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[2019] ZAGPPHC 264
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Bouwer NO and Another v Smit NO and Others (59423/2015) [2019] ZAGPPHC 264 (5 June 2019)
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 number: 59423/2015
Heard on: 28 May 2019
Date
of judgment: 5 June 2019
In the matter between:
WILLEM
FRANCOIS BOUWER N.O.
First
Applicant
CHRISTOFFEL
FREDERICK VILJOEN
Second Applicant
and
CATHERINA JOHANNA SMIT
N.O.
First Respondent
JOHANNES ADRIAAN VILJOEN
N.O.
Second
Respondent
WILLEM CHRISTIAAN VOLJOEN N.O.
Third Respondent
ALBERTUS ABRAHAM VILJOEN
N.O.
Fourth
Respondent
ABRAHAM
CAREL VILJOEN N.O.
Fifth Respondent
PETRUS
JACOBUS VILJOEN
Sixth Respondent
DANIE
BARNARD N.O.
Seventh Respondent
MASTER
OF THE NORTH GAUTENG
HIGH COURT, PRETORIA.
Eighth Respondent
ABRAHAM
CAREL VILJOEN
Ninth Respondent
JUDGMENT
SWANEPOEL
AJ:
INTRODUCTION
[1]
This
is an application for the removal of the trustees of the Avianco
Trust ("the trust"), and the appointment in their
stead of
two independent trustees. First Applicant is an attorney, acting in
this application in his representative capacity as
the executor of
the estate of the late Abraham Carel Viljoen ("Viljoen")
who passed away on 12 November 2011.
[2]
Second
Applicant, as well as First, Second, Third, Fourth, Fifth and Sixth
Respondents are the children of Viljoen from his marriage
to Anna
Maria Aletta Viljoen, who was previously the seventh respondent
("Anna Viljoen"). All of the siblings were appointed
as
trustees of the trust after Viljoen's passing. Anna Viljoen passed
away after the application was launched, the executor of
her estate,
one Danie Barnard, was substituted in her stead, and he is now the
Seventh Respondent. By the time that the matter
came before Court,
the parties had agreed that the passing of Anna Viljoen had resulted
in the purpose of the trust being fulfilled
and that the trust should
be terminated. They also agreed that one, alternatively two
independent trustees should be appointed
to wind up the affairs of
the trust. All of the trustees, save for Fifth Respondent, wish to be
removed as trustees. The main issue
remaining for decision, is
whether Fifth Respondent should also be removed as trustee.
BACKGROUND
[3]
On
or about 19 April 1994 Viljoen signed a deed of trust, creating an
inter vivas
trust,
the Avianco Trust, the trustees at that time being Viljoen, his wife
Anna Viljoen, and one Willem Du Tait. At the outset
there was a
dispute between the parties regarding which trust deed was the
correct one, the deed referred to above, or a deed upon
which
applicants relied that had been signed in 2001, and which purported
to create the "Avianco Familie Trust". The
parties have now
agreed that the deed signed in 1994 (that Fifth Respondent contended
was the correct document) is the operative
one.
[4]
In
the deed Viljoen nominated Anna Viljoen and all the children born
from their marriage as beneficiaries of the trust. The deed
provided
that the trust would endure until Anna's death, or, at the discretion
of the trustees, until an earlier or later date.
Upon the termination
of the trust, the capital then remaining was to be divided between
the remaining beneficiaries.
[5]
A
beneficiary was entitled to conclude agreements with the trust, with
the proviso that the contract should be disclosed in writing
in
advance to all the trustees.
[6]
The
deed provided for the removal of a trustee by a court in the event
of:
6.1
The
trustee becoming permanently mentally incapacitated, if he/she was
declared incapable of handling his/her own affairs or was
declared to
be a prodigal, or if the trustee was placed under curatorship;
6.2
The
trustee's liabilities exceeding his/her assets, or the trustee
committing an act of insolvency;
6.3
The
trustee failing to execute his duties as trustee properly;
6.4
The
trustee being sentenced to imprisonment without the option of a fine;
6.5
The
trustee becoming disqualified to be appointed as a director of a
company in accordance with section 218 (1) of the Companies
Act,
1973.
[7]
A
decision of trustees required a majority of votes. Any trustee was
entitled to call a meeting of trustees on 14 days' written
notice to
the other trustees. The deed required that there should be a minimum
of three trustees at all times.
[8]
Viljoen
executed a will on 28 March 2001, in terms of which he bequeathed his
entire estate to the trust subject to certain conditions,
of which
the relevant ones are:
8.1
That Anna Viljoen would have lifelong
usufruct of the income of the trust;
8.2
That all seven children would be
trustees of the trust, together with Anna Viljoen;
8.3
That five votes would be required to
pass a resolution.
[9]
The
will also provided that after Anna Viljoen's death, the usufruct
would devolve upon the children for a period of one year, and
should
a beneficiary pass away during the currency of the usufruct, his/her
children would step into the shoes of that beneficiary.
[10] After
Viljoen passed away, all seven of the children were appointed as
trustees of the trust, together
with Anna Viljoen. Sixth Respondent
was subsequently sequestrated, and consequently he was removed as a
trustee of the trust. Sixth
Respondent was also the executor of
Viljoen's estate. Some of the trustees had concerns that Sixth
Respondent had not executed
his duties as executor with diligence and
care, and that he had delayed the finalisation of the estate. As a
result, the trust
resolved on 11 July 2012 to apply for the removal
of Sixth Respondent as executor. An order to that effect was granted
by default
on 3 February 2014.
[11]
Fifth Respondent was implacably opposed
to the removal of Sixth Respondent as executor . Fifth and Sixth
Respondents applied jointly
for the rescission of the order, but
later decided to withdraw the application. In the meantime First
Applicant had been appointed
as executor of Viljoen's estate in Sixth
Respondent's place.
[12]
For some years there has been friction
between the Viljoen siblings. It is fair to say that the decision to
remove Sixth Respondent
as executor of his father's estate, and the
appointment of 1st Applicant in his stead, fuelled the fires of
enmity. By September
2012, when the annual trustees' meeting was
held, the differences between the siblings had become overwhelming,
with Fifth and
Sixth Respondents in one camp, and the rest of the
siblings in the opposing camp. Whether he was correct or not, Fifth
Respondent's
perception was that 1
st
Applicant was exacerbating the disagreements between the siblings.
Fifth Respondent was very vocal in his belief that First Applicant
had been improperly substituted in Sixth Respondent's stead as
executor, and that First Applicant was doing nothing to finalise
the
estate. He clearly felt that First Applicant was interfering in
family affairs that were none of his business.
[13]
The parties seemed to have reached a
stalemate by 2015, and during July 2015 this application was
launched. First Applicant, in
his capacity as executor of the Viljoen
estate, and Second Applicant, in his personal capacity as well as in
his capacity as trustee,
sought the removal of Second Applicant, and
First, Second, Third, Fourth, Fifth and Seventh Respondents as
trustees of the trust.
The also sought the appointment of two
independent persons as trustees. The application was only opposed by
Fifth Respondent, and
essentially the other respondents supported the
application. Neither Second Applicant, nor the respondents (save for
Fifth Respondent)
wished to remain on as trustees.
[14]
The grounds for the removal of the
trustees were dealt with in very vague and generalised terms in the
founding affidavit. To a
large extent, 1
st
Applicant (who deposed to the founding affidavit) felt aggrieved by
Sixth Respondent's alleged lack of cooperation in resolving
the
deceased estate , and his apparent refusal to provide relevant
documents and information.
[15]
In an attempt to resolve his
difficulties, First Applicant "initiated" a meeting of
trustees. The meeting, in First Applicant's
own words, erupted into
chaos, with tempers flaring and accusations and insults cast about
between the two camps.
[16]
The result is that First Applicant
became convinced that Fifth and Sixth Respondents were being
obstructive. Sixth Respondent was
primarily his cause of complaint,
as he had particular knowledge of the affairs of the estate, and
First Applicant wanted to know
what he had done with all the assets
in the estate. First Applicant also wanted information relating to an
overseas investment
that belonged to the trust, but was being held in
the names of the Second and Sixth Respondents .
[17]
On 23 June 2015 First Applicant wrote to
all the trustees seeking certain information and documents. He
demanded:
17.1
Information regarding certain assets
that had already been dealt with by Sixth Respondent, and which were
in the hands of the trust;
17.2
Copies of all bank statements of the
trust;
17.3
A comprehensive list of all the bank
accounts opened by the trust;
17.4
Details of the trust's offshore
accounts;
17.5
Information relating to the trust's
books and accounts;
17.6
A list of all documents under the
control of the trust, including invoices, receipts, minutes of
meetings of trustees, minutes of
meetings of beneficiaries, agendas,
minute books, resolutions etc.
[18]
Fourth Respondent replied to the letter
suggesting that First Applicant should liaise with Sixth Respondent,
the previous executor,
and with the agent appointed by him to
administer the estate, one Hein Bezuidenhout, as well as with Fifth
Respondent and with
the trust auditors, Messrs. Griessel Nel. Fifth
Respondent also replied to the request for information. He recorded
that First
Applicant had had the liquidation and distribution account
in his possession for some time, and he invited him to familiarise
himself
with the document. Fifth Respondent also tendered to make
himself available to discuss specific issues with First Applicant. In
a later email, Sixth Respondent pointed out again that First
Applicant had the liquidation and distribution account in his
possession,
that he was in possession of the details of the trust
auditors, and that he knew where to find Sixth Respondent. He
suggested that
First Applicant was not being truthful when he said
that he did not have the information that he needed to finalise the
estate.
First Applicant was apparently frustrated by the aforesaid
responses, and it clearly reinforced his view that Fifth and Sixth
Respondents
were being obstructive.
[19] Based
on the aforesaid facts, First Applicant launched this application and
in the founding affidavit
he raised the following grounds for the
removal of the trustees:
19.1
He believed that it was in the trust's
interests that independent persons be appointed as trustees;
19.2
He alleged that there was continued
conflict at trustee meetings, that it was thus impossible to hold
trustee meetings, and trustees
were incapable of agreeing on
anything. Conversely, First Applicant alleged that no trustee
meetings were being held;
19.3
The Seventh Respondent had a usufruct
over the assets of the trust, and the trust was allegedly "failing
in achieving this
object and purpose";
19.4
No resolutions were being adopted and
none were implemented;
19.5
The trustees were required to keep
minutes of meetings, to meet regularly, to keep proper books of
account and to account for their
conduct as trustees, which they were
not doing.
[20]
First
Applicant made the specific allegation that it was principally Fifth
and Sixth Respondents who were making it impossible for
the trust to
function. There was allegedly complete chaos as far as financial
accounting was concerned. He also alleged that the
trust had not
submitted tax returns to the South African Revenue Services and that
there were no proper books for the trust. There
were no apparently no
financial statements being prepared and not even basic books of
account were being maintained.
[21]
The
picture that First Applicant painted was that of a completely
dysfunctional trust that was clearly unable to achieve the goal
envisaged by its creator. The aforesaid is the case that Fifth
Respondent was asked to meet in his answering affidavit.
LOCUS
STANDI
[22]
At the outset Fifth Respondent's
contended that First Respondent did not have the required
locus
standi
to bring the application.
Fifth Respondent took the point that First Applicant did not have any
interest in the trust, specifically
not in the removal of its
trustees.
[23]
The test whether a party has
locus
standi
was set out in
Jacobs
en 'n ander v Waks
[1991] ZASCA 152
;
1992 (1) SA 521
(AA) at 533 J to 534 (B):
"In die algemeen beteken
die vereiste van locus standi dat iemand wat aanspraak maak op
regshulp 'n voldoende belang moet he
by die onderwerp van die geding
om
die
hof the laat oordeel dat
sy
eis in
behandeling geneem behoort te word. Dit
is
nie 'n tegniese
begrip met vas
omleinde grense
nie. Die gebruiklikste manier waarop die vereiste beskryf word
is
om te
se
dat 'n eiser of
applicant 'n direkte belang by die aangevraagde regshulp moet he (dit
moet nie te ver verwyder
wees
nie); andersinds
word daar oak
gese,
na gelang van die
samehang van die feite, dat daar 'n werklike belang moet
wees
(nie abstrak of
akademies nie), of dat dit 'n teenswoordige belang moet
wees
(nie hipoteties
.
me).....
"
[24] It is
clear from
Jacobs
(supra) that a party's interest in the
relief sought does not have to be financial in nature. Section 20 (1)
of the Trust Property
Control Act, Act 57 of 1988 seems, however, to
limit the class of persons who may apply for the removal of a trustee
even further:
"20
Removal of trustee
(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".
[25] Mr
Lamey, acting for Fifth Respondent pointed my attention to the matter
of
Ras NNO v Van der Meulen
2011 (4) SA 17
(SCA)
where
Leach JA found (at 20 C):
"The court clearly erred
in finding that short of being
a
beneficiary, the
respondent had an interest in the trust which justified her being
entitled to seek the relief claimed. It is only
if she is a
beneficiary that she would be entitled to seek the removal of the
trustees .... .."
[26]
In
Kidbrooke
Place Management Association v Walton NNO
2015 (4) SA 112
(WCC) at
118 I
Binns-Ward J suggested
that even if an applicant did not have an interest in the trust
property, he could still have
locus
standi
by virtue of the common law,
if he had a sufficiently direct interest in the subject matter of the
litigation, even if he did not
have an interest in the trust
property. Itself. This
dictum
seems,
on the face of it, to conflict with the
Ras
judgment
(supra).
However nothing turns on it in this
matter, and I do not have to decide this issue as, in my view, First
Applicant has no interest
whatsoever in the subject matter of the
litigation. He has no interest in the trust property, nor does he
have any interest in
the trust, nor in its administration, nor in the
removal of its trustees.
[27]
First Applicant's sole purpose is to
administer the deceased estate, and to ensure that the assets of the
deceased estate are placed
in possession of the trust. I fail to see
how the administration of the trust impacts on First Respondent's
duties as executor.
It is therefore my view that First Applicant does
not have
locus standi
to
bring the application to remove the trustees.
MERITS
[28]
That however, is not the end of the
matter. Second Applicant is a beneficiary of the trust, and as such
he is entitled to bring
the application. Second Applicant supported
First Applicant's version and it is therefore necessary to consider
the merits of the
application.
[29]
Before I deal with the Fifth
Respondent's answer to the allegations, I must point out that the
papers are replete with factual disputes.
I therefore have to be
mindful of the
dictum
in
Plascon-Evans Paints Ltd v Van
Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
(AD) at 634 (H):
" It is correct that,
where in proceedings on notice of motion disputes of fact have arisen
on the affidavits, a final order,
whether it be an interdict or
some
other form of
relief, may be granted if those facts averred in the applicant's
affidavits which have been admitted by the respondent,
together with
the facts alleged by the respondent, justify such an order."
[30]
In answer to applicants' averments Fifth
Respondent put up a comprehensive answer. Fifth Respondent alleges
that he was appointed
as the chairperson of the trust with the
consent of his co-trustees. He states that the other trustees are
either not interested
in dealing with the affairs of the trust, or
they are incapable of handling its affairs. He alleges that some of
the trustees are
resident elsewhere, and cannot attend meetings of
the trustees. For that reason Fifth Respondent, regarding himself as
an experienced
businessman, has taken the burden of the trust affairs
on his own shoulders.
[31]
Fifth Respondent denies that the trust
is not functional. He alleges that under his auspices, the affairs of
the trust have been
properly administered, and assets have been
properly accounted for. Fifth Respondent makes two points, in my view
correctly so,
firstly, that there are no allegations of impropriety
against him, and secondly, that most of the allegations relate to the
conduct
of Sixth Respondent in dealing with the affairs of the
deceased estate, and he has not been a trustee for some years.
[32]
In reply, First Applicant filed a fifty
eight page affidavit in which he made a number of new allegations
against Fifth Respondent.
The material new allegations are the
following:
32.1
That
he has an autocratic style and does not accept the decision of the
majority of trustees;
32.2
That
he simply appoints his own auditors to do his bidding in respect of
the trust affairs;
32.3
That Fifth Respondent made a loan to the
trust which he wants to recover, that the loan is in dispute, and
that Fifth Respondent
therefore has a conflict of interest that would
disqualify him from continuing as a trustee;
32.4
That there are numerous assets of the
deceased estate that were not accounted for in the inventory;
32.5
There is a complete breakdown of trust
between the Fifth Respondent and the beneficiaries;
32.6
That the books of the trust have been
manipulated.
[33]
First Applicant makes the following
inexplicable and unsubstantiated allegation:
" I deny the
unsubstantiated statement by the Fifth Respondent that he
has
seen to it that
the trust
assets
are properly
administered and accounted for. I have already referred to the
missing
assets
of the trust
as
far
as
the deceased
estate
is
concerned.
Furthermore, I have well founded
reasons
to suspect
serious
maladministration
in the deceased estate by the Sixth Respondent."
[34]
I emphasize that I am bound to accept
the Fifth Respondent’s version where it contradicts applicant's
version, unless the
Fifth. Respondent's averment is so obviously
false that it can be rejected. In this matter the consideration of
facts is made even
simpler by the comprehensive version put up by
Fifth Respondent. There are simply no facts to support the contention
that either
the estate assets or the trust assets are missing, or
that there has been maladministration of the trust or the estate.
What is
meant by the statement that there are "missing assets of
the trust as far as the deceased estate is concerned", I do not
know. Subsequent to the reply being filed, Fifth Respondent, quite
correctly so, deemed it necessary to file an affidavit in answer
to
the new allegations that only arose in reply. In that affidavit he
deals with each of the First Applicant's allegations.
[35]
I will deal with each allegation
separately:
35.1
Absence
of meetings and resolutions:
The
allegation that there were no meetings of trustees being held is
palpably false. Fifth Respondent attached the minutes of an
annual
meeting held on 28 July 2015, the same date upon which the
application was issued. According to the return of service the
application was served on Third, Fifth and Sixth Respondents on 28
July 2015 at the offices of the trust auditors, where the annual
meeting was being conducted. The contention that no meetings were
being held was, to First Applicant's knowledge, false. The allegation
that resolutions were not adopted is equally untrue.
35.2
Fifth
Respondent also attached to the answering affidavit the minutes of
the meeting of 7 March 2014, being the previous annual
general
meeting of trustees. First Applicant himself attached the minutes of
a trustees' meeting held on 11 July 2012 to his replying
affidavit.
That meeting was held at First Applicant's offices. At that meeting a
resolution was taken to apply for the removal
of Sixth Respondent as
executor of the estate. There is simply no truth to the allegation
that there were no meetings of trustees.
They may have been held
annually, but nothing prevented any one of the other trustees from
calling for a meeting, as they did in
July 2012.
35.3
Absence
of basic books of account and financial statements:
This allegation is even more egregious than the allegation that
meetings were not held. In his answering affidavit, Fifth Respondent
attached financial statements for the financial years 2013, 2014 and
2015. He also attached the SARS tax returns for 2013, 2014
and
2015.In reply Applicants' case morphed from the allegation that there
were no financial records (not even basic books of account),
to a
denial that the financial statements were properly audited. He
provided no factual basis for this allegation save to state
that none
of the other trustees had signed the statements. There is no
allegation, however, that the statements do not correctly
reflect the
financial affairs of the trust. There is also no factual basis to the
allegation that the books of account have been
"manipulated".
What I find inexplicable, is that First Applicant could by a mere
enquiry to the auditors have determined
that there were proper books
of account, and that financial statements had been prepared. There is
no explanation why he did not
take that opportunity.
35.4
Conflict
of interest in respect of loan:
Fifth Respondent is alleged to have lent the sum of R 114 411.00 to
the trust at a stage when its account was frozen, in order
to pay
income tax and to avoid penalties for late payment. First Applicant
now alleges that the loan is disputed, notwithstanding
the fact that
at the annual general meeting of 7 March 2014 the loan was discussed
and it was resolved to repay the monies to Fifth
Respondent. I have
serious doubts whether there is actually a dispute regarding the
loan. In any event, the order that I intend
to make will resolve any
potential conflict of interest.
35.5
Assets
of the
estate have not been accounted
for:
This allegation has nothing to
do with the trust. If it were true, then First Applicant has the
authority to pursue those assets
and recover them from wherever they
may be found. In any event, what is more concerning is that First
Applicant has been aware
throughout that Hein Bezuidenhout was
appointed as Sixth Respondent's agent to administer the affairs of
the trust, and despite
invitations to do so, First Applicant has made
no attempt to engage with Bezuidenhout regarding his concerns. In my
view Fifth
Respondent has in any event provided a proper explanation
for each of the allegedly missing assets.
[36]
Finally I have to deal with the
allegation that Fifth Respondent has an autocratic style, and does as
he pleases with the trust
and its affairs. The breakdown of the
relationship between a trustee and his co-trustees and beneficiaries
is, in my view, not
per se
a
basis to remove a trustee from his position. A trustee is not lightly
removed, and there have to be substantive reasons why the
trustee
cannot, or should not be allowed to continue in his position.
[37]
The principles to be applied in deciding
whether to remove a trustee have been restated a number of times over
the years. In
Sackville West v
Nourse and another
1925 AD 516
,
Solomon
ACJ considered an application to remove a trustee based on the
contention that he had acted imprudently with trust monies
in
investing in a hotel property. The learned judge referred to the
matter of
Ledderstedt v Broers
(9
AC 371)
,
an appeal to the privy
Council against a judgment of the Cape Supreme Court. In his judgment
Lord Blackburn quoted a passage from
Story's
Equitable
Jurisprudence
(at paragraph 1289)
with approval:
"But in cases of positive
misconduct Courts of Equity have no difficulty in interposing to
remove trustees who have abused
their trust: it is not indeed every
mistake or neglect of duty or inaccuracy of conduct of trustees,
which will induce Courts of
Equity to adopt such a course. But the
acts or omissions must be such as to endanger the trust property or
to show a want of honesty
or a want of proper capacity to execute the
duties, or a want of reasonable fidelity."
[38]
Solomon ACJ further quoted Lord
Blackburn (in
Ledderstedt
supra
at
527)
where he laid down the general
principle that a Court would remove a trustee
"if
satisfied that the continuance of the trustee would prevent the trust
being properly executed."
Solomon
ACJ also approved of the passage in which Lord Blackburn set out the
broad approach to be applied in these matters:
"In exercising so delicate
a jurisdiction as that of removing trustees, their Lordships do not
venture to lay down any general
rule beyond the very broad principle
above enunciated that their main guide must be the welfare of the
beneficiaries."
[39]
What is clear from the
Sackville
matter, is that it is not
necessary to find fraud or "positive misconduct" on the
part of a trustee, before he or she
could be removed from office. One
of the grounds for removal argued for in
Sackville
(supra
at
528)
was
the friction and hostility between trustees and the beneficiary.
Solomon ACJ considered the nature of the functions that the
trustee
was required to discharge, and came to the view that notwithstanding
the hostility which emanated mainly from the side
of the beneficiary,
the trust could nevertheless be properly executed, and that there
were therefore insufficient grounds to remove
the trustee.
[40]
In
Spiros
v Spiros
1932 WLD 207
at 211,
the
Court held that even though it could not be found that there was any
misconduct on the part of a trustee:
"...
.it seems to me to be
a case of obstinacy on the part of the respondent and of the two
parties not being able to agree, but whatever
the cause the fact
remains that the trust property has really been endangered, and if
the Court has to regard as the main guide
the welfare of the
beneficiaries, which in this
case
include a minor, the
daughter of the applicant, I think the Court can only come to one
conclusion and that is that the administration
cannot be carried on
in the way in which it has been carried on in the past."
[41]
In
the matter of
Volkwyn, N.O. v
Clarke
&
Damant
1946 W.P.A. 456
(at 464)
Murray J made the following comment:
"Both the statute and the
case cited (Letterstedt v Broers) indicate that the sufficiency of
the cause for removal is to be
tested by a consideration of the
interests of the estate. It must therefore appear, I think, that the
particular circumstances
of the acts complained of are such as to
stamp the executor or administrator as a dishonest, grossly
inefficient or untrustworthy
person, whose future conduct can be
expected to be such as to expose the estate to risk of actual loss or
of administration in
a way not contemplated by the trust instrument."
[41]
In
Die
Meester v Meyer
1975 (2) SA 1
(TPA),
Margo
J, in discussing the principle laid down by Murray J in
Volkwyn,
remarked that circumstances of
any nature, which left the trustee in an untenable situation
vis
a
vis
the trust, would be
prima
facie
grounds for his/her removal
(at 17 D). The determining factor was the interests of the trust and
its beneficiaries. For instance,
should the executor in the
Meyer
matter (who is as against the
estate in the same position as a trustee is in respect of a trust)
not be impartial in considering
claims against the estate, that would
be
prima facie
grounds
for his removal. (See also:
Webster
v Webster
1968 (3) SA 386
(T) at 388 C to D)
[42]
It was argued on behalf of applicants
that the dictatorial conduct of the Fifth Respondent, and the
hostility between the different
factions of siblings engendered
thereby, rendered the execution of the trust impossible. In
Tijmstra
NO v Blunt Mackenzie NO and others
2002 (1) SA 459
(TPD),
the
hostility shown by a trustee towards co-trustees, was one of the
factors that led to the removal of the trustee. Normally, simple
hostility between trustees or trustees and beneficiaries would not be
sufficient reason to remove a trustee from his position.
However, the
general principle remains, that should the conduct of the trustee
generate such hostility between parties that the
trust cannot be
executed properly, a trustee may be removed from office.
[43]
In analysing the various allegations, I
have no doubt that Fifth Respondent did not endear himself towards
the other trustees. He
took a very dim view of the fact that First
Applicant had been appointed as executor of his late father's estate,
and he believed
that First Applicant was interfering in family
affairs that had nothing to do with him. I must say that I have some
sympathy with
Fifth Respondent's views. First Applicant "initiated"
a trustee's meeting when he had no right to do so. Applicants'
attorney, Mr Danie Barnard attempted to attend the annual general
meeting in 2015, without the necessary consent in writing and
in
advance of all the trustees. When he was asked to leave, he refused.
Then followed the demand for information and documents
that fell
outside of the purview of First Applicant's duties. It is not
surprising that Fifth Respondent was unhappy with Barnard's
conduct,
and that of First Applicant.
[44] The
question that I have to consider is whether Fifth Respondent's
conduct was such that it would likely
prevent the further execution
of the trust. There have been vague allegations made of assets that
have disappeared from the estate.
Those allegations were denied, and,
in my view, comprehensively shown to be untrue. The allegations
regarding the estate relate
to the manner in which Sixth Respondent
allegedly administered the estate, and have no bearing on the
business of the trust. There
are no substantive allegations that the
assets of the trust have been administered improperly or have
disappeared. The allegations
of financial mismanagement by failing to
keep books of account have been conclusively rebutted.
[45]
I doubt that the relationship between
the siblings will be restored in the near future, and they will in
all likelihood remain hostile
to one another. However, given the
order that I intend to make, I do not believe that such hostility
will prevent (what is essentially)
the winding up of the trust. I
also have serious doubts that the loan to which reference was made
would constitute a substantial
conflict of interest. The loan has
been reflected in the books of the trust for a number of years, and
at the 2014 annual meeting
the trustees already resolved to reimburse
Fifth Respondent. In any event, the two independent trustees will be
able to deal with
any conflicts, should they arise.
[46]
The trust requires three trustees at any
one time. I therefore propose to direct the Master of the High Court
to appoint two independent
persons to wind up the affairs of the
trust, together with Fifth Respondent. In the event of a
disagreement, a majority of votes
would prevail. In summary
therefore, I am of the view that there are no grounds for the removal
of Fifth Respondent as trustee.
The result is that the application
should be dismissed, and the counter application should succeed,
albeit in amended form.
COSTS
[47]
Costs
generally follow the result. Fifth Respondent has argued that I
should grant an order against the applicants, and against
the
respondents who supported the application, in their personal
capacities. As far as the applicants are concerned, they act in
their
representative capacities, whilst Second Applicant also brought the
application in his personal capacity. I see no reason
why the estate
of the late Mr. Viljoen should be burdened with the costs of the
application, which to my mind was ill-conceived.
I also see no reason
why the trust should be out of pocket for the costs of the Second
Applicant.
[48]
As
far as a costs order against the First, Second, Third and Fourth
Respondents is concerned, they were not represented herein,
and
although they supported applicants' version, they did not actively
pursue the matter. I do not believe that, in the absence
of having
heard them on costs, it would be appropriate to make such an order.
My view is therefore that applicants should pay the
costs, jointly
and severally, the one paying the other to be absolved, in their
personal capacities.
[49]
One
issue remains, which is the costs of the previous postponement of the
matter on 19 March 2018. The following facts seem to be
common cause:
49.1
During December 2017 the matter was
set down for hearing on 19 March 2018. At that stage applicants had
filed their replying affidavit.
It must, from the outset, have been
clear that the replying affidavit contained much new material that
would likely have to be
dealt with, either by an application to
strike, or by a further affidavit.
49.2
More than three months passed before
Fifth Respondent delivered a counter-application, and, on the day of
the hearing Fifth Respondent
filed a duplicating affidavit.
49.3
When the matter was called it was
pointed out to counsel that the file was empty. The matter was thus
postponed and costs were reserved.
[50]
There is no explanation why the file was
empty, but one can safely assume that the matter would not have
continued in any event
due to the late filing of the
counter-application and the duplicating affidavit, even if the file
had been complete. Although applicants
contend that their attorney
had prepared the file properly, and that the contents of the file had
disappeared thereafter, it is
still applicants' responsibility to see
to it that a complete file is before the presiding judge. Therefore,
both parties seem
to have had a hand in the postponement, and in my
view, there should be no order as to costs for the postponement of 19
March 2018.
[51]
In the premises I make the following
order:
51.1
Second Applicant and First to
Fourth Respondents are removed as trustees of the Avianco Trust, IT
no. 1912/1994.
51.2
In terms of the provisions of
clause 10.1 of the trust deed dated 19 April 1994, and in terms of
section 13 of the Trust Property
Control Act, Act 57 of 1988 ("
the Act") the trust is to be dissolved and the assets of the
trust are to be distributed
and transferred to the beneficiaries of
the trust.
51.3
The Master of the High Court is
directed to appoint two professional persons as independent trustees
in terms of section 7 of the
Act, and such persons shall not be from
within the ranks of any of the parties to the present litigation,
their representatives
or of the previous trustees or beneficiaries.
51.4
The trustees shall, in order to
give effect to the aforegoing:
51.4.1
Take control of all assets,
funds, monies, and accounts of the trust;
51.4.2
Determine whether there are
assets of the trust that have not been transferred to the trust, and
take all necessary steps to obtain
possession and transfer of such
assets to the trust before final distribution to the beneficiaries
and the termination of the trust.
The trustees may make interim
distributions of funds or assets to the beneficiaries.
51.4.3
At their discretion, liquidate
any assets, movable or immovable, of the trust;
51.4.4
For all intents and purposes act
as administrator for the purposes of winding up the trust, and for
the distribution of the net
assets of the trust to the beneficiaries;
51.4.5
Ensure that all liabilities of
the trust are settled before final distribution of assets to the
beneficiaries;
51.4.6
Account to all of the
beneficiaries , and to the Master of the High Court for the payment
of liabilities and the distribution of
the assets of the trust to the
beneficiaries;
51.4.7
Be entitled to such reasonable
remuneration as the Master may approve;
51.4.8
Be entitled to conduct a forensic
audit into the affairs of the trust and to appoint a forensic auditor
to conduct an investigation
into its affairs;
51.4.9
Be entitled to approach this
Court if necessary, on papers duly supplemented, to extend their
powers in order to give effect to
this order.
51.5
Upon fulfilment of the
obligations of the trustees as set out above, the trust shall
terminate.
51.6
Applicants shall pay the costs of
the application and the counter-application, jointly and severally,
the one paying the other to
be absolved, in their personal
capacities.
51.7
In respect of the wasted costs of
19 March 2018, each party shall pay its own costs.
J.J. C. Swanepoel
Acting
Judge of the High Court,
Gauteng
Division, Pretoria
Heard
on:
28 May 2019
Counsel
for Applicants:
Adv. M.P van der Merwe
SC
Attorneys
for Applicants:
BARNARD & PATEL ATTORNEYS
Counsel
for Respondents : Adv A.T. Lamey
Attorneys
for respondents: DAWIE BEYERS ATTORNEYS
INC
Date
of judgment:
5 June 2019