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[2018] ZAKZDHC 12
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Tugh NO and Another v Rajbansi and Others (9220/2015) [2018] ZAKZDHC 12 (15 May 2018)
IN THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION, DURBAN
CASE
NO: 9220/2015
In
the matter between:
HIMAL
TUGH
N.O.
First
Applicant
PRAVIN
RAMJATHAN
N.O.
Second
Applicant
and
SHAMEEN THAKUR
RAJBANSI
First
Respondent
THE MASTER OF THE HIGH COURT,
PIETERMARITZBURG
Second
Respondent
VIMLESH AMICHAND
RAJBANSI
Third
Respondent
VIMAL
RAJBANSI
Fourth
Respondent
VIMLEKHA AMICHAND
RAJBANSI
Fifth
Respondent
VIMSHANA DEVI AMICHAND
RAJBANSI
Sixth
Respondent
VIMTHA AMICHAND
RAJBANSI
Seventh
Respondent
Coram:
Koen J
Heard:
19 APRIL 2018
Delivered:
15 May 2018
O R D E R
An order is granted in the following
terms:
(a) The First Respondent is hereby
removed as a trustee of the A. Rajbansi Family Trust with
registration number IT 1918/2000;
(b) The Second Respondent is directed
to endorse its records accordingly;
(c) The First Respondent is directed
to hand over to the Applicants all documents, banking and
administrative instruments relating
to the administration of the
Trust within 3 days of the grant of this order;
(d) In the event of the First
Respondent failing to comply with paragraph (c) above the Sheriff or
his Deputy be and is hereby authorised
to do all things necessary to
give effect to paragraph (c) above;
(e) The First Respondent is directed
pay the costs of the application.
JUDGMENT
KOEN
J
[1]
The Applicants, in their representative capacity as two of the three
trustees of the A. Rajbansi Family Trust (‘the Trust’),
apply on motion for the following relief against the First
Respondent, third trustee of the Trust, in her personal capacity:
[1]
‘
1.That
this matter be afforded urgency …
2.
That the First Respondent be and is hereby removed as a Trustee of
the A. Rajbansi Family Trust with registration number IT 1918/2000
(THE TRUST);
3.
That the Second Respondent
[2]
is
directed to endorse its records accordingly in respect of paragraph 2
above;
4.
That the First Respondent is directed to hand over to the Applicants
all documents, banking and administrative instruments relating
to the
administration of the Trust within 3 days of the grant of this order;
5.
In the event of the First Respondent failing to comply with paragraph
4 above that the Sheriff or his Deputy be and is hereby
authorised to
do all things necessary to give effect to paragraph 4 above;
6.
The First Respondent pay the costs of this application on an attorney
and client scale including the costs of two counsel;
7.
Further and/or alternative relief as this Honourable Court may deem
necessary.’
[2]
The following facts are either common cause or not seriously in
dispute on the papers:
(a) Apart from being a duly appointed
trustee to the Trust pursuant to letters of authority issued by the
Master of the High Court
on 26 September 2013, the First Respondent
is also the executrix
[3]
to the estate of her late husband, A Rajbansi (hereinafter referred
to as the ‘deceased’);
(b) In case no. 9787/2013, the First
Respondent in her capacity as executrix in the estate of the deceased
and as duly appointed
trustee of the Trust launched an application
against
inter alia
the First Applicant and Second Applicant
[4]
as Seven and Eighth Respondents. She claimed an order that the
decision by the Master of the High Court to uphold objections to
the
First and Final Liquidation and Distribution account in the estate of
the deceased be set aside, together with certain ancillary
relief.
Part of the objection related to whether shares in Manog Investments
(Pty) Limited (‘Manog’) held by Hewawathie
Devjeith
(‘Devjeith’) are held by her as a nominee of the
deceased. Another part of the objection related to whether
shares in
respect of Phoenix North Properties (Pty) Limited (‘Phoenix’),
Gahana Enterprise (Pty) Limited (‘Gahana’);
Footwin
Investments (Pty) Limited (‘Footwin’), and Snapshot
Investments 1359 (Pty) Ltd (‘Snapshot’) held
by Vimlesh
Amichand Rajbansi (‘Vimlesh Rajbansi’) as nominee, and
which in terms of the will of the deceased were to
be ‘transferred
to the (Trust)’, were to be transferred to the deceased estate
or directly to the Trust.
(c) In case no. 10429/2013 the First
Respondent in her capacity as executrix in the estate of the deceased
in an action prayed for
an order against Devjeith
[5]
that she do all things necessary and take all necessary steps to
transfer the shareholding and any cash assets in Manog to the
estate
of the deceased, and that Vimlesh Rajbansi
[6]
do all things necessary and take all necessary steps to transfer the
shareholding and any cash assets in Gahana, Phoenix, Footwin
and
Snapshot to the deceased estate. The First and Second Applicants in
this application were not cited as parties to that action
but
subsequently applied successfully for leave to intervene as
Defendants.
[7]
Vimlesh Rajbansi defended the action on the basis that she holds the
shares as nominee for and on behalf of the Trust and that
she had
tendered transfer of the shares to the Trust in or around May 2014.
Ex facie an affidavit filed under that case number
by the First
Applicant the Trust resolved by resolution signed by all three
trustees (including the First Respondent) of the Trust
on 6 November
2014, to institute action against Vimlesh Rajbansi to do all things
necessary in order to take effective control
of the companies in
respect of which holds the shares.
(d) In case no. 12226/2014, following
Vimlesh Rajbansi having indicated in May 2014 that she tendered
transfer of the shares to
the Trust, the First Respondent applied for
an urgent interdict pending the final determination of the action
under Case No. 10429/2013,
citing Vimlesh Rajbansi as First
Respondent and the Applicants in their representative capacity as the
Second and Third Respondents,
interdicting the transfer of the shares
in Gahana, Phoenix, Footwin and Snapshot to the Trust and the
Applicants from accepting
transfer of the shares into the Trust. An
order was granted on 27 October 2014 but part thereof discharged on 7
November 2014.
(e) The litigation under case numbers
case No. 9787/2013, 10429/2013 and 12226/2014 has not been decided
finally.
[8]
[3]
The Applicants’ prayer for relief is premised on
inter alia
the following grounds namely:
(a) That the First Respondent has
failed to act in good faith and in the best interest of the Trust;
(b) That the First Respondent finds
herself in an irreconcilable position of conflict between her
interests as the executrix in
the estate of the deceased and her
fiduciary duties as trustee of the Trust;
(c) That the First Respondent’s
conduct has jeopardised trust assets;
(d) That the First Respondent‘s
continuation in office as trustee will impede or frustrate the proper
administration of the
trust and be detrimental to the welfare of the
trust beneficiaries and trust estate.
[4]
There are a number of factual disputes arising on the papers, the
materiality of which differs depending on which ground for
the
removal of the First Respondent is sought to be invoked. No such
dispute of material fact however arises in respect of the
ground for
removal referred to in paragraph 3(b) above, which issue can be
decided on the papers in the respects set out below.
[9]
[5]
It is well established in our law that:
(a) A trustee must administer a Trust
estate with the utmost good faith and in the best interest of the
trust beneficiaries;
[10]
(b) A trustee must act with
impartiality, which implies the avoidance of a conflict between the
trustees personal interest and those
of the beneficiaries;
[11]
(c) A Trustee is obliged to conserve
Trust property;
(d) A conflict between interest and
duty, whether arising from an act of the Trustee, such as a claim
made against the Trust estate,
or from independent causes, is a
ground for removal, such principle similarly being applicable to
executors;
[12]
(e) A trustee can be removed from
office by the court if continuance in office would prevent the proper
administration of a Trust
or be detrimental to the welfare of the
trust beneficiaries and the Trust Estate;
[13]
(f) Although this court has the power
in terms of s 20 of the Trust Property Control Act 57 of 1988 or
using its inherent power
to remove a trustee where continuous
occupation of the office of the trustee will prevent the Trust from
being properly administered
or be to the detriment of the
beneficiaries, such power must be exercised with circumspection and
only where the removal of the
Trustee will be in the interest of the
Trust and its beneficiaries. The First Respondent in this regard
relied on the decision
in
Gowar
and another v Gowar and others
(‘
Gowar’
).
[14]
[6]
In
Gowar
attention was
inter alia
drawn to the
following:
(a) In
Land
and Agriculture Bank of South Africa v Parker and others
[15]
Cameron JA held that:
‘
[A
Trust]
an
accumulation of assets and liabilities. These constitute the trust
estate, which is a separate entity. But though separate,
the
accumulation of rights and obligations comprising the trust estate
does not have legal personality. It vests in the trustees,
and must
be administered by them – and it is only through the trustees,
specified as in the trust instrument, that the trust
can act
’;
[16]
(b) Where more than one trustee has
been specified in the Trust Deed they share a common fiduciary
obligation towards the fulfilment
of the objects of the Trust and
must act jointly;
[17]
(c) In terms of s 9(1) of the Trust
Property Control Act:
‘
(1)
A trustee shall in the performance of his duties and the exercise of
his powers act with the care, diligence and skill which
can
reasonably be expected of a person who manages the affairs of
another
’
;
(d) Kotze JA in
Sackville
West
[18]
said that:
‘
a
tutor must observe greater care in dealing with his ward's money than
he does with his own, for, while a man may act as he pleases
with his
own property, he is not at liberty to do so with that of his ward.
The standard of care to be observed is accordingly
not that which an
ordinary man generally observes in the management of his own affairs,
but that of the prudent and careful man;
or, to use the
technical expression of the Roman law, that of the
bonus
et
diligens
paterfamilias.
’
(e) This was reaffirmed in the context
of trusts in
Administrators
Estate Richards vs Nichol and another
.
[19]
[7]
Section 20(1) of the Trust Property Control Act 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.’
[8]
Proof of misconduct, dishonesty or
mala
fides
is not essential for
the removal of executers or administrators.
[20]
In
Volkwyn N.O. v Clarke and
Damant
[21]
Murray J held:
‘
the
essential test is whether such disharmony as exists imperils the
Trust estate or its proper administration’.
Mere
friction or enmity between the trustee and beneficiaries will not in
itself be adequate reason for the removal of a trustee.
Nor would
mere conflict amongst trustees be a sufficient reason. Ultimately the
question is whether the removal will, as required
by s 20(1) of the
Act, be ‘in the interest of the Trust and its beneficiaries’.
[9]
In
Grobbelaar
,
[22]
Van Blerk JA concluded:
‘
Dit
is duidelik dat hier 'n wesenlike botsing bestaan tussen die
persoonlike belange van die respondent en die van die boedel waardeur
'n toestand geskep is wat respondent se posisie as eksekuteur vir hom
onhoudbaar maak. Hy bevind hom in die onmoontlike posisie
dat hy
enersyds as skuldeiser van die boedel sal moet veg vir sy eis en
andersyds in sy hoedanigheid as eksekuteur die boedel sal
moet
verdedig teen dieselfde eis. In hierdie rol sal hy genoodsaak wees om
kant te kies. Hy kan nie onsydig of onpartydig bly nie.’
[23]
[10]
The present position in which the First Respondent finds herself is
little different to the scenario which prevailed in
Grobbelaar
.
That position of conflict arises irrespective of the ultimate
de
jure
conclusion a court may
reach in the pending litigation.
[11]
The founder of the Trust required that three trustees be appointed to
the Trust in order to contribute their individual expertise
and
judgment to a collective pool of wisdom for the benefit of the Trust
and its beneficiaries. The present is not just simply
a situation
where the First Respondent and the Applicants may disagree as
trustees. It has gone beyond that.
[12]
The First Respondent finds herself in the invidious position of
laying claims to the shares as executrix whilst in the proper
discharge of her fiduciary duties as trustee she might also be
required to pursue those shares on behalf of and for the benefit
of
the Trust directly. That places her in a position where she has
to choose sides. Whether she is correct in having
chosen the
side of the deceased estate is not the issue. By placing
herself in a position where she has to choose sides results
in a
situation where she cannot remain impartial and non-partisan.
[13]
No proof of
mala fides
or dishonesty is required. Her positions as executrix and as trustee
in relation to the transfer of the shares simply involve two
positions which are mutually destructive, with conflicting duties.
[14]
In the light of that conclusion, it is not necessary to decide any of
the further grounds, and in particular to refer the application
for
the hearing of oral evidence on any disputed factual issues.
[15]
As regards costs, I am not persuaded that a punitive order of costs
on the attorney and client scale is warranted. The
First
Respondent was entitled to place her views before this court. It was
reasonable for her to do so. It is however clear to
me that she finds
herself in an irreconcilable position of conflict and that the
application must be granted. That she has been
unsuccessful does not
per se justify a punitive order. There are no further circumstances
which would justify such an award
[16]
Although both parties asked for the costs to include the costs of two
counsel (the heads of argument having been signed by
both senior and
junior counsel on each side) the parties were represented at the
hearing by respectively Mr Tugh and Ms Singh only.
In the exercise of
my discretion I am disposed to allowing only the costs of one
counsel. The matter was not in my view of such
complexity as to
justify the costs of two counsel.
[17]
In the circumstances an order is granted in the following terms:
(a) The First Respondent is hereby
removed as a trustee of the A. Rajbansi Family Trust with
registration number IT 1918/2000;
(b) The Second Respondent is directed
to endorse its records accordingly;
(c) The First Respondent is directed
to hand over to the Applicants all documents, banking and
administrative instruments relating
to the administration of the
Trust within 3 days of the grant of this order;
(d) In the event of the First
Respondent failing to comply with sub-paragraph (c) above the Sheriff
or his Deputy be and is hereby
authorised to do all things necessary
to give effect to paragraph (c) above;
(e) The First Respondent is directed
pay the costs of the application.
____________________________
Appearances
For
the Applicant: MR E.H. TUGH
Instructed
by: Govender Mchunu & Associates
Tel.:
031-3098338 / 8445
Ref.:
LG/DN/06T0101001
For
the First Respondent: MS R SINGH
Instructed
by: Anesh Maharaj Attorneys
Salmon
Grove Chambers
Tel.:
031- 301 3105
Ref.:
Mr Maharaj
[1]
Despite some initial
objection to the First Respondent being cited in her personal
capacity, such citation is plainly correct in
the light of the
decision in
Mcnamee
and others v Executors Estate Mcnamee
(1913) 34 NPD 428.
[2]
The Second Respondent is the Master
of the High Court and the Third to Seventh Respondents are
beneficiaries of the Trust.
[3]
The First Respondent was appointed as
executrix by the Master pursuant to the provisions of s 18(1)(a) and
s 19(a) of the Administration
of the Estates Act 66 of 1965.
[4]
The Second Applicant was not cited
initially but joined later.
[5]
As Second Defendant.
[6]
As First Defendant.
[7]
The Applicants contended
that they had a vested right to be joined in any proceedings which
involved matters relating to the Trust,
that in order to discharge
their fiduciary duties as trustees and that it was imperative that
they be given leave to intervene
as Defendants in Case No.
10429/2013, as any order that may be granted under that case number
may have a direct and substantial
effect on the Trust, in particular
the Trust assets, and that they had a direct and substantial
interest in the subject matter
of that litigation.
[8]
Although not relevant to
the present judgment, there was also an application under Case No.
3687/2012 launched by the Sixth Respondent
and Seventh Respondent to
remove the First Respondent as Executrix in the deceased estate,
which application was dismissed with
costs on 15 February 2013.
[9]
Stellenbosch
Farmers
Winery
Ltd.
v.
Stellenvale
Winery
(Pty)
Ltd
1957 (4) SA 234
(C);
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984
(3) SA 623
(A);
Fax
Directories (Pty) Ltd v SA Fax Listings
1990 (2) SA 164
(D),
[1990] 1 All SA 107
(D); contrast
Di
Meo
v.
Capri
Restaurant
1961 (4) SA 614
(N).
[10]
Doyle v Board of Executers
1999
(2) SA 805
(C) at 813B and
Bafokeng
Tribe v Impala Platinum Limited
1999
(3) SA 517
(B) 545J – 546A.
[11]
Jowell v Bamwell-Jones and others
2000 (3) SA 274
(SCA) para
14.
[12]
Grobbelaar v Grobbelaar
1959 (4) SA 719
(A);
Tijmstra
N O v Blunt-MacKenzie N.O.
2002
(1) SA 459 (T).
[13]
Sackville West v Nourse and
another
1925 AD 516
at 527
– 528.
[14]
2016 (5) SA 225
(SCA)
para 27 and para 30.
[15]
2005 (2) SA 77 (SCA).
[16]
Land and Agricultural Bank v
Parker
n15 para 10;
Gowar
n14 para 21.
[17]
Gowar
n14
para 23.
[18]
Sackville
n13 at 534.
[19]
1991 (1) SA 551
(SCA) at 557D-F.
[20]
1946 WLD 456
at 471.
[21]
Volkwyn
n20
at 474.
[22]
Grobbelaar
n12 724G.
[23]
The Applicants
also relied
on the
decision also in
Barnett v
Estate Beattie
1928 CPD
482
where the Respondent was removed from office in that matter.