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[2018] ZAGPPHC 245
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Shevel v Shevel (57607/16) [2018] ZAGPPHC 245 (23 January 2018)
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORI
A
)
Case
Number: 57607/16
Date:
23/01/2018
REPORTABLE:
NO
OF
INTEREST TO OTHER JUDGES: NO
In
the matter between:
DANIEL
ELYN
SHEVEL
APPLICANT
and
ELLIOT
JACK
SHEVEL
RESPONDENT
Coram:
HUGHES J
JUDGMENT
HUGHES
J
[1]
The applicant, Daniel Elyan Sheve,l
is· the son of the
respondent,
Elliot Jack Shevel. In this application the applicant seeks an order
to remove the respondent, in terms of section
20 of the Trust
Property Control Act 57 of 1998 (the Act), as trustee of the family
trust, JSE Share Trust (the trust), to which
he is also a
beneficiary.
[2]
The applicant asserts that as trustee and beneficiary of the trust
duly registered with the Master of this court he has
locus standi
to bring this application. The trust has two other trustees, that
being the respondent and Mr Leonard de Vos, a chartered accountant,
practising as such at De Vos Richards. The trust is a family trust
founded by the respondent in 2000. It is not in dispute that
the
trust deed has been amended from time to time. One of such amendments
took place in 2005 causing the removal of a family trust
and
replacing it with the applicant's appointment as a beneficiary and
trustee. A final amendment during June 2015, by the applicant
himself, effectively recorded the beneficiaries of the trust as
himself, the respondent and the applicant's minor son, Kelly.
[3]
The trust is the sole shareholder of a private company since 2005,
Stand 752 Parktown Extension (Pty) Ltd (the company).
The company
owns a property in Parktown Johannesburg since 1993, Erf 752 Parktown
Extension, also known as 45 Empire Road Parktown,
Johannesburg (the
property). Therefore, the only asset of the trust is the property.
The company, according to the respondent,
acquired the property for
the benefit of his medical practice, Dr E Shevel Incorporated trading
as the Headache Clinic. This was
so, in order for the practice to no
longer pay rental as it had been doing so in the past. The respondent
is the sole shareholder
and director of the Headache Clinic and has
been the sole director of the company since 2007.
[4]
By virtue of a longstanding agreement between the company and the
Headache Clinic, the respondent states, that the Headache
Clinic was
to occupy the property rent free in return the Headache Clinic would
be fully responsible for the payments of rates,
insurance and
maintenance of the property. Thus, the Headache Clinic pays the
expenses such as insurance, maintenance, rates, taxes
and other
running expenses of the property, at no costs to the company. The
respondent states further that the aforesaid averments
are inherent
of the tacit terms of the agreement concluded between the company and
the Headache Clinic. Incidentally, the respondent
is director of both
the company and the Headache Clinic and is alleged to have
represented both in the conclusion of the agreement.
According to the
respondent the agreement was never reduced to writing but the
arrangement has been in place since 2005 when the
property was
acquired.
[5]
The respondent established the Headache Clinic in 1992 and the
applicant held the position of practice manager of the
Headache
Clinic since 1999. Even so, the respondent assisted the applicant,
until the applicant accused him the respondent of meddling
with his
management. Thus, since 2002 the applicant was left to manage the
Headache Clinic on his own. The respondent essentially
concentrated
with the medical side of the practice of the clinic and this was the
position until the applicant was relieved of
his duties during
mid-December 2015.
[6]
The respondent raised a
point in limine
of non-joinder which
he abandoned at the commencement of argument. I therefore will not be
venturing into that terrain.
[7]
The issue raised is one which is narrow in my view, being, that the
applicant seeks the removal of the respondent as trustee
due to his
failure to comply with his fiduciary duties as a trustee. He relied
upon section 20 of the Act, specifically section
20(1) states that a
trustee may on application of the Master or any person having an
interest in the trust property, at any time,
be removed from their
office by a court, if such court is satisfied that the removal will
be in the interests of the trust and
the beneficiaries.
[8]
Before embarking on the task at hand I pause to consider the
dicta
of Murray J in
Volkwyn N.O. v Clarke and Damant
1947 WLD 456
at 464,
after an analysis and consideration of cases such as
The
Master v Edgecombe's Executors 1910 TPD
at
271,
where the
court stated that, the courts possessed the same common law power for
the removal of administrator,s trustees and executors
alike. This
common law power is fortified by section 20 of the Act. I am mindful
of the additional cases of
Lettersterdt v Broers (9, A.C.371)
and
Sackville West v Nourse and Another 1925 A.O. 516 ,
where the
following was stated:
"To
my mind it is a matter of delicacy (asexpressed in
Letterstedt's
case
(supra)
but of seriousness to interferewith the
management of the estate of a deceased person by removing from the
control thereof persons
who, in reliance upon their ability and
character, the deceased has deliberately selected to carry out his
wishes. Even if the
executor or administrator has acted incorrectly
in his duties, and has not observed the strict requirements of the
law, something
more is required before h si removal
is warranted. Both the statute and the case cited indicates
that the sufficiency
of the cause for removal is to be tested by a
consideration of the interest 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."
[9]
I turn to deal with the assertions made by the applicant. He
commences by illustrating that he established that the value
of the
property is R11 million. In addition, he calculated that a reasonable
estimation of the gross income, which could be obtained
annually from
the property was R 1 473 112. 00, whilst the net income that could be
attained annually would be R1 104 834.00 or
R92 069.50 per month.
Hence, it was unacceptable for the Headache Clinic to use the
property rent free as the potential income,
for the benefit of the
beneficiaries, from renting the property is lost, so argues the
applicant.
[10]
This culminated in the applicant convening a meeting to address his
concerns, which eventually took place on 13 January 2016.
At this
meeting the applicant proposed that the arrangement between the
Headache Clinic and the company be reconsidered. This,
he states,
would ensure that the benefit that could be derived from the use of
the company property would be to the advantage of
the trust.
[11]
The applicant further contends that the respondent is conflicted as
he does not appreciate the value of the property to the
trust.
Further, he is a director of both the company and the Headache
Clinic, who are the parties in the arrangement to the detriment
of
the trust. This, in my view, is the crux of the issues before me.
[12]
The respondent, on the other hand, asserts that the applicant as from
2005 acquiesced to the agreement in place between the
Headache Clinic
and the company. This arrangement, having been in place prior to him
becoming a trustee and beneficiary of the
trust. The respondent
further states that the Headache Clinic has an agreement with the
trust and the property owing company and
is thus entitled to occupy
the property rent free.
[13]
In accessing the request of the removal of the respondent,
consideration ought to be had of the interest of the trust. In doing
so, it is thus vital to examine the conduct of the respondent and to
determine if indeed such conduct is dishonest, grossly inefficient
or
untrustworthy to necessitate such removal. The said conduct should
also be such that if continued in
the
future, could expose the trust to
the risk of actual loss
or
the administration of which is not contemplated by the trust.
[14]
On my examination of the papers before me I find that the interest of
the trust is set out in the Amended Trust Deed
at paragraph 4
with the heading: 'Purpose and objectives of the Trust'. The import
of the principle objectives of the trust is
set out in the following
paragraph:
"4.1
The primary objective of the Trust is for the Trustees to accept,
hold, add to, invest, enhance and administer the Trust
Fund for the
benefit and well-being of the Beneficiaries in the widest sense
subject to the provisions of the Trust Deed."
[15]
A further paragraph which points towards the interest of the trust is
found under paragraph 5 headed 'Trust Fund to vest in
Trustees'
specifically 5.3 and 5.4 which I set out below:
"5.3
While the Trust is in operation the Trustees are hereby obliged to
take possession of all the Trust
Assets
including title deeds and other documents and to ensure their
preservation and safekeeping for the duration of the Trust.
5.4
However or wherever the Trust Fund may be held or registered, it
shall be held on and for account of the Trust and on behalf
of the
Beneficiaries and at no time shall the Trustees be deemed to acquire
for themselves or on their personal account any contingent
and/or
vested right or interest in the Trust Fund save insofar as the
Trustees may be Beneficiaries of the Trust in terms of the
Trust
Deed."
[16]
I am aware that the trust deed makes provision for the board of
trustees to comprise of a minimum of three trustees all the
time. The
arrangement that's currently in place, between the company and the
Headache Clinic, goes contrary to the purpose and
objectives of the
trust, as is set out in paragraph 4.1 of the trust deed. The company
owning the property, of which the trust
is the only shareholder, is
the vessel which has an arrangement with the Headache Clinic. This
arrangement, to my mind, is clearly
not beneficial to the trust. Even
though, the Headache Clinic pays the rates, maintenance and insurance
for the property, one needs
to bear in mind that this arrangement has
been in place with the knowledge of the trust and the trustees over a
period of time.
Most importantly, in my view, is that the financial
benefit alluded to by the applicant in relation to the rental, had
never formed
part of the Trust Fund which the trustees have
undertaken to "accept, hold, add to, invest, enhance and
administer... for
the benefit and well-being of the Beneficiaries in
the widest sense". These duties fall in the domain of the
property itself
and not the proposed financial benefit that could be
derived. In the circumstances where the
benefit
had not existed a trustee cannot
be said to have been in derelict of their fiduciary
duty as expressed above. I therefore cannot find that the conduct of
the respondent is dishonest, grossly inefficient or untrustworthy
to
necessitate his removal. Neither can I conclude that his continued
future conduct, in the circumstances, could expose the trust
to the
risk of actual loss or the administration of which is not
contemplated by the trust. This is so, as the proposed benefit
was
never a part of the trust fund or put simply a benefit that the
trustees had undertaken to protect, as it was not part of the
trust
fund, in terms of paragraph 4.1.
[17]
What is crucial though, is whether on the facts before me the
arrangement, in anyway caused a trustee to acquire for his/her
personal account, that which would have been for the advantage for
the beneficiaries (as per paragraph 5.4 of the Trust Deed).
In the
current instance, the applicant states that this is so, as the
respondent is gaining for his personal account that which
could have
been benefitted by the beneficiaries. As such the respondent in his
capacity as trustee is not acting for the benefit
of the trust and
the beneficiaries to such trust. This argument must fail for the
reason already advanced, that being, the financial
benefit had not
existed for the trust and as such the respondent could not be accused
of acquiring that which would have benefited
the beneficiaries.
[18]
Does such conduct warrant the removal of the respondent? In my view,
such conduct does not amount to dishonesty, grossly inefficiency
or
untrustworthiness and does not imperil the trust property or the
proper administration thereof. See
Gowar v Gowar
2016 (5) SA 225
(SCA) at para [31] and [32]
where Petse JA stated as followings:
"[31]
...Thus, the overriding question is always whether or not the conduct
of the trustee imperils the trust property or its
proper
administration. Consequently, mere friction or enmity between the
trustee and the beneficiaries will not in itself be adequate
reason
for the removal of the trustee from office.
(See
also in this regard:
Tijmstra
NO
v
Blunt-Mackenzie
NO
&
others
2002 (1) SA 459
(T) at 473E-.G )
Nor,
in my view, would mere conflict amongst trustees themselves be a
sufficient reason for the removal of a trustee at the suit
of
another.
[32]
Moreover, it must be emphasised that whilst a trustee is in law
required to act with care and diligence, the decisive consideration
is the welfare of the beneficiaries and the proper administration of
the trust and the trust property. And, sight must not be lost
of the
crucial fact that the court may order the removal of a trustee only
if such removal will, as required by s 20(1) of the
Act, be
'
in the interests of
the trust and its
beneficiaries.'
(My emphasis.)"
[19]
Consequently the order I make is as follow:
[19.1]
The application to remove the respondent as trustee of the JSE Share
Trust (IT6957/00) is dismissed with costs.
________________________
W.
Hughes
Judge
of the High Court, Pretoria
Date
Delivered:
For
the Applicant: MacRoberts Inc.
012 425 3400
For
the Respondent: Bagraim Sachs Inc.
011 884 8952