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[2020] ZAGPPHC 52
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J.S N.O and Another v P.J.N S Familie Trust and Others (2017/66789) [2020] ZAGPPHC 52 (20 February 2020)
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Certain
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REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
CASE
NO: 2017/66789
20/2/2020
(1)
REPORTABLE: NO
(2)
OF INTEREST TO OTHER JUDGES: NO
(3)
REVISED
In
the matter between:
J[….]
S[…..] N.O.
1
st
Applicant
J[….]
S[….]
2
nd
Applicant
and
THE
PJN S[….] FAMILIE TRUST
1
st
Respondent
P[….]
J[….] N[….] S[….]
2
nd
Respondent
P[….]
[….] S[….]
3
rd
Respondent
R[….]
S[….]
4
th
Respondent
THE
MASTER OF THE HIGH COURT
5
th
Respondent
ESTEABINVESTMENTS(PTY)LTD
6
th
Respondent
THE
COMPANIES AND INTELLECTUAL
PROPERTY
COMMISSION
7
th
Respondent
JUDGMENT
MOKOSE
J
[1]
This is an opposed application wherein the applicants seek an order
terminating the
trust, an order removing a restrictive condition of
the title deed and an order of the sale of the immovable property
held by the
first respondent being the 100% holder in the sixth
respondent and a division of the proceeds of sale as between the
second applicant,
the third and fourth respondents and alternatively,
as the court deeds fit. The applicants reason for the application is
ascribed
to the fact that the foundation of the trust has ceased to
exist and the object cannot be further achieved, with the result that
the beneficiaries are prejudiced by its continued existence.
Background
[2]
Prior to the marriage of the second applicant to the second
respondent in 1989, a
property was purchased and registered in the
name of the second respondent. This was the property situate at
[....], Pretoria.
[3]
During 2001 the second applicant and the
second respondent commenced a business known as IT-HQ and on the
advice of a friend, the
property was transferred from the second
respondent to the sixth respondent. It must be noted that the shares
in the sixth respondent
were held exclusively by the first respondent
(the trust). It was alleged by the second respondent that the main
reason for the
property being registered in the name of the company
was to secure the property from creditors and for the benefit of the
capital
beneficiaries, the third and fourth respondents. This denied
by the second applicant.
[4]
lt is common cause that when the
business was commenced in 2001, a mortgage bond was registered over
the property in favour of Absa
Bank in the sum of R480 000,00 for the
purpose of acquiring start-up capital for the business. A usufruct in
favour of the second
respondent was registered over the property. The
second respondent
avers
that
it was with the consent of the second applicant, which Is disputed.
[5]
Prior to the divorce, the second
applicant and the second respondent and their children resided on the
property and both parties
contributed to the maintenance and general
upkeep of the property, improvement of the property and the repayment
of the mortgage
bond.
[6]
It must also be noted that in terms of
the trust deed the second respondent was the founder, a trustee and
an income beneficiary
of the trust. The second applicant was an
initial trustee and income beneficiary of the trust. The children
(the third and fourth
respondents) are capital beneficiaries. It is
also notable that the trust, company and shares in the company did
not form part
of the divorce settlement.
[7]
Prior to dealing with the merits of the matter, It is noted that the
applicants had
enrolled the respondents' application for condonation
for the late filing of the answering affidavit before Collis J in
October
2018 at which time it was ordered that the application for
condonation should be heard at the same time as the main application.
Costs were reserved. The objection to the application was abandoned
and as such, the application for condonation was no longer
being
opposed. Accordingly, the condonation application for the late filing
of the respondents' answering affidavit is granted.
Legal
Principles
[8]
In
motion proceedings the affidavits constitute both pleadings and
evidence and the issues and averments in support of the parties'
case
must appear clearly therefrom. It is trite that the applicant in
application proceedings must make out his or her case in
the founding
affidavit. A litigant should not be allowed to try and make out a
case in the replying affidavit. This is based on
the principle that
the applicant should stand and fall by his founding affidavit.
[1]
The court is confined to resolving the dispute on the issues raised
in the founding affidavit and must not have regard to extraneous
issues and unproved facts.
[2]
The
applicants' case
[9]
The second applicant avers that the
object of the establishment of the trust was to provide a family
home. She avers further that
the object has now ceased as the parties
have since divorced.
[10]
The second applicant avers in the
founding affidavit that when the marriage between her and the second
respondent was terminated
by decree of divorce on 6 December 2010,
the second respondent refused to sell the family home which was
registered in the name
of the sixth respondent. The second applicant
avers further that the second respondent continued to reside on the
property as if
he was the sole owner thereof and paid not rent
towards it. She averred further that she did not take issue with this
as her son
resided on the said property with the second respondent
and thought that they she could deal with the property if anything
should
happen to the second respondent. She was of the view that the
property was registered in the trust and as a trustee could make
decisions pertaining to the trust and its assets.
[11]
The second applicant also brought to the
court's attention that the second respondent never convened any
shareholder's meetings
as director of the sixth respondent and she
and the capital beneficiaries were kept in the dark at all times. The
second applicant
averred
that
the second respondent had appropriated the Immovable property which
was prejudicial to the beneficiaries of the trust. Accordingly,
it
was in the interest of the beneficiaries that the trust be terminated
as the reason for the trust had since fallen away.
The
respondents' case
[12]
The second respondent avers that as the
founder of the trust the object of the establishment of the trust was
to secure the property
from creditors and to secure the value of the
trust property for the benefit of the capital beneficiaries, being
the third and
fourth respondents.
[13]
The respondent, in his heads of
argument, avers that the applicants' relief has morphed into an
application aimed at piercing the
sixth respondent's corporate veil
and the first respondent’s veneer. The respondent objects to
this relief for the reason
that it is the applicants' responsibility
to address this in the founding affidavit and not make out his
case
in the replying affidavit. This
approach has denied the respondents an opportunity of responding to
the allegations In the replying
affidavit.
[14]
The relief sought by the second
applicant is premised upon Section 13 of the Trust Property Control
Act 57 of 1988 which provides
as follows:
"13.
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
object
of
the
founder; or
(b)
prejudices the interests
of
beneficiaries; or
(c)
is in conflicts
with
the
public interest,
the
court may, on application of a trustee or any parson 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.·
[15]
Section
13 has both a subjective and objective criterion.
[3]
The former relates to the founder's lack of foresight or
contemplation and the latter relates to the prejudice to the trust
object,
beneficiaries or public interest. The court may only
intervene where the above criteria have been satisfied.
[4]
[16]
Firstly, the relief sought by the
applicants as set out in their heads of argument has changed from
that as set out in the founding
affidavit. It is evident that it is
aimed at piercing the sixth respondent's corporate veil and the first
respondent's veneer.
The applicants' case must be made out In the
founding affidavit and not in the heads of argument. Accordingly, the
court will deal
with the issue on hand as set out in the notice of
motion and founding affidavit.
[17]
The applicants aver in the founding
affidavit that the foundation of the trust can no longer be achieved
with the result that the
Interests of the beneficiaries is
prejudiced. One has to ascertain the object of the trust according to
the founder. The applicant
makes an averment that the trust was
formed with the object of providing a family home. As the parties
have now divorced, the need
for a family home has fallen
away
and the court ought to grant an
order of dissolution of the trust, cancellation of the usufruct and
order the subsequent sale of
the immovable property.
[18]
The second respondent on the other hand,
avers
to
the contrary, that the object of the trust was to secure the trust
property away from creditors and to secure the value of the
trust
property for the benefit of the capital beneficiaries. Furthermore,
he is of the view that the applicants fall short on the
first
jurisdictional requirements of Section 13 and that if the court was
of the view that the applicants' version was the most
probable one
that the object of the trust was to provide a family home, why was
this application only brought 10 years after the
second applicant
moved out of the family home and not Immediately the object
ceased
to exist?
[19]
Applying
the principles espoused in the Plascon Evans case'
[5]
averments set out in the respondents' affidavit should be accepted
unless they are far-fetched or clearly untenable. Accordingly,
to
succeed in the relief as set out in the notice of motion
against
the
respondents, the applicants must prove the jurisdictional provisions
of Section 13. No case has been made out by the applicants
in that
regard.
[20]
I therefore come to the view that the
applicants have failed to establish that any provision has brought
about any consequence as
mentioned in Section13 (a), (b) or (c) of
the Act and that the founder of the trust, at the time of the
establishment of the trust,
did not contemplate of foresee such a
result. Furthermore, it appears to the court as well as the
respondents that the second applicant
is attempting to 'take a
second
bite of the cherry'. It is evident
from the settlement agreement that the property, the trust nor the
company did not form part
of the divorce settlement.
[20]
I also note that the application has not
been supported by the third and fourth respondents In the form of a
confirmatory affidavit
by them nor is there an indication of the
matter having been discussed with all the beneficiaries before the
application was launched.
As capital beneficiaries, they have a
direct interest in the application sought by the applicants. This too
indicates that the
application was self-serving and not In the
interest of all the beneficiaries. Accordingly, the applicants'
prayer 1 is dismissed.
[21]
The applicants further seek the
cancellation of the second respondent's usufruct from the title deed.
The second applicant avers
that the second respondent had
unilaterally caused the usufruct to
have
been
registered
In his favour.
[22]
The second respondent avers that the
property was registered in the sixth respondent's name with the
consent and knowledge of the
second applicant. Furthermore, the
registration of the usufruct was within the knowledge of the second
applicant and not
done
without
her personal knowledge.
[23]
A usufruct
is
a
limited right in ownership of
immovable property. The usufruct holder is entitled to the fruits of
property which includes the right
to live on the said property as
well as the right to rental should it be rented out.
[24]
In view of the fact that I have dismissed the applicants' prayer as
aforesaid, I am of the view
that the court has no need to cancel the
usufruct In favour of the second respondent. An application has not
been made in terms
of any of the enabling legislation for the
cancellation of the usufruct. The prayer for the cancellation and
division of the trust
assets
are concomitant to prayer 1.
[25]
Accordingly, the following order is granted:
1.
the application is dismissed with costs;
2.
the costs of the application for
condonation are granted in favour of the respondents.
MOKOSE
J
Judge
of the High Court
of
South Africa, Gauteng
Division,
Pretoria
For
the 1
st
& 2
nd
Appellants;
Dr
T J Botha
Instructed
by:
Cilliers
& Reyders Inc.
For
the
1
ST
2
nd
and 6
th
Respondents:
Adv
M Louw
Instructed
by:
Deon
Lategan Attorneys
Date
of Hearing:
8
October 2019
Date
of Judgment:
20
February 2020
[1]
Director of Hospital Services v Mistry
1979 (1) SA 626
(A) at 645H
[2]
Director of Hospital Services v Mistry (supra)
[3]
Cameron, De Waal, Wunch Solomon & Khan,
Honore1s
South African Law of Trusts
5ed
(2002) at 517
[4]
Curators, Emma Smith Educational Fund v The University of
KwaZulu-Natal & others
2016 (6) SA 518
(SCA) at para 48
[5]
Plascon -Evans Ltd v Van Rlebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA
623(A)