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[2019] ZAGPPHC 189
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T.C v D.C and Others (54491/2018) [2019] ZAGPPHC 189 (23 May 2019)
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REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG DIVISION, PRETORIA
(1)
REPORTABLE:
YES
/NO
(2)
OF
INTEREST TO OTHER JUDGES: YES/
NO
(3)
REVISED
Case No: 54491/2018
23/5/2019
In
the matter between:
T[….]
C[….]
Applicant
and
D[….]
C[….]
First Respondent
J[….]
P[….] L[….] C[….]
Second Respondent
THE MASTER
OF THE HIGH COURT
Third Respondent
JUDGMENT
NGD
MARITZ AJ:
1.
The
applicant and the first respondent, who were married in 1994 out of
community of property and subject to the accrual system,
and divorced
on 30 November 2015, have at all times since the establishment of the
C[….] Family Trust (IT502/1998) in 1988,
been and still are
the only two trustees of the Trust. The applicant, as plaintiff,
during 2013 instituted an action for divorce
against the respondent.
On 5 August 2015, the parties acting in their personal capacities and
in their capacities as the two trustees
of the Trust, entered into a
written settlement agreement in the divorce action. On 27 November
2015 the first respondent, being
the defendant in the divorce action
which had been set down for hearing on 27 November 2015, applied for
a postponement of the
divorce action and of the determination of the
question whether the settlement agreement concluded on 5 August 2015
was binding
on the parties. The application was heard by Legodi J,
who on 30 November 2015 made an order refusing the postponement and
declaring
that the settlement agreement was binding on the parties.
The divorce action was then referred to Kollapen J. who on 30
November
2015 granted a divorce order. The settlement agreement was
not made part of the order granted by Kollapen J. The respondent
subsequently
in February 2017 applied for, and was granted leave to
appeal the declaratory order made by Legodi J, but thereafter failed
to
pursue the appeal, which consequently lapsed. The first respondent
in his answering affidavit and in argument before me persisted
in
contending that the settlement agreement is not binding or has
lapsed, and that the divorce has not yet been finalised in that
he
has not seen a signed and stamped divorce order and because there has
allegedly not been a division of the accrual in the applicant's
estate. The settlement agreement entered into in the divorce
proceedings, and bearing the case number in those proceedings, and
which has by order of this court been declared to be binding on the
parties, in express terms finally disposes of all claims which
either
of the two parties to the marriage may have had against the other,
including any claim which the first respondent may have
had to share
in the accrual of the applicant's estate. Even if his claim had not
been compromised and extinguished in the settlement
agreement, the
claim vested at the date of divorce, being 30 November 2015, and
would by now have become prescribed in terms of
the provisions of the
Prescription Act, 1969
.
2.
During
1998 the applicant's father Willem Erasmus as donor and the applicant
and first respondent as trustees established the C[....]
Family Trust
in terms of a written Trust Deed. The beneficiaries (both in respect
of income and capital) were stipulated to be
the children born out of
their marriage, at which time no children had yet been born.
Subsequently three sons were born of the
marriage, the elder two of
whom are majors and full time students, the third being a
scholar, and all three being dependent
on the applicant for their
maintenance. Neither the applicant nor the first respondent are
beneficiaries of the Trust. During 1997
the first respondent was
injured in a motor collision, and received payment of a substantial
amount in damages. He advanced a most
of the compensation which he
received as a loan to the Trust, to enable the Trust to acquire
certain immovable properties. It is
common cause, and was confirmed
in argument by applicant's attorney on her instructions, that this
resulted in the first respondent
having a credit loan account in the
Trust.
3.
The
applicant seeks the removal of the first respondent as trustee,
whereas the first respondent in a counter-application seeks
the
removal of the applicant as trustee. It is common cause between the
parties that it is in the best interests of the Trust and
its
beneficiaries that they should not both be trustees, and that one of
them should be removed. In the hearing before me, the
applicant was
represented by attorney Michael Wagener, whereas the first respondent
appeared in person. The Master of the High
Court filed a notice to
abide in which certain concerns were raised, and the second
respondent, against whom no relief was claimed,
did not oppose the
application or appear before me. As the first respondent had no legal
representation and claimed to be unable
to afford legal
representation, and himself drafted the answering affidavit,
counter-application and written heads of argument,
I in the hearing
went out of my way to ensure that the submissions which he wished me
to consider were properly formulated by him
in the context of the
facts properly placed before me on affidavit, the issues in the
application, and the relevant principles
of law, in order to ensure
that he had a full and fair opportunity to present his case.
4.
The
written settlement agreement concluded in August 2015 dealt,
inter
alia,
with their parental rights and
responsibilities relating to their three sons, who at the time were
all minors, maintenance for the
minor children, proprietary matters
and three immovable properties owned by the Trust. The settlement
agreement provided that the
first respondent shall make payment of a
sum of R300 000 to the credit of the banking account of the Trust
within three months,
failing which an undeveloped erf owned by the
Trust, known as Erf 190 Kaapsche Hoop would be sold for not less than
R350 000, and
the nett proceeds of the sale would be deposited to the
credit of a banking account of the Trust, to be used solely for the
payment
of expenses to be incurred by the applicant in respect of the
school fees and other scholastic needs of the three minor children.
The settlement agreement also provided that a second immovable
property owned by the Trust, being Erf 240 Summer Place would
immediately
be sold for not less than R275 000, and the nett proceeds
of the sale would be deposited to the credit of the Trust's banking
account,
to be used solely for payment of the monthly school fees and
further scholastic expenses which the applicant may incur in respect
of the three children, being the Tust beneficiaries. The settlement
agreement further provided that the first respondent's brother,
being
the second respondent, would be appointed as trustee of the Trust,
and that on his appointment the applicant would resign
as trustee.
The relevant clause 5.4.1 and 5.4.4 of the settlement agreement
provide as follows:
"
Die Eiseres en die Verweerder
ondemeem
om
binne sewe (7) dae vanaf ondertekening hiervan die
nodige resolusie deur te voer om JPLC
(the brother of the
respondent, and the second respondent in the application before me)
aan te stel
as
trustee van die Trust, en die partye
ondemeem
om
nie onredelik hulle handtekeninge of toestemming
te weerhou daarvoor nie, en
om
all handelinge en aksies nodig
uit te voer en te verrig
om
te voldoen aan enige vereistes
deur en vorskrifte van die Meester van die Hooggeregshof
(the
third respondent in the application before me)
vir JPLC
se
aanstelling.
Die Eisers sal op dieselfde dag waarop die
nodige resolusie om LPLC as trustee aan te stel deugevoer word bedank
as trustee van
die trust."
…
..
Die partye ondemeem elk om enige en a/le
dokumentasie soos vereis mag word te onderteken
op
die dag waarop die nodige reso/usie om JPLC as trustee aan
te
stel deurgevoer word en die
Eiseres bedank as trustee van die trust.
...."
(my emphasis)
Subsequently, the first respondent disputed
that the settlement was binding on the parties thereto, and refused
to act in terms
of these provisions. The R300 000 was not paid by the
first respondent, and neither the Kaapsche Hoop nor the Summer Place
erven
were sold. Offers to purchase at the minimum prices stipulated
in the settlement agreement could also not be procured, and the first
respondent refused to consent to the sale at lower prices. The
applicant has continued to maintain the three still dependent
children
with no financial assistance from either the first
respondent or the Trust. Under the circumstances where first
respondent disputed
that the settlement agreement was binding, and
refused to act in terms thereof, the second respondent declined to
accept appointment,
and as a consequence the applicant and the first
respondent remained and still are the only trustees of the Trust. In
argument
before me the first respondent confirmed that he was the
cause of clause 5.4.1 of the settlement agreement not being
implemented
and of the fact that second respondent was not appointed
as trustee.
5.
The
third immovable property owned by the Trust is a smallholding with a
dwelling house and outbuildings, known as Tigerpoort, and
which was
during the marriage, and until the applicant and the three minor
children left the home during April 2013, the communal
home of the
parties and their minor children. There is a mortgage bond registered
over this property in favour of ABSA Bank as
security for an amount
lent to and owing by the Trust to the bank. The first respondent has
remained in occupation of the Tigerpoort
property since the applicant
and the minor children left in April 2013, and is still in occupation
of the property. The first respondent
initially by agreement between
him and the applicant made payment of the monthly mortgage bond loan
repayments to ABSA Bank, but
after the parties had become divorced
and since March 2016, the first respondent ceased payment of the bond
instalments, resulting
in Absa Bank during January 2017 instituting
legal action against the applicant as surety, for payment of the full
outstanding
loan balance secured by the mortgage bond registered over
Tiegerporot. The applicant negotiated with Absa Bank to pay the
arrears,
and has since early 2017 made payment of the arrears owing
to ABSA Bank, and continues to make payment of the monthly bond
instalments
to ABSA Bank. The first respondent has continued to
reside on the Trust's property, Tiegerpoort. The first respondent has
not in
the past and still does not pay any rental in respect of the
Tigerpoort property to the Trust, which has no source of income. The
first respondent is unemployed and claims to be unable to make any
payments in respect of the Tigerpoort property or to pay any
maintenance in respect of the three children, all three of whom are
still dependent. The first respondent has no professional
qualifications, and due to the disability of his left arm resulting
from the motor vehicle accident in 1997, he will probably be
unable
to obtain full-time employment. The applicant, who is a qualified
attorney but practises as a cost consultant, has also
been making
payment of the municipal charges and taxes in respect of the three
immovable properties owned by the Trust, as the
Trust has no income
and none of the properties can be sold without the first respondent
as co- trustee agreeing thereto, which
he refuses to do. Had it not
been for the fact that the applicant has funded payment of the
Trust's liabilities for several years,
in respect of which her loan
account in the Trust has been credited, the inevitable outcome would
have been that one or more creditors
would have obtained judgement
against the Trust, and one or more of the Trust properties would have
been sold in execution.
6.
The
applicant seeks an order that the first respondent be removed as
trustee of the Trust, that Human Anderson (an experienced Chartered
Accountant with no connection to either the applicant or the first
respondent) be appointed as trustee of the Trust, that the
applicant's position as trustee be confirmed, and the costs of the
application be borne by the Trust. In a counter-application the
first
respondent seeks an order that his position as trustee be confirmed,
that the applicant be removed as trustee, and that the
first
respondent's father be appointed as trustee, and that the Trust's
accountants be removed from office. It was common cause
on the
affidavits filed, and in argument before me, that either the
applicant or the first respondent should be removed as trustee,
and
that a new second trustee should be appointed.
7.
The
grounds upon which the applicant seeks the removal of the first
respondent as trustee are in summary as follows:
-
The first respondent allegedly does not
acknowledge that any of the trust properties belong to the Trust and
should be appropriated
for the benefit of the beneficiaries, and has
on occasions stated that the trust properties belong to him in his
personal capacity.
The first respondent in his answering affidavit
stated the following:
"It was represented to me
(during
negotiations preceding the conclusion of the settlement agreement)
that I receive the Tigerpoort
property as my own. I do believe that I should have
a
loan account against both the
Tigerpoort and Kaapschehoop properties. In the form of these loan
accounts I do believe that I should
have some right to these
properties. I do acknowledge that these are trust properties. These
properties are long term investments
and currently are not able to
provide an income, nor did they ever provide income... The applicant
forced the agreement on me,
including the pretence that I receive
this property as my own."
-
Despite the terms of the settlement
agreement, the first respondent has refused his consent as trustee to
the sale of the Summer
Place and Kaapsche Hoop properties. The
reasons which the first respondent in the answering affidavit
advanced for his refusal
to agree to the sale of these two erven is
that the settlement agreement is not binding, and that he believes
that the properties
are worth more than the prices at which the
applicant wishes to sell the properties. He does not dispute that
there are substantial
amounts owing in respect of municipal rates in
respect of these properties, and that the Trust has no income with
which to pay
these liabilities.
-
The three sons of the applicant and the first respondent and who are
the
beneficiaries of the Trust are now at an age where they have
substantial maintenance requirements, two being full time students,
and the other being a high school scholar, and it is necessary that
trust properties be disposed of to generate an income to meet
their
maintenance requirements, particularly under circumstances where the
first respondent makes no contribution to their maintenance.
The
first respondent's answer to this in his affidavit is that the
beneficiaries have received a complete and privileged education
at
the highest level for the past eighteen years, at the cost of the
applicant without any financial contribution for maintenance
from him
or the Trust, that the applicant has the financial means to provide
alone for the maintenance of the children, that the
Trust deed does
not permit any distributions to be made to the beneficiaries before
the youngest reaches the age of 25 years, and
that he does not
believe that the beneficiaries would agree to the sale of the
properties. Even if he were to be correct, the Trust
Deed expressly
stipulates that it may be amended by agreement between the trustees
while the founder (the applicant's father) is
still alive, which he
is, but that would require an agreement between the applicant and the
first respondent as trustees. The parties
in clause 5.4.3 of the
settlement agreement undertook to pass all such resolutions and
perform such actions which may be necessary
to give effect to the
agreement and to comply with any legal requirements or directives of
the Master to do so. This on a proper
interpretation would include an
amendment to the Trust Deed should this be required in order to
permit the trustees to give effect
to the settlement agreement. The
applicant disputes that she has the financial means to maintain her
three sons without any financial
assistance from the first respondent
or the Trust.
-
It has become impossible to manage the Trust's affairs with the
applicant
and the first respondent as trustees, in that the first
respondent refuses to co-operate with the applicant in regard to the
affairs
of the Trust. Furthermore, the applicant during March 2015
obtained a family violence interdict against the first respondent, in
terms of which the first respondent is prohibited from communicating
with the applicant except for the purpose of discussing arrangements
regarding the children. In February 2017 the first respondent was
found guilty of contempt of this court order, and sentenced to
one
year imprisonment, suspended for five years. As a result all matters
regarding the Trust have to be raised through third parties
and
attorneys. These allegations are subject to any real or
bona fide
dispute in the respondent's answering affidavit. The answering
affidavit is replete with allegations not relevant to the issues to
be decided in this application, invective and rhetoric, and
conclusions by the first respondent constituting secondary facts,
without the allegation of primary facts to support those conclusions.
It is clear from the first respondent’s answering affidavit
that he still harbours a high level of animosity and bitterness
towards the applicant and the legal representatives, and has levelled
numerous, in my view unfounded, allegations of mendacity, perjury and
fraud against the applicant. In my view it is not in the
interests of
the beneficiaries of the Trust that the trust assets be controlled
and administered by trustees who continue, due
primarily to the first
respondent's conduct, to have such a toxic and confrontational
relationship.
8.
The
grounds upon which the first respondent seeks the removal of the
applicant as trustee, and the appointment of his father in
her place,
are in summary as follows:
•
That
the applicant during the negotiations leading to the settlement
agreement in the divorce proceedings fraudulently and falsely
represented to him that he would receive the Tigerpoort property as
his own and now wishes to have him removed as trustee to deprive
him
of the property. This is disputed by the applicant, who points out
that the first respondent was during the negotiations represented
by
both an attorney and counsel, and that the terms of the settlement
agreement and the Trust Deed do not support the first respondent's
allegations. In my view the first respondent's allegations, which
have little or no relevance to the issues which I am called upon
to
decide, are without foundation .
•
That
the attorney and advocate who were acting for him when the settlement
agreement was negotiated and concluded gave him wrong
advice and
failed to act in his best interests, and that his signature to the
settlement agreement was procured by fraud and undue
influence. In my
view the first respondent’s allegations, which have little or
no relevance to the issues which I am called
upon to decide, are
without foundation.
•
That
the applicant in the settlement agreement agreed to resign as
trustee, but has failed to do so. He contends that this resulted
in
the lapsing of the settlement agreement. In my view there is no merit
in this complaint, as the settlement agreement, on a proper
interpretation thereof, provides that the applicant would resign upon
the appointment of the second respondent as trustee in her
place, the
first respondent refused to act in terms of the settlement agreement
to have the second respondent appointed as trustee,
and the second
respondent subsequently declined to accept appointment as trustee.
The Trust Deed requires that there should at
all times be two
trustees, and the obvious consequence was therefore that the
applicant and the first respondent at that time remained
the only two
trustees.
•
That
the applicant, the accounting firm established by her father and
which acts as accountant for the Trust, and her father are
allegedly
involved in dubious maladministration of the Trust's finances, and
have manipulated the loan accounts in the Trust's
books of account.
These allegations are denied by the applicant. The first respondent
also contends that the applicant and the
trust accountants have
failed to keep financial records for the Trust, have failed to keep
minutes and resolutions relating to
trust transactions, and have
failed to maintain an asset register. The first respondent contended
in his written heads of argument
that the applicant has contributed
an amount of R1 219 000 to the Trust and that he has contributed more
than R542 000 to the Trust,
but that the books of account do not
correctly reflect the amounts owing to them by the Trust. These
contentions must be evaluated
in the light of the common cause fact
that the first respondent after formation of the Trust lent most of
the amount he had received
as compensation for his personal injuries
to the Trust, that the Trust is owner of three immovable properties
and no other assets,
that the Trust receives no income, has made no
distribution of income or capital, has continued to incur liabilities
in respect
of the three immovable properties which have been financed
by the applicant alone since 2016, and has not entered into any
transactions
which would require a resolution of trustees. It is also
common cause that the trustees have since 2013, due to the
acrimonious
breakdown of their marriage, been unwilling and unable to
meet and rationally discuss and decide upon the affairs of the Trust.
In my view there is no factual foundation on the affidavits before me
for the first respondent's complaints in this regard against
the
applicant.
9.
Section
20(1) of the Trust Property Control Act 57 of 1988 provides that
''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."
The
applicant as a trustee, even though not a beneficiary of the Trust,
is clearly a person having an interest in the property,
with the
necessary
locus standi
to
apply for the removal of a co-trustee. (See
Kidbrooke
Place Management Association and Another v Walton and Others NNO
2015
(4) SA 112
(WCC) at [15]- [18])
In the matter of
Tijmstra NO v
Blunt-McKenzie NO and Others
2002 (1) SA 459
(TPD)
Kirk-Cohen J
held that a trustee may be removed even if his conduct complained of
was
bona fide,
that mala
tides
or even misconduct are
not necessary requirements for a trustee's removal, that conduct of a
trustee in treating a trust asset as
his own would be a circumstance
justifying the removal of the trustee, as would a failure by a
trustee to take proper and reasonable
steps to safeguard the trust
assets.
In the matter of
Kidbrooke Place Management
Association v Walton NNO
2015 (4) SA 112
(WCC) at para [49] - [54]
Binns-Ward J correctly stated that a trustee, even though
innocent, whose position involves a conflict of interest and duty may
be removed from office by the court, that the sufficiency of the
cause for removal is to be tested by consideration of the interests
of the trust estate, and a misconstruing by a trustee in material
respects of the nature of his role, duties and responsibilities
as
trustee, would justify his removal as being in the interest of the
trust and its beneficiaries, as contemplated in section 20(1)
of the
Trust Property Control Act, 1988. To borrow from the language of
Binns-Ward J at para [54], it can be said in respect of
the first
respondent that
"the unresolved issues that I have discussed
in relation to the discharge of his functions as trustee are a
festering problem
in the administration of the affairs of the Trust
that will not be laid to rest for so long as he remains in office."
See also
Gowar v Gowar 2016(5) SA 225 (SCA)
10.
The
first respondent's ongoing disputes, bitterness and unhappiness in
regard to the Trust, its properties and financial administration
appear to stem mainly from his dissatisfaction with the terms of the
settlement agreement, the status of his loan account and a
need, due
to his precarious financial circumstances and physical disability, to
receive payment of the amount owing to him by the
Trust, and his
contention that he has not received complete annual financial
statements of the Trust from the applicant, who it
is common cause
has managed the Trusts' financial affairs from the outset and has
instructed the Trust's accountants. In his written
heads of argument
the first respondent submitted the following:
"In the event that the court finds that
the first respondent
is
to
be removed
as
trustee,
then
as
part
of such an order, it should include a payout to the first respondent,
regarding his loan account... The first respondent respectfully
admits (sic) that he will abide by the court in the event that he be
removed
as
trustee
or the trust be terminated
as
described above, it will bring a
final and fair closure to this extremely acrimonious and costly legal
actions. Then the parties
can both eventually continue with their
respective lives...."
It would not be competent for me to make an
order in these proceedings that the Trust pay to the first respondent
the amount which
he claims should be reflected as a credit on his
loan account in the Trust. During argument applicant's attorney, in
reply to a
question from me and after having taken instructions from
the applicant, conceded that the first respondent has a credit loan
account
in the Trust. I invited the applicant (who was present in
court) through her attorney, in order to avoid or limit inevitable
further
litigation, to consent to an order that she furnish the first
respondent with a full statement of account in respect of his loan
account in the Trust from inception to date, reflecting all debits
and credits, and furnish him with copies of annual financial
statements of the Trust signed by her as correctly reflecting the
financial affairs of the Trust. The applicant to her credit consented
to such an order being made.
11.
Taking
into account the content of the affidavits and the written and oral
submissions made to me, I am satisfied that the first
respondent's
removal as trustee of the C[....] Family Trust will be in the
interests of the Trust and its beneficiaries, as contemplated
in
section 20(1) of the Trust Property Control Act 57 of 1988. I am
further of the view that there is no merit in the first respondent's
counter-application, and that he has failed to establish an
entitlement to any of the relief which he claims.
The applicant has also sought an order that Mr
Human Anderson be appointed as trustee of the C[....] Family Trust.
Mr Anderson,
whose confirmatory affidavit is annexed to the
application, appears to be an independent and suitably qualified
person to act as
trustee. The third respondent has filed a notice of
intention to abide, in which he records that he is not aware of any
reason
why Mr Anderson should not be appointed as trustee of the
C[....] Family Trust. As section 13 of the Trust Property Control Act
57 of 1988 vests the Master with the power to appoint and authorise a
trustee in the place of a trustee who ceases to hold office,
such
appointment should be made by the Master and not by the court.
In the third respondent's notice of intention
to abide a concern is raised in regard to the applicant's request
that the costs of
the application be paid by the Trust and not by the
first respondent. It is clear on the papers before me that the
applicant, who
has incurred legal expenses in advancing the interests
of the Trust and its beneficiaries, is unlikely to be able to recover
such
costs from the first respondent in terms of any cost order which
I might make. In regard to the concerns expressed by the third
respondent as to the appropriate cost order, clause 9.6 of the Trust
Deed provides that the trust income may be applied to make
any
repayment to a trustee in respect of expenses which a trustee
personally may have incurred in the execution of the trustee's
duties
for the benefit of the Trust. The first respondent raised no
objection to the cost order sought by the applicant. Under
these
circumstances I am of the view that it would be just and equitable to
order that the costs of this application, on a scale
as between
attorney and client, be borne by the C[....] Family Trust.
12.
In
the result I make the following order:
1.
The
first respondentis removed as trustee of the C[….] Family
Trust IT502/1998.
2.
I
direct that the Master of the High Court, Pretoria (the third
respondent) should appoint Mr Human Anderson and authorise him to
act
as trustee of the C[....] Family Trust IT502/1998. In terms of the
provisions of the Trust Deed, Human Anderson should be exempted
from
the requirement to provide security to the Master of the High Court
for the performance of his duties as trustee.
3.
The
costs of this application, on a scale as between and attorney and
client, are to be paid by the C[....] Family Trust IT502/1998.
4.
The
first respondent's counter-application is dismissed, with the
consequence that the applicant's position as trustee of the C[....]
Family Trust IT502/1998 is confirmed.
5.
The
applicant is directed to deliver to the first respondent within three
months of date of this order, a detailed statement of
account in
respect of the first respondent's loan account in the C[....] Family
Trust from inception of the Trust to 28 February
2019, reflecting and
describing all debits and credits to the loan account, supported by
copies of such vouchers or documents as
may be available to the
applicant to support the loan account entries.
6.
The
applicant is directed to deliver to the first respondent within three
months of date of this order, copies of the annual financial
statements of the C[….] Family Trust for the financial years
ending February 2015, 2016, 2017, 2018 and 2019, signed and
confirmed
by the applicant as being a fair and correct reflection of the
financial affairs of the C[....] Family Trust.
NGD
MARITZ AJ
Acting Judge of the High Court
Gauteng Local Division, Pretoria