[...]
H[...]
Second Applicant
and
R[...]
W[...] W[...] N.N.O
First Respondent
F[...]
E[...] W[...] N.N.O
Second Respondent
M[...]
P[...] N.N.O
Third Respondent
THE
W[...] FAMILY TRUST
Fourth Respondent
THE MASTER OF THE HIGH
COURT
OF
SOUTH AFRICA, EASTERN CAPE
Fifth Respondent
CONLON AND ASSOCIATES
INCORPORATED
Reg
no:
2[…] Sixth
Respondent
JUDGMENT
MOLONY
AJ
:
Introduction
[1]
The first applicant in this matter has
approached this court in her capacity as the mother and legal
guardian of the two minor children
listed above (‘the minor
children’).
[2]
The second applicant in this matter is the
first applicant, in her personal capacity. The second
applicant’s personal
interest, according to the founding
affidavit, is due to the fact that she is a creditor of the fourth
respondent (‘the trust’).
The second applicant
furthermore points out that she is the listed ‘donor’ of
the trust. The applicants will
hereafter be referred to
collectively as ‘H[...]’.
[3]
The first respondent (‘W[...] ’)
is cited in his capacity as a trustee of the trust. W[...] and
H[…] were
married, but divorced on 5 December 2017. The
minor children were born of the marriage between W[...] and H[…].
[4]
The second respondent is cited in her
capacity as a trustee of the trust. The second respondent
(‘F[...] W[...] ’)
is W[...] ’s mother.
[5]
The third respondent is cited in her
capacity as a trustee of the trust. The third respondent
(‘P[...]’) is involved
in a relationship with W[...] .
The aforementioned trustees will, when referring to them
collectively, be referred to as
‘the trustees’.
[6]
The fourth respondent is the trust, duly
incorporated in terms of the Trust Property Control Act 57 of 1988
(‘the Trust Act’),
and registered with the Master of the
Eastern Cape High Court, Grahamstown/Makhanda, under IT3[…].
[7]
The fifth respondent is the above-mentioned
Master of the High Court (‘the Master’). No relief
is sought against
the fifth respondent.
[8]
The sixth respondent (‘the company’)
is a company which was involved in the transfer of certain immoveable
property
which led to the application in this matter.
Relevant
background
[9]
The trust was established in 2011.
The relevant trust deed (with addendums) records the primary object
of the trust as being
to ‘
serve as
a family trust’.
[10]
H[…], W[...] and the minor
children were listed as beneficiaries in the trust deed.
[11]
H[...] is recorded as being the ‘donor’
in the trust deed, having donated an amount of R 100.00 as part of
establishing
the trust.
[12]
The independent trustee, at the time the
trust was established, was Birch Bruce Administration Close
Corporation (‘the CC’),
as represented by Eugene Samuel
George Birch.
[13]
The donor (i.e. H[...]), W[...] , and the
above-mentioned CC, are collectively referred to as ‘the
parties’ in the trust
deed.
[14]
H[...] is the primary care-giver of the two
minor children, who reside with her.
[15]
H[...] and W[...] , during the course of
their marriage, purchased various immoveable properties, game and
cattle, and it was agreed
that the various properties be placed in a
trust, which led to the establishment of the trust.
[16]
H[...] and W[...] disagree in regard to the
intention behind establishing the trust. H[...] avers that it
was established
for the benefit of the minor children, and for their
expenses to come from or out of the trust.
[17]
W[...] avers that the intention was for the
trust (which had certain tax benefits, and which would protect the
relevant properties
from being sold should H[...] or W[...] face
insolvency proceedings) to only be used for the minor children’s
benefit
when H[...] and W[...] passed away. W[...] denies that
it was intended that the trust be utilized to meet the everyday
expenses
of the minor children, but was to protect the relevant
properties in case he or H[...] were declared insolvent or bankrupt.
[18]
In
2013, and in order to give effect to the ruling in the matter of
Potgieter
v Potgieter NO and Others,
[1]
the
trust deed was amended to
inter
alia
reflect H[...], W[...] and the two minor children as being
beneficiaries who had accepted benefits under the trust, and who were
accordingly required to co-sign the amendment.
[19]
When H[...] and W[...] divorced on 5
December 2017, the order included that they were to determine the
difference in the accrual
between their respective estates.
[20]
H[...] and W[...] signed a deed of
settlement containing agreement in regard to the immoveable
properties acquired during the subsistence
of the marriage, pursuant
to the above-mentioned order, on 29 April 2019.
[21]
The deed of settlement confirmed that the
parties had acquired three immoveable properties (a house in
Cambridge, East London, and
two farms) during the course of the
marriage.
[22]
The deed of settlement set out that the
house in Cambridge (‘the 8[…] H[…] Street
property’), which was
registered in the name of both H[...] and
W[...] , would be retained by H[...] as her sole and absolute
property, and dealt with
the practicalities of implementing such
agreement.
[23]
The deed of settlement stated, at paragraph
1.6 thereof, that:
‘
It
is recorded that the two farms shall be retained by the Defendant.
Farm 1[…], East London is registered in the name
of the W[...]
Family Trust. The T[…] Farm has been acquired and is
also registered in the name of the W[...] Family
Trust.’
And
at paragraph 1.9:
‘
On
transfer to the Plaintiff of the Defendant’s undivided half
share in 8[…] H[…] Street, Cambridge, East London,
the
Plaintiff shall resign as a Trustee of the W[...] Family Trust
and shall waive all rights that she might have to the
Trust as a
beneficiary. The Plaintiff undertakes to sign all documentation
necessary to give effect to the provisions of
this clause within
seven (7) days of the date of being requested to do so. Should
the Plaintiff fail to sign the documentation,
the parties irrevocably
authorize the Sheriff of the High Court, East London to sign all and
any documentation necessary to give
effect to the provisions of this
clause.’
And
at paragraph 2.4:
‘
The
Plaintiff warrants to the Defendant that she has remarried, out of
community of property, and excluding the provisions of accrual.
Should the Plaintiff remarry (in the future) the Plaintiff, and
furthermore the Defendant (should he remarry) agree that it is
their
intention that if any of the properties are sold, the proceeds, or
any other property or any other asset which is acquired
with the net
proceeds will remain the exclusive the (sic) property of the
Plaintiff or the Defendant (as the case may be).
Both Plaintiff
and Defendant intend to provide for their daughters from the proceeds
of the sale of the properties on their death.’
[24]
Whilst paragraph 2.4 is somewhat confusing
in regard to whether or not H[...] has in fact remarried, or if this
clause was intended
to refer to future marriages only, nothing turns
on this.
[25]
Paragraph 2.2 of the deed of settlement
allowed for either party to approach the High Court for the agreement
to be made an order
of court. It does not appear, from the
papers, that the deed of settlement was ever made an order of court.
[26]
H[...] duly resigned as a trustee, as did
the independent trustee. The papers do not disclose whether or
not H[...] was ever
called upon to sign any documentation waiving her
rights as a beneficiary.
[27]
During
2019 H[...]
[2]
launched an
urgent
ex
parte
application
under case no.: EL1462/2019 (’the first application’),
requesting
inter
alia
an
interdict against W[...] , F[…] W[...] and P[…],
in their capacity as trustees of the trust, from selling
one of the
above-mentioned immoveable properties.
[28]
It was also sought that the purchase price
(of R 650 000.00) be deposited into H[...]’s attorney’s
trust account,
and that F[…] W[...] be interdicted from
withdrawing, utilizing or dissipating the aforementioned amount, in
the event
that such amount had already been paid into F[...] W[...]
’s bank account, pending finalization of the application.
[29]
The first application was in two parts,
with part A being reflected above, whilst part B requested that the
dispute-allegation of
breach of trust by the respondents be referred
to and dealt with at arbitration (in terms of clause 34 of the Trust
Deed).
[30]
On 13 December 2019, Toni AJ granted a rule
nisi
in
the first application, calling upon the respondents to show cause by
7 January 2020 as to why the relief sought in part A should
not be
made final.
[31]
On 18 December 2019 the respondents filed
opposing papers, and anticipated the return date.
[32]
The matter was then heard by Pakati J on 19
December 2019, with judgment being delivered on 28 January 2020.
The rule
nisi
was confirmed, with F[...] W[...] being interdicted from
withdrawing, utilizing or dissipating the aforementioned amount,
as
it appeared the amount in question had already been paid into her
account.
[33]
The
judgment of Pakati J was later taken on appeal and overturned, by a
full bench of this division, on 10 August 2021.
[3]
A reading of the judgment (written by Mbenenge JP, with Brooks J and
Gqamana J concurring) demonstrates that the judgment
of Pakati J was
set aside primarily due to the fact that the relevant order was
granted under the following circumstances:
[4]
(a)
A rule
nisi
(returnable on a particular day) was sought on an
ex
parte
basis.
(b)
The rule
nisi
(which was part A of the application), along with interim relief, was
requested pending the outcome of part B. At the time
the
application was launched there was no part B in the notice of
motion. An ‘extended notice of motion’ had
been
filed shortly thereafter.
(c)
Pakati J, in reaching the final decision,
accepted the ‘extended notice of motion’. In this
regard, it was held,
Pakati J erred, as no appropriate application
for leave to amend the notice of motion had been launched, and the
opposing parties
were unduly prejudiced.
[34]
In addition to the above, and in the
context of determining an appropriate order of costs, the full bench
was of the view that H[...],
in not disclosing the contents of the
settlement agreement in the divorce proceedings, had failed in her
duty to disclose all material
facts in pursuit of her
ex
parte
application. The
aforementioned failure was considered lamentable, and was part of the
reason why a punitive costs order
was granted against H[...].
[35]
On 3 February 2020 H[...] launched the
current application (‘the second application’) in two
parts. Part A, which
was
inter
alia
to interdict and restrain the
payment of the proceeds of the sale of Farm 1[…], K[…]
B[…] (‘the K[…]
B[…] property’)
pending the outcome of a dispute to be referred to arbitration to
remove W[...] , F[...] W[...] and
P[...] as trustees of the
trust, alternatively the dissolution of the trust and the
distribution of the trust proceeds and assets
by payments to H[...].
[36]
Part B of the second application simply
seeks an order that H[...], along with W[...] , F[...] W[...] and
P[...], attend and/or
refer the dispute regarding the management of
the trust to arbitration in terms of clause 34 of the Trust Deed and
that the arbitration
award be made an order of court, in order to
enforce compliance therewith.
[37]
Costs are sought against W[...] , F[...]
W[...] and P[...] in regard to part A and part B of the
application on an attorney
and client scale, with such costs to
include the costs of counsel.
[38]
The
relief sought in part A was ultimately granted by Mjali J.
[5]
Leave to appeal was sought, and refused. It appears that prior
to the matter being argued, an agreement was struck
that the proceeds
of the sale would remain in the company’s trust account pending
the outcome of the second application.
[39]
This judgment is accordingly only concerned
with part B of the second application.
Part
B of the second application
[40]
H[...] maintains that, as in case number,
EL1462/2019, W[...] , F[...] W[...] and P[...] have acted in a
manner which is inconsistent
with the provisions of the trust deed as
well as the governing provisions of the Trust Act.
[41]
H[...] notes,
inter
alia
, that the deed of alienation of
property in regard to the K[...] B[...] property, was concluded on 24
October 2019. It is
not in dispute that the relevant
endorsement from the Master, authorizing F[...] W[...] and
P[...] to act as trustees of
the trust, was only issued on 9 December
2019.
[42]
In W[...] , F[...] W[...] and
P[...]’s view, this is immaterial as transfer of the property
has yet to take place.
Annexure ‘K’ to the founding
affidavit is an extract from a minute of a meeting (no date is
disclosed) between W[...]
, F[...] W[...] and P[...], in their
capacity as trustees, in which they
inter
alia
resolve that the K[...] B[...]
property may be sold in accordance with the relevant sale agreement,
and that the trust ratifies
and adopts as valid any documentation
already signed and acts performed by any of the trustees in
connection with the sale of the
aforementioned property.
[43]
W[...] avers that the proceeds of the
sale of the K[...] B[...] property have not been paid out to him in
his personal capacity.
It appears that W[...] was, due to
the settlement agreement in the divorce between H[...] and W[...] ,
under the impression
that he was lawfully permitted to utilize the
monies generated by the sale of the relevant trust properties, for
private use.
[44]
It
appears that the original intention (as reflected in annexure ‘RA2’
to H[...]’s first replying affidavit) was
for the balance of
the proceeds of the sale to be paid into F[...] W[...] ’s
personal bank account.
[6]
Annexure ‘RA2’ is a document titled ‘Authority by
Seller’, and is dated 10 December 2019.
[45]
W[...] avers that the monies in question
can still be transferred to the trust, whereafter the trustees could
resolve to allow W[...]
to utilize the proceeds. W[...] denies
any contravention of the provisions of the trust deed or the Trust
Act.
[46]
W[...] denies that the minor children are
prejudiced as he has been paying the necessary maintenance, and both
he and H[...] have
been caring for the minor children.
[47]
In a supplementary answering affidavit,
W[...] further alleged that the trust account of the trust (which was
ostensibly with Nedbank)
was not in fact a trust account, but a
savings account, registered by ‘Birch Trust t/a Birch Bruce Fin
Serv’, which
was also the only signatory to the relevant
account.
[48]
H[...] denied any impropriety in regard to
the above and, in reply (as annexure ‘RA3’ to her first
replying affidavit),
provided a statement from the Nedbank account
(which is a ‘corporate saver’ account) for the period 1
March 2013 to
28 February 2014, and which appears to show various
deposits being placed into the account by W[...] , along with various
payments
being made in regard to the minor children.
[49]
Various arguments were advanced in regard
to the import of the above, and various allegations of dishonesty on
the part of H[...]
as well as the relevant respondents were made.
[50]
In
my view, the central issue in this matter is whether or not H[...]
has the right to refer the dispute with the trustees to arbitration
in terms of clause 34 of the trust deed, or if she is required
instead to exercise whatever alternative remedies are available
(for
example via the Trust Act).
[7]
Analysis
[51]
Clause 34 has the heading ‘Informal
Arbitration’, and the relevant sub-paragraphs (34.1 and 34.2)
state as follows:
‘
34.1
Any difference or dispute between the parties in connection with the
interpretation or application of the provisions of this
trust deed or
its termination shall be referred to and be determined by informal
arbitration in terms of this clause.
34.2
Any party to this trust deed may demand that a dispute be determined
in terms of this clause by written notice given to the
other party
(ies).’
[52]
H[...], in essence, seeks to have the issue
of whether or not the trustees have breached their fiduciary duties
determined by way
of arbitration.
[53]
Mr Cole, who appeared for W[...] , F[...]
W[...] and P[...], invited me to conclude that, given the
decision of the full bench
in the first application, H[...] has not
approached this court with clean hands, as she did not specifically
disclose the settlement
agreement in the founding affidavit.
[54]
Mr Bothma, who appeared for H[...],
submitted that the first application was a different matter, which,
unlike the second application,
involved relief sought
ex
parte
. He submitted that the founding
affidavit in the second application was signed prior to the full
bench judgment in the first application
being delivered.
[55]
W[...] , F[...] W[...] and P[...] allege
that H[...] does not have
locus standi
to launch the second application, as, in accordance with the
settlement agreement, she is no longer a trustee and has waived all
rights she may have had as a beneficiary. The minor children, it was
submitted, remain as possible future beneficiaries, to be
selected at
the whim of the current trustees, who have a wide and unfettered
discretion. The minor children have no real
rights in the trust
property, and have no part of the trust property vested in them.
The existing trustees ratified the sale
of the K[...] B[...]
property.
[56]
Mr
Bothma relied on three authorities in countering the above, those
being
Gross
and Others v Pentz
,
[8]
Potgieter
and Another v Potgieter NO and Others
,
[9]
and
Griessel
NO and Others v De Kock and Another
.
[10]
[57]
He submitted, relying on the
Potgieter
matter, that the minor children (represented by their parents, who
were the donor as well as two of the trustees) had (similar
to the
circumstances in the
Potgieter
matter) accepted benefits and accordingly become parties to the
contract that was the trust deed.
[58]
In
the
Potgieter
matter, the following is stated:
[11]
‘
As
I see it, the legal principles that find application are well settled
and I did not understand any of the parties to contend
otherwise. I
believe these principles can be formulated thus: a trust deed
executed by a founder and trustees of a trust for
the benefit of
others is akin to a contract for the benefit of a third party, also
known as a
stipulatio
alteri
.
In consequence, the founder and trustee can vary or even cancel the
agreement between them before the third party has accepted
the
benefits conferred on him or her by the trust deed. But once the
beneficiary has accepted those benefits, the trust deed
can only
be varied with his or her consent. The reason is that, as in the case
of a
stipulatio
alteri
,
it is only upon acceptance that the beneficiaries acquire rights
under the trust (see, for example,
Crookes
NO and Another v Watson and Others
1956
(1)
SA
277
(A)
at
285F;
Ex
parte Hulton
1954
(1)
SA
460
(C)
at
466A – D;
Hofer
and Others v Kevitt NO and Others
1998
(1)
SA382
(SCA)
([1997]
4 All
SA
620)
at 386G – 387E; Cameron, De Waal, Kahn, Solomon &
Wunsh
Honoré:
South African Law of Trusts
5
ed (2002) para 304).’
And
further:
[12]
‘
I
do not think it can be gainsaid that at the time of the variation
agreement on 21 February 2006, the appellants enjoyed no vested
rights to either the income or the capital of the trust. They
were clearly contingent beneficiaries only. But that does not
render
their acceptance of these contingent benefits irrelevant. The
respondents referred to no authority that supports any proposition
to
that effect and I cannot think of a reason why that would be so. The
import of acceptance by the beneficiary is that it
creates a
right for the beneficiary pursuant to the trust deed, while no such
right existed before. The reason why, after that
acceptance, the
trust deed cannot be varied without the beneficiary's consent, is
that the law seeks to protect the right thus
created for the first
time. In this light, the question whether the right thus created is
enforceable, conditional or contingent
should make no difference.
The only relevant consideration is whether the right is worthy
of protection, and I have no doubt
that it is. Hence, for example,
our law affords the contingent beneficiary the right to protect his
or her interest against maladministration
by the trustee (see
Gross
and Others v Pentz
1996
(4)
SA
617
(A)
([1996]
4 All
SA
63)
at 628I – J).’
[59]
The above is reflected in the fact that the
minor children were required to sign the amendment to the trust deed
that catered for
the decision in the
Potgieter
matter, as well as any future amendments.
[60]
Mr Bothma submitted further that the minor
children (represented by their mother), as contingent beneficiaries,
had the necessary
rights in this matter.
[61]
He referred to the
Gross
matter, in which the following is conveniently summarized in the
headnote:
‘
In
its decision as to whether a contingent beneficiary of a trust (viz
one who had merely a contingent interest in both the future
income
and the capital thereof) had
locus
standi
to
institute action against a co-trustee for maladministration amounting
to breach of trust and resulting in pecuniary loss
to the trust
estate, the Court made,
inter
alia
,
the following observations: The general rule of our law was that the
proper person to act in legal proceedings on behalf
of a
deceased estate was the executor thereof: a beneficiary normally had
no standing to do so, and the same principle applied
to a trustee
appointed in terms of a testamentary trust. (At 625A/B-E,
paraphrased.) A distinction had to be drawn, however, between
actions
brought
on
behalf of the trust
,
for instance, to recover trust assets or nullify transactions entered
into by the trust (representative actions) and actions brought
by
beneficiaries
in
their own right
against
a trustee for maladministration or for failing to pay or transfer to
beneficiaries what is due to them under the trust (direct
actions).
The general rule could clearly apply only to representative actions.
(At 625E-H.) Because a delinquent trustee could
not be expected to
sue himself, the general rule did not apply in such cases.
Consequently, beneficiaries had
locus
standi
to
claim restoration to the trust of loss caused by the negligence
of the trustees. (The rule in
Beningfield
v Baxter
(1886)
12 AC 167.)
(At 627H/I-I and 628G.) Contingent beneficiaries (viz
those who have no vested interest in the future income or
the
corpus
of
the trust) did have a vested interest in the proper administration of
the trust and should also be able to avail themselves
of a
representative action in terms of the
Beningfield
exception.
(At 628I-J.)’
[62]
In
reaching the above conclusions, it was stated in the
Gross
matter
[13]
that:
‘
In
my view, the
Beningfield
exception
should be recognised and the general rule modified to this extent.
Clearly a defaulting or delinquent trustee cannot
be expected to sue
himself. The only alternative to allowing the
Beningfield
exception
would be to require the aggrieved beneficiaries to sue for the
removal of the trustee and the appointment of
a new trustee as a
precursor to possible action being taken by the new trustee for the
recovery of the estate assets or other relief
for the recoupment of
the loss sustained by the estate. This, in my opinion, would impose
too cumbersome a process upon the aggrieved
beneficiaries.’
[63]
Mr Bothma also referred to H[...]’s
status as a party to the trust deed due to her being the ‘donor’
as recorded
in the trust deed.
[64]
He submitted that a trustee’s
discretion is never entirely unfettered, as trustees are still
required to comply with their
fiduciary duties.
[65]
He
submitted that (similar to the
Griesel
matter) H[...] is alleging that there has been a breach of the
trustees’ fiduciary duty, in that they apparently exercised
their power and sold the K[...] B[...] property, with the intention
to of giving all of the proceeds to W[...], to the exclusion
and
prejudice of his daughters. Whether or not this had in fact
occurred and how the settlement agreement in the divorce
(given that
it was a private agreement between two individuals
[14]
)
affected the situation were issues to be determined at arbitration.
H[...] had approached the court to enforce contractual
rights to
refer the matter to arbitration.
[66]
In addition to the above, the proper
interpretation of the wording of clause 34 of the trust deed was in
dispute.
[67]
Mr Bothma submitted that on a proper
(commercially practical) interpretation of clause 34.1, it included
disputes relating to administration
of the trust.
[68]
Clause 34.1, in contrast, catered for
further disputes which would not fall under clause 34.1. If it
did not, then clause
34.2 would essentially be redundant.
[69]
This was demonstrated, he submitted,
inter
alia
by the fact that clause 34.1 made
it obligatory (the word ‘shall’ is utilized) to refer a
dispute falling under that
clause to be referred to arbitration,
whilst clause 34.2 (which used the word ‘may’) allowed
for a discretion in regard
to other types of disputes, which did not
fall under clause 34.1.
[70]
Mr Cole disagreed with the above,
submitting that clause 34.2 was simply the manner in which the
proceedings contemplated in clause
34.1 would be implemented.
He submitted that nowhere in the founding affidavit was any case made
out regarding what was in
dispute, as no dispute was raised in regard
to an interpretation of the trust deed, or regarding the application
of the provisions
of the trust, or regarding the termination of the
trust. Issues in regard to the management of the trust (when
there was
no disagreement between the trustees themselves) did not
fall under clause 34.1. He submitted that the settlement
agreement
necessarily implied that the trustees were expected to
resolve to pay the proceeds of the sale of the relevant farm to
W[...].
[71]
Mr Cole submitted further that the second
application was futile, as the existing trustees could, in any event,
resolve to terminate
the trust and distribute the benefits to W[...].
[72]
In my view H[...], in her representative
capacity as mother and legal guardian of the minor children has the
necessary
locus standi
to uphold their best interests, which in this instance involves
inter
alia
their rights as beneficiaries, and
relates to a dispute as to whether or not W[...] , F[...] W[...] and
P[...] are managing the
affairs of the trust in accordance with the
provisions of the trust deed, in accordance with their fiduciary
duties, as well as
in accordance with the Trust Act.
[73]
In terms of the trust deed itself, H[...],
in her capacity as donor, is a party to the trust deed.
[74]
The
fact that W[...] sold the relevant property, ostensibly for his
own benefit, at a time when he was the sole appointed
trustee, does,
prima
facie
appear to be
ultra
vires
.
[15]
The fact that he did so apparently pursuant to the terms of a
settlement agreement in a divorce, when there was no
accompanying
resolution from the relevant trustees at the time, similarly
prima
facie
appears
to be
ultra
vires
(this
view was shared by Mjali J when deciding part A of this
application)
.
[16]
In my view these are issues which should be determined at
arbitration.
[75]
Clause
34.1 states that a difference or dispute between the parties,
inter
alia
relating to the application of the provisions of the trust deed,
shall be referred to and be determined by informal arbitration.
A sensible interpretation
[17]
of
the aforementioned would clearly include a dispute relating to the
management of the trust as such management would involve the
trustees
engaging in their duties which would require them to apply the
provisions of the trust deed.
[76]
It is notable that the word ‘party’
is used in clause 34.1 (as opposed to ‘trustee’) which,
as defined in
the trust deed, includes the donor (that being H[...]).
[77]
Clause 34.2, in my view, sets out how the
relevant party may invoke clause 34.1.
[78]
Clause 34.1 also refers to disputes
relating to termination of the trust and so, to the extent that the
trustees may attempt to
terminate the trust in order to thwart any
arbitration process, such dispute may be dealt with at arbitration.
[79]
Clause 34.10 of the trust deed makes
provision for the decision of the arbitrator to be made an order of
court by any party at the
cost of such party, and so, depending on
the outcome of such arbitration, such remedy is already available to
the parties.
Costs
[80]
In regard to the issue of costs, the
relevant parties, in their papers, requested a punitive costs order,
alleging various instances
of wrongdoing.
[81]
Whilst the views of the full bench in the
first application were not favourable in regard to H[...]’s
conduct, I cannot overlook
that the context in that matter involved
an
ex parte
application. The papers in that matter are not before me.
[82]
This matter (the second application) was
not launched on an
ex parte
basis, and the relevant parties had opportunity to ventilate the
relevant issues. H[...] annexed the judgment of Pakati J
(which
refers to the settlement agreement in the divorce) to the founding
papers, but made it clear that she does not view the
background
relating to the ongoing maintenance and other legal issues between
W[...] and herself as being relevant to this application.
It
therefore cannot be, in my view, said that H[...] attempted to
mislead this court in this regard in the second application.
[83]
W[...] , F[...] W[...] and P[...], in
keeping with their stance that they have not contravened any
provisions of the trust deed
or the Trust Act, and that H[...] did
not have the
locus standi
to approach this court, were entitled to oppose this application.
[84]
Given the above there is no reason, in my
view, why the costs in this matter should not follow the result.
Order
In
the result the following order is made:
(a)
The applicants and the first, second and
third respondents are to attend and/or refer the dispute regarding
the management of the
trust to arbitration in terms of clause 34 of
the trust deed.
(b)
The first, second and third respondents are
to pay the costs of part B of this application.
N MOLONY
ACTING
JUDGE OF THE HIGH COURT
On behalf of the
applicants: Mr Bothma
Instructed by:
Makaula Makaula Inc.
134
Windyridge Road
Parkside
EAST
LONDON
Tel:
083 375 9804
Email:
nrmakaula14@yahoo.com
On behalf of the
first, second
and
third respondents:
Mr Cole SC
Instructed
by:
Raymond Simms Inc.
2
RJ Masters Place
Greenfields
EAST
LONDON
Tel:
079 815 6403
Email:
raymondsimmsinc@gmail.com
[1]
2012
(1) SA 637 (SCA).
[2]
She
launched the above-mentioned application in her representative
capacity as mother and legal guardian of the two minor children.
[3]
See
Russel
Wayne Webber N.O. and Others v Megan Hein (as representative of
Hannah and Ashely Webber)
Appeal Case No.: CA221/2020, Eastern Cape Division, Grahamstown,
delivered on 10 August 2021.
[4]
Supra
at
paras 1 – 17; paras 21 – 22 and paras 26 – 36.
[5]
See
judgment of Mjali J in this matter (heard on 20 February 2020 –
the copy of the judgment provided in the court file
is undated).
[6]
Section
10 of the Trust Property Control Act requires that whenever a person
receives money in his capacity as trustee, it shall
be deposited in
a separate trust account at a banking institution or building
society.
[7]
See
sections 19, 20 and 23 of the Trust Property Control Act.
[8]
1996
(4) SA 617 (A).
[9]
2012
(1) SA 637 (SCA).
[10]
2019
(5) SA 396 (SCA).
[11]
Supra
at
para 18.
[12]
Supra
at
para 28.
[13]
Supra
at
p. 628.
[14]
Whilst
it was noted in the full bench judgment (at para 30 thereof) in the
first application that the parties to the settlement
agreement
appeared to intend one another to retain the respective properties
as their personal property, and that their daughters
accepted that
to have been the position, it was not readily apparent in the papers
before me that the minor children had accepted
the aforementioned
position.
[15]
See,
for example,
Land
and Agricultural Bank of South Africa v Parker and Others
2005 (2) SA 77
(SCA) at paras 10 – 14 and
Thorpe
and Others v Trittenwein and Another
2007 (2) SA 172
(SCA) at paras 9 - 16. See further clause 5.2
of the trust deed (which states that there shall always be not less
than
two trustees); and the amended clause 36 of the trust deed
(contained in annexure ‘B’ to the founding affidavit),
which states as follows:
‘
Notwithstanding
anything to the contrary in this deed, no trustee shall at any time
qualify as a capital or income beneficiary
of this trust or receive
any benefits as such for so long as he is solely competent to
dispose of trust property for his own
benefit or for the benefit of
his estate as contemplated in Section 3(3)(d) of the Estate Duty Act
No. 45 of 1955, as amended.’
[16]
See
para 29 of the judgment of Mjali J.
[17]
See
Natal
Joint Municipal Pension Fund v Endumeni Municipality
2012
(4) SA 593 (SCA)
at
para 18:
'The
present state of the law can be expressed as follows:
Interpretation is the process of attributing meaning to the
words used in a document, be it legislation, some other statutory
instrument, or contract, having regard to the context provided
by
reading the particular provision or provisions in the light of the
document as a whole and the circumstances attendant upon
its coming
into existence. Whatever the nature of the document, consideration
must be given to the language used in the
light of the ordinary
rules of grammar and syntax; the context in which the provision
appears; the apparent purpose to which
it is directed and the
material known to those responsible for its production. Where more
than one meaning is possible each possibility
must be weighed in the
light of all these factors. The process is objective, not
subjective. A sensible meaning is to be preferred
to one that leads
to insensible or unbusinesslike results or undermines the apparent
purpose of the document. Judges
must be alert to, and
guard against the temptation to substitute what they regard as
reasonable, sensible or businesslike for
the words actually
used. To do so in regard to statute or statutory instrument is to
cross the divide between interpretation
and legislation; in a
contractual context it is to make a contract for the parties other
than the one they in fact made. The
inevitable point of departure is
the language of the provision itself, read in context and having
regard to the purpose of the
provision and the background to
preparation and production of the document.'