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[2021] ZAMPMBHC 46
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Shabangu N.O. and others v Malumane N.O. and Others (1980/2020) [2021] ZAMPMBHC 46 (4 October 2021)
REPUBLIC OF SOUTH
AFRICA
IN THE HIGH COURT OF
SOUTH AFRICA
(MPUMALANGA DIVISION,
MBOMBELA)
REPORTABLE: NO
OF INTEREST TO OTHER
JUDGES: YES
REVISED: YES
04/10/2021
CASE
NO: 1980/2020
In
the matter between:
FONIE
SHABANGU
N.O.
First Applicant
JAMES
VADER SHAKOANE
N.O.
Second Applicant
FRANCINA
SOKATI
N.O.
Third Applicant
MONDAY
MAKHABANE
N.O.
Fourth Applicant
and
DECEMBER
JOHN MALUMANE N.O.
First Respondent
SILO
MICHAEL MABUZA
N.O.
Second Respondent
BHANI
PETRUS KHOZA
N.O.
Third Respondent
ENSIE
MASOMO MOKOENA N.O.
Fourth Respondent
MAKARONI
ROBERT SHABANGU N.O.
Fifth Respondent
DUDU
EUNICE MBUYANE
N.O.
Sixth Respondent
BRYAN
BONGA MOKOENA N.O.
Seventh Respondent
WALTER
DAVID MOKOENA N.O.
Eighth Respondent
BUSI
LUSIA MASHEGO
N.O.
Ninth Respondent
SAMSON
DANIEL SHAKOANE N.O.
Tenth Respondent
MASTER
OF THE HIGH COURT: MBOMBELA
Eleventh Respondent
OFFICE
OF REGIONAL LAND CLAIMS
COMMISSIONER:
MPUMALANGA
Twelfth Respondent
MEC
FOR RURAL DEVELOPMENT
AND
LAND REFORM: MPUMALANGA
Thirteenth Respondent
JUDGMENT
MASHILE
J:
INTRODUCTION
[1]
This application concerns the removal of the First to Tenth
Respondents as trustees
of the Mbayane Community Trust (“the
Trust”). These trustees are currently on suspension following
an urgent order
of this Court per Greyling-Coetzer AJ on 2 October
2020. The essence of the order is that pending
the
Applicants’ application for the removal of the First to Tenth
Respondents as trustees of the Trust, the aforesaid respondent
trustees are suspended and interdicted from acting on behalf of the
Trust’s and/or performing any duties and/or exercising
any
powers as per the Trust Deed. The word, respondents and trustees,
will be used interchangeably depending on the context.
[2]
The order continues to appoint all of the four Applicants as interim
trustees of the
Trust and directs them to nominate and appoint an
independent trustee within 14 days of the date of the order. The
order further
lays down that the nominated independent trustee is
required to:
2.1 Be
suitably qualified to act as trustee and assist the Trust in
functioning optimally;
2.2
Have no current or former affiliation and/or association and/or
interest in the Trust, Greyling Botha Van
Rensburg Attorneys, Desire
Koch Attorneys or an attorney’s firm associated with either of
aforementioned firms;
2.3
Be regarded as a suitable trustee as provided for in the Trust
Property Control Act NO 56
of 1988.
[3]
The order also prescribes that the independent trustee would have the
same powers
bestowed on trustees as per Clause 6 of the Trust Deed
except that in addition, he enjoys a casting vote. The interim
trustees
would have the same powers as described in the Trust Deed,
with the added power given to the independent trustee and subject to
any limitation set out in the order. The interim trustees are
specifically deprived of the power to dispose, sell, alienate,
exchange,
any real right in respect of any immovable property
belonging to the Trust. Finally, the Applicants were ordered to
launch the
application for the removal of the First to Tenth
Respondents as trustees of the Trust within 15 days of the date of
the order,
failing which the interim order would lapse.
[4]
As directed by the court, the Applicants are now applying to court
seeking the removal
of the First to Tenth Respondents as trustees.
The Applicants allege that the justification for the application is
the First to
Tenth Respondents’ failure to adhere to their
fiduciary duties in terms of the Trust Property Control Act, 57 of
1988 (“the
Act”), which they deliberately neglected.
[5]
Proper administration of the Trust, aver the Applicants, will not
only be hindered
by the Respondents continuing to act as trustees but
it will be detrimental to the welfare of the members, beneficiaries
and households
in the Trust. The Trust Deed as it stands now, does
not prevent trustees who have been removed by either members or other
trustees
or a court order from standing for election again. The
Applicants Lament this manifest lacuna in the Trust Deed and seek the
intervention
of this Court in that regard.
[6]
The relief sought by the Applicants in this application is set out in
the following
terms:
“
1.
The First to Tenth Respondents are removed as the Trustees of the
Mbayane Community Trust with registration
number: IT010926/2004(T);
2.
That the First to Tenth Respondents surrender their letters of
authority to the Eleventh
Respondent;
3.
That the Eleventh Respondent adjusts and amends their records
accordingly, alternatively
cancels or terminates the letters of
Authority issued to the First to Tenth Respondents on 18 June 2018;
4.
That the interim trustees appointed in terms of the court order
granted on 2 October 2020
under this case number continue to act as
such until the election of the new Trustees as per the election
procedure set out in
the Trust Deed;
5.
That the First to Tenth Respondents are prevented from accepting any
nomination to be appointed
as a Trustee and/or prevented from being
appointed as a Trustee of the Mbayane Community Trust again;
6
.…..”
FACTUAL
MATRIX
[7]
The Trust is said to
have been founded by Sihlahuse Joseph Motaung during 2004. The main
objective of its formation was to secure
a property that the
community had obtained through a process of land claim for
development for the benefit of the community. The
primary idea was
that every household had to receive equal value from the assets of
the Trust. As such, the Trust had to be managed
by the trustees for
the benefit of every household/member or beneficiary.
[8]
Following the registration of the Trust, various immovable properties
acquired through
the land claim process were transferred into the
name of the Trust. The value of the properties transferred to the
Trust is significant
and they are prime farming properties. The
transfer of the properties into the name of the Trust did not
necessarily come with
advantages for the community nor did they
produce any income or benefit for all the beneficiaries or
households. The first benefit,
allege the Applicants, that the whole
community realized was during December 2019.
[9]
During late 2015 to early 2016, negotiations ensued with Mr. Deon
Kotzee who wanted
to lease the property known as Lahlamali, being
Portion 3 of the Farm Legogote 30, Registration Division JU, Province
of Mpumalanga.
The Applicants have confessed that they are not in
possession of a copy of the lease agreement. That said, they claim
that they
have nonetheless been able to establish some information
concerning the lease agreement. That information relates specifically
to the income which the lease agreement generates annually.
[10]
The Applicants state that the lease agreement raised an average
income of approximately R600
000.00 per annum. The amount is said to
have been paid into the account of the Trust by Mr Kotzee since 2016.
The aforesaid notwithstanding,
no benefit has accrued to the
beneficiaries or households of the Trust. The Applicants allege
further that a rough estimate of
how much should be in the bank
account of the Trust amounts in all to R2 400 000.00. It
must be noted that this information
has not been confirmed by Mr
Kotzee.
[11]
The Applicants say that they have persistently been requesting the
trustees to furnish explanation
why the property for which the
community had worked so hard to obtain was not providing any support
or income to the beneficiaries.
No explanation was forthcoming. To
date the position has not changed. In June 2018, the current trustees
were appointed. It soon
became obvious that these Trustees were not
acting in the best interest of the members as they were not complying
with their fiduciary
duties as trustees of the Trust.
[12]
The maladministration of the Trust endured and became frightening for
the members of the Trust.
It is common cause that no financial
information was ever made available, no information regarding income
or expenditure of the
Trust was ever tabled and no one knows why
funds were not paid to the beneficiaries at all. When the Applicants
attempted to obtain
bank statements of the Trust, the Bank officials
advised them that only the signatories to the account were authorized
to have
access to them. Subsequent to numerous requests to have
insight into the bank accounts of the Trust, the trustees provided
them
with a handwritten bank statement at one meeting. This was one
indubitable confirmation that serious administration issues prevailed
in the Trust, allege the Applicants.
[13]
The Applicants state that the First to Tenth Respondents carried on
to avoid their requests for
information. The frustration experienced
by the Applicants and the beneficiaries of the Trust deepened in 2018
when the latter
decided to take action against the appointed Trustees
by seeking advice from their Attorney of Record. On 8 December 2018
at a
meeting of the members of the Trust, it was resolved to appoint
the Applicants, as the Safety, Security and Disciplinary Committee,
to take over the running of the Trust because of the discontent with
the current administration of the Trust by the trustees.
[14]
Additionally, the meeting decided to have the First to Tenth
Respondents removed as Trustees
because of their failure to observe
their fiduciary duties. On 11 December 2018, all the trustees were
served with Letters of Demand
relating to the financial statements of
the Trust. The demand also informed them of the resolution that they
be removed as trustees.
The members had doubts regarding the Trust
especially its running. From the beginning, the community has not
received any financial
reward or monthly income from the management
of the immovable properties of the Trust.
[15]
The first financial aid or distribution to households was received
during December 2019. Each
household received an amount of R6 000.00
distributed from the rental income of the Trust received from Mr
Kotzee. The Applicants
instructed their Attorney to proceed with an
Application for the removal of the trustees. They subsequently
managed to obtain a
copy of Mr Kotzee’s payment history for the
period of six months preceding the appointment of the Applicants’
attorney
in 2018.
[16]
It is evident from the statement that during the period 2 August 2018
to 28 September 2018, Mr
Kotzee paid an amount of approximately R370
000.00 into the bank account of the Trust. The Applicants allege that
to date they
have no knowledge of the fate of the money whatsoever.
None of the trustees who are also the Respondents in this
application, can
give a satisfactory explanation of where the money
had disappeared.
[17]
A bank statement was ultimately produced in January 2019 for the
period of 1 August 2018 until
31 December 2018 after a considerable
pressure was brought to bear on the trustees. From these bank
statements, it is discernable
that all of the funds that were paid to
the Trust’s account were withdrawn as cash. This fact was
confirmed by Ms M Surajpersad
in a letter dated 28 March 2019
addressed to the Thirteenth Respondent. There has been neither
explanation for the withdrawals
nor is there supporting documentation
or anything to show that this money was used for the benefit of the
beneficiaries of the
Trust.
[18]
The Applicants and the beneficiaries, in general, have taken a more
active role in the affairs
and management of the Trust. Some of them
have even expressed their wish to develop the immovable properties
for the benefit of
the larger community. Towards the end of August
2020, the majority of the members of the Trust accepted a proposal to
sell some
of the portions of the immovable property of the Trust to
develop the remaining portions. They believe that such development
could
yield tangible benefits.
[19]
It is not contested or seriously denied that shortly after taking the
decision to develop the
immovable properties of the Trust, the First
to Tenth Respondents made several attempts to terminate the mandate
of the Attorneys
of the Applicants. When the attempt failed, threats
of intimidations surfaced culminating in the Tenth Respondent
threatening the
Second Applicant, his brother, if he did not sign a
resolution supporting the Respondents. These threats ended up being
interdicted
by the order of this Court dated 2 October 2020.
[20]
The Applicant allege that it seems that the Respondents admit that
there has been mismanagement
of the funds of the Trust. The admission
notwithstanding, it is strenuously argued that only some of the
trustees were responsible
for the act. As such, it is unlawful to
visit the remaining trustees with the indiscretions of the others
who, it is claimed, have
since been suspended.
POINTS IN LIMINE
[21]
The Respondents have raised certain preliminary points which require
adjudication before determination
of the main issues. These are the
following:
21.1 Disputes of
fact;
21.2 Misjoinder of
the Fourth Applicant;
21.3 The Deponent’s
lack of
locus standi; and
21.4 The lack of
jurisdiction of this court.
DISPUTES OF FACT
[22]
Here the Respondents’ claim is that the acceptance of a
proposal to sell portions of the
property of the Trust has created a
material dispute of fact. It is trite that a court has a wide-ranging
discretion whether to
refer an application to oral evidence. A court
cannot refer a matter for oral evidence on the mere say-so of one of
the parties
to a dispute. Prior to doing so, it ought to examine the
dispute of fact to determine whether such dispute of fact is real or
genuine.
[23]
The manner in which disputes of fact can arise was described in the
matter of
Room Hire Co (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd
1949 (3) SA 1155
(T).
Some of these are:
23.1 When the
respondent denies all the material allegations made by the various
deponents on the applicant’s behalf,
and produces or will
produce, positive evidence by deponents or witnesses to the contrary.
He may have witnesses who are not presently
available or who, though
adverse to making an affidavit, would give evidence viva voce if
subpoenaed;
23.2 When the
respondent admits the applicant’s affidavit evidence but
alleges other facts which the applicant disputes;
23.3 When the
respondent concedes that he has no knowledge of the main facts stated
by the applicant, but denies them, putting
the applicant to the proof
and himself gives or proposes to give evidence to show that the
applicants and his deponents are biased
and untruthful or otherwise
unreliable, and that certain facts upon which the applicant relies to
prove the main facts are untrue.
[24]
The disputes of fact complained of ought to be about the one that is
for adjudication before
the court seized of the matter. Accordingly,
it is appropriate to ask oneself what the dispute is in this matter.
The controversy
before this Court for decision concerns the removal
of the trustees and barring them for nomination for appointment as
trustees
ever again.
[25]
Given the nature of the dispute before this Court, it is difficult to
establish a connection
between the acceptance of a proposal to sell
portions of the land of the Trust and the removal of trustees.
Moreover, and assuming
that the proposal to sell was relevant, the
order of this Court per Greyling-Coetzer AJ dated 2 October 2020
specifically prohibits
the interim trustees to alienate any property
of the Trust. That on its own would have rendered the complaint
relating to disputes
of fact completely extraneous to the dispute
before court. In the circumstances, the disputes of fact contention
are dismissed
as devoid of any merit whatsoever.
MISJOINDER OF THE
FOURTH APPLICANT
[26]
The allegation that the Fourth Applicant was unaware of this
application and that he is not part
of it is outrageous especially
because he is cited as such in these papers. Furthermore, the
Respondents state that, as confirmation
of their allegation, an
affidavit of the Fourth Applicant is attached to their answering
affidavit BUT on inspection of their PAPERS,
no such confirmatory
affidavit could be found. In fact, the Applicants have annexed a
confirmatory affidavit of the Fourth Applicant
as proof that he is
aware of the matter and that he is part of it. In the circumstances,
this
point in limine
too stands to be dismissed as bereft of
any merit.
THE DEPONENT’S
LACK OF LOCUS STANDI
[27]
I agree with the Applicants that while the Respondents may not have
dealt with this point as
a
point in limine,
allegations of
lack of
locus standi
are generally characterised as
preliminary points. As such, it ought to be dealt with at this
juncture. Perhaps it will be appropriate
to preface any discussion
here with the provisions of Clause 23 of the Trust Deed. The Clause
empowers any member, class of members
or any person having a material
interest therein to approach the court for appropriate relief in the
event of any refusal or failure
on the part of the Trustees.
[28]
This
point in limine
is nonsensical in view of the admission
by the Respondents that all the parties are members and beneficiaries
of the Trust. It follows
that the Deponent, as a member and
beneficiary of the Trust, has a material interest to approach this
Court where the trustees
have failed or refused to do so. The
Deponent was part of the urgent application wherein the court
directed that he, together with
the other applicants, ought to launch
this application within 14 days of the date of the order failing
which the interim order
would lapse. The admission as outlined above
cannot co-exist with the lack of
locus standi
argument. As
such it is rejected and dismissed.
LACK OF
JURISDICTION OF THIS COURT
[29]
The Respondents have filed a supplementary affidavit wherein they
deal with the clause pertaining
to arbitration in the Trust Deed. It
is settled that a party must seek leave of the court to file further
affidavits. The Respondents’
explanation for their failure to
have dealt with the issue of arbitration in their answering affidavit
is that the Applicants filed
the Trust Deed with missing pages. As a
matter of fact, the Respondents specifically state in their answering
affidavit that a
supplementary affidavit might become necessary later
once they have established precisely what the missing pages of the
Trust Deed
are all about. This is what they have done. In the absence
of opposition, I have no difficulty to grant leave for the filing of
the supplementary affidavit.
[30]
I now turn to arbitration as another
point in limine
raised by
the Respondents. The clause dealing with arbitration in the Trust
Deed is 24 and it is headed: “Disputes”.
The Respondents
have referred to the relevant sub-clauses of Clause 24, which I
proceed to cite in full below:
“
24.1
In order to facilitate the resolution of disputes and avoid
unnecessary litigation, in the case of disputes which for any reason
are unable to be referred to the MASTER, it is further provided that
the Board of TRUSTEES, or any three (3) of their number, or
a General
Meeting of MEMBERS or any four (4) of their number, shall be entitled
to require, in the event of any difference or dispute
which the
parties are unable amicably to resolve, whether in regard to the
meaning or effect of any term of this TRUST DEED, or
the rights and
obligations of any party interested or acting thereunder, or any
other matter arising therefrom or incidental thereto,
that such
difference or dispute shall be referred to arbitration in accordance
with the following provisions:
24.4. The Arbitrator
shall permit each party to adduce such evidence and argument as the
Arbitrator may consider to be relevant
to the matter in dispute.
24.8 The
decision of the Arbitrator shall be final and binding upon all
parties and capable of being made an Order of Court
on application by
any of them.”
[31]
The Respondents are unwavering in their assertion that these extracts
from Clause 24 of the Trust
Deed represent proof that the Arbitrator
has jurisdiction to adjudicate disputes and not this Court. Perhaps
the first remark that
I should make is one appropriately observed by
the Applicants – the arbitration clause is concerned with
reference of controversies
to the arbitrator for determination. The
ground upon which the removal of the trustees is sought being common
cause, it is hard
to fathom where the dispute lie. The Respondents
admit that there has been misappropriation of funds by some among
themselves.
If that is so, where is the dispute for referral?
[32]
I need to emphasise that once the Respondents do not contest the
allegation that there have been
mal-administration and
misappropriation of funds in the Trust, which is the ground upon
which their removal as trustees is sought,
their case has been dealt
a fatal blow and they cannot rely on arbitration as a
point in
limine.
The clause of arbitration as cited by the Respondents is
correct but it hardly finds application here because there is no
controversy
for referral to the arbitrator.
[33]
Besides and assuming that arbitration was properly raised, this Court
would not have entertained
it anyway in the absence of an application
to stay the proceedings while they refer it for arbitration.
Dismissal of the application
is totally improper in these
circumstances. The correct position is as described above. I say an
application to stay the proceedings
pending referral would have
sufficed because I read the Trust Deed to be an agreement among the
trustees on how they will run and
operate the Trust for the benefit
of the larger body of beneficiaries.
[34]
In any event, arbitration is inappropriate for another reason as
pointed out by the Applicants.
An arbitrator cannot grant an order
authorizing the Master of the High Court to remove the trustees of
the Trust. That remains
the preserve of this Court. So, this point
would not have succeeded for that reason as well. Against that
background the
point in limine
is dismissed.
ISSUES
[35]
Now that I have disposed of the
points
in limine
, it is
proper to turn to the actual issues that should be addressed in this
judgment. From the facts above I am required to determine
whether or
not it is appropriate to remove the Respondents as trustees on the
ground of breach of their fiduciary duties with the
Trust.
Furthermore, I am also expected to make a pronouncement on whether or
not this Court can, in the absence of any provision
in the Trust
Deed, proscribe the trustees from nomination to ever stand for
elections as trustees of the Trust again.
LEGAL FRAMEWORK
[36]
This application for the removal of the Respondents as trustees is
founded on the Act. As such,
it is proper to outline the Sections of
the Act pertinent to the issue.
Section 9
provides 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).”
[37]
Dealing with removal of trustees for their failure contemplated in
Sub-Section 2 of Section 9,
Section 20 is headed: Removal of trustee
and it stipulates:
“
(1)
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 interests of the trust
and its beneficiaries.
(2)
A trustee may at any time be removed from his office by the Master
(a)
if he has been convicted in the Republic or elsewhere of any offence
of which dishonesty is an element or of any other offence
for which
he has been sentenced to imprisonment without the option of a fine;
or
(b)
if he fails to give security or additional security, as the case may
be, to the satisfaction of the Master within two months
after having
been requested thereto or within such further period as is allowed by
the Master; or
(c)
if his estate is sequestrated or liquidated or placed under judicial
management; or
(d)
if he has been declared by a competent court to be mentally ill or
incapable of managing his own affairs or if he is by virtue
of the
Mental Health Act, 1973 (Act 18 of 1973), detained as a patient in an
institution or as a State patient; or
(e)
if he fails to perform satisfactorily any duty imposed upon him by or
under this Act or to comply with any lawful request of
the Master.
(3)
If a trustee authorized to act under section 6 (1) is removed from
his office or resigns,
he shall without delay return his written
authority to the Master.”
[38]
IN
Land
and Agricultural Bank of South
Africa v Parker and Others
2005
(2) SA 77
(SCA) at paragraph 10,
it was stated that: “
In
its strictly technical sense the trust is a legal institution sui
generis… The trustee is the owner of the trust property
for
purposes of administration of the trust but qua trustee he has no
beneficial interest therein.” In the same vein, in
Lupacchini
NO and Another v Minister of Safety and Security
2010 (6) SA 457
(SCA) at paragraph
1
the court said
the following:
“…
.is
an accumulation of assets and liabilities. These constitute the trust
estate, which is a separate entity. But though separate,
the
accumulation of rights and obligations comprising the trust estate
does not have legal personality. It vests in the trustees,
and must
be administered by them – and it is only through the trustees,
specified as in the trust instrument, that the trust
can act…”
[39]
It is trite that where a trust has more than one trustee, they share
a common fiduciary obligation
towards the fulfilment of the objects
of the trust and must act jointly. See
Gowar and Another v Gowar
and Others
2016 (5) SA 225
(SCA).
As early as 1925, the
Appellate Division, as it then was, stated the following in
Sackville
West v Norse and Another
1925
AD 516
on the fiduciary duties of
trustees:
“
The
effect of this authority is that a tutor must invest the property of
his ward with diligence and safety. It is also said that
a tutor must
observe greater care in dealing with his ward's money than he does
with his own, for, while a man may act as he pleases
with his own
property, he is not at liberty to do so with that of his ward. The
standard of care to be observed is accordingly
not that which an
ordinary man generally observes in the management of his own affairs,
but that of the prudent and careful man;
or, to use the
technical expression of the Roman law, that of the bonus et diligens
paterfamilias. . .. We may accordingly conclude
that the rule of our
law is that a person in a fiduciary position, like a trustee, is
obliged, in dealing with . . . the money
of the beneficiary, to
observe due care and diligence, and not to expose it in any way to
any business risks.”
See
also, Administrators, Estate Richards v Nichol and Another
[1998] ZASCA 82
;
1999
(1) SA 551
(SCA).
[40]
The general rule regarding the removal of trustees
is that a trustee will be removed
from office when continuance in office will imperil the property of a
trust and prevent the trust
itself being properly administered to the
welfare of the beneficiaries. The power to remove a trustee must be
exercised guardedly
but neither
mala
fides
nor even
misconduct is required for the removal of a trustee. See the Gowar
case
supra at
paragraphs 30 – 31. Courts have over and over again stressed
that the removal of trustees must be done in line with the provisions
of Section 20(1) of the Act - when it is in the interests of the
trust and its beneficiaries.
[41]
To the extent that the Applicants require this Court to vary the
provisions of the Trust Deed,
Section 13 of the Act becomes
pertinent. The Section provides:
“
Power
of court to vary trust provisions —
If a trust instrument
contains any provision which brings about consequences which in the
opinion of the court the founder of a
trust did not contemplate or
foresee and which —
(a)
hampers the
achievement of the objects of the founder; or
(b)
prejudices the
interests of beneficiaries; or
(c)
is in conflict with the public interest,
the court may, on
application of the trustee or any person who in the opinion of the
court has a sufficient interest in the trust
property, delete or vary
any such provision or make in respect thereof any order which such
court deems just, including an order
whereby particular trust
property is substituted for particular other property, or an order
terminating the trust.”
ANALYSIS
[42]
The questions for this Court are, have the trustees failed in their
discharge of their fiduciary
duty towards the Trust, if so, in what
manner have they contravened their fiduciary duty towards the Trust
and is it in the interest
of the Trust and its beneficiaries that
they be removed as trustees? I proceed to address these issues below.
HAVE
THE TRUSTEES FAILED TO ACT IN ACCORDANCE WITH THEIR FIDUCIARY AND IF
SO, IN WHAT MANNER
[43]
The Applicants have submitted that
the
manner in which the trustees have conducted themselves, which they do
not contest anywhere in their papers, puts the proper
administration
of the trust and the trust property at risk. The trustees have no
financial information, explanation and/or record
keeping of any kind.
They have kept no records of any decisions that they have taken, no
minutes of meetings from the time they
were appointed. No proof
exists that records were made available to any of the beneficiaries
and/or members and/or households.
[44]
The trustees cannot explain the large cash withdrawals contained in
the bank statement on which
the Applicants were able to lay their
hands. There is no financial and/or administrative reporting of any
kind. This is confirmed
by the registration of ownership and title of
a property belonging to the Trust into the name of an unknown
individual without
any explanation or record of a decision in
connection therewith.
[45]
The title deed indicates that the property was donated but no one
knows under what circumstances
the donation was made as there is no
resolution through which one can determine why it was made. Even
assuming that the information
on the title deed is incorrect and that
the land was in fact sold, there is no proof of a large amount that
can be associated with
the sale of the property being deposited into
the account of the Trust.
[46]
Oblivious of the principle in the Gowar case
supra
, that
trustees share a common fiduciary obligation towards the fulfilment
of the objects of the trust and must act jointly. One
set of trustees
accuse another of being delinquents blaming them of mismanaging the
finances of the Trust, displaying unbecoming
behaviour and refusing
to furnish them with the financial report. One thing stands out and
that is that despite this knowledge
that the other set of trustees
were a problem, the other claiming to be innocent did nothing to
determine the extent of the mismanagement
such that to date no one
knows how much money has been embezzled.
[47]
Because trustees act jointly as a unit, the one set cannot attempt to
extricate itself from the
other set for its failure of observance of
its fiduciary duties, they are all in it together with the others and
the responsibility
is therefore to be shouldered by all of them. In
short, the failure is attributed to the whole unit of trustees and
not to individual
trustees especially in circumstances where those
who claim to be innocent have done nothing to acquit themselves of
the misdeed.
POWER TO VARY THE
TRUST DEED
[48]
Prior to this Court entertaining variation of the Trust Deed, it must
be satisfied that the founder
of the Trust has, at the time of the
creation of the Trust, failed to contemplate or foresee that there
could be a need to make
a provision that would limit the eligibility
of trustees to stand for nomination for re-election as trustees
especially those who
have been removed in circumstances where they
have contravened their fiduciary duties with the Trust. This is
contrary to the fiduciary
relationship between trustees and
beneficiaries, members and/or households.
[49]
It is not demanding to realise that had the founder thoroughly
thought of the repercussions of
the lack of a provision limiting the
nomination of a trustee especially one removed under circumstances
where he has transgressed
his fiduciary duties, he would have sought
the inclusion of a clause limiting re-election as a matter of course.
Failure to limit
nomination to stand for re-election under
circumstances described above would fetter or hinder the objectives
the founder meant
to accomplish by the creation of the Trust. This
will prejudice the interest of the beneficiaries and equally imperil
the property
of the Trust. The Trust Deed must accordingly be amended
to reflect the proper intentions of the founder.
FINDINGS
[50]
The Respondents have as a unit of trustees for the Trust failed to
observe their fiduciary duties.
The fact that not all of them were
involved in the misappropriation of the funds belonging to the Trust
is of no moment as they
act jointly. This Court has the power in
terms of Section 13 of the Act to vary the Trust Deed to include or
remove a provision
that the founder could not have contemplated or
foreseen at the time of the creation of the Trust.
CONCLUSION
[51]
In the result, the application succeeds and I make the following
order:
1.
The First to Tenth Respondents are removed as the Trustees of the
Mbayane Community
Trust with registration number: IT010926/2004(T);
2.
The First to Tenth Respondents are directed to surrender their
letters of authority
to the Eleventh Respondent;
3.
The Eleventh Respondent is directed to adjust and amend their records
accordingly,
alternatively, cancel or terminate the letters of
Authority issued to the First to Tenth Respondents on 18 June 2018;
4.
The interim trustees
appointed in terms of the court order granted on 2 October 2020
under
this case number are ordered to continue to act as such until the
election of the new Trustees as per the election procedure
set out in
the Trust Deed;
5.
The First to Tenth Respondents are prevented from accepting any
nomination to
be appointed as Trustees of the Trust again;
6.
The Trust Deed must be amended to read that trustees who have
previously been
removed as trustees, especially as a result of
contravention of their fiduciary duties with the Trust, are excluded
from accepting
nomination to stand for elections as trustees again;
7.
The First to Tenth Respondents are ordered to pay the costs of this
application
on an attorney and client scale.
B A MASHILE
JUDGE OF THE HIGH
COURT OF SOUTH AFRICA
MPUMALANGA DIVISION,
MBOMBELA
This judgment was
handed down electronically by circulation to the parties and/or
parties’ representatives by email. The date
and time for
hand-down is deemed to be 04 October 2021 at 10:00.
APPEARANCES:
Counsel
for the Applicant:
Adv J
Van Den Bergh
Instructed
by:
Greyling Botha Van
Rensburg Attorneys
C/O Desire Koch
Attorneys
Counsel for the
Respondents:
No appearance
Instructed
by:
Sphiwe Milazi
Attorneys Inc
C/O SN Mkhatshwa
Attorneys
Date of Judgment:
04 October 2021