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[2016] ZAKZDHC 37
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Dlamini and Others v Ngcobo and Others (11802/2012) [2016] ZAKZDHC 37 (6 May 2016)
SAFLII
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Certain
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IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
LOCAL DIVISION, DURBAN
CASE
NO: 11802/2012
In
the matter between:
SIFISO
GOLDRICH CLIFFORD DLAMINI
FIRST APPLICANT
MUNTU
HECTOR DLAMINI
SECOND APPLICANT
MUNTU
HECTOR DLAMINI N.O.
THIRD APPLICANT
RAYNDEL
DUMISANI DLAMINI
FOURTH APPLICANT
and
JOY
NGCOBO
FIRST RESPONDENT
DOREEN
ZINHLE DLAMINI
SECOND
RESPONDENT
NANDI
ZAMASIBA
MATJELE
THIRD RESPONDENT
ORDER
1.
The application is
dismissed with costs.
2.
Such costs are to include
the costs occasioned by the employment of
Senior
Counsel where applicable.
JUDGMENT
HENRIQUES
J
Introduction
[1]
This is an application for an interim interdict pending the final
determination of an action instituted by certain of the applicants
under case number 4070/2012.
[1]
[2]
The relief foreshadowed in the notice of motion is the following,
namely:
‘
1.
(a)
that pending the final determination of an
action to be instituted under case number 4070/2012 against the First
Respondent and
Kentucky Fried Chicken within thirty days of the grant
of this Order (“the action”):
(i)
the Gil Family Trust is ordered to continue to
pay R12 689.00 to
the First, Second and Third Applicants pending the final
determination of the action;
(ii)
the Respondents are interdicted and restrained from
causing the
income of the KwaMashu KFC outlet being paid into any bank account
other than the bank account with details as follows:
First
National Bank (Overport branch)
Account
Number: [6.....]
[2]
(“the
first bank account”)
(iii)
the Respondents are ordered to account to the Applicants
in respect
of all monies paid into and out of the bank account with details as
follows:
First
National Bank
Account
Number: [6.....]
(b)
that the Respondents are to pay the costs of this application jointly
and severally,
the one paying, the other to be absolved.’
[3]
When the application first served before the court, no interim relief
was granted.
[4]
The relief which the applicants seek can be dealt with under three
headings, namely:
[4.1]
for the Gil Family Trust to continue paying to the first, second and
third applicants the sum of R12 689.00
pending the final
determination of the action;
[4.2]
the respondents be interdicted and restrained from causing any income
from the KwaMashu Kentucky Fried
Chicken (KFC) outlet being paid into
any bank account other than the one specified;
[4.3]
the respondents provide to the applicants an account of all monies in
the bank account specified in
their notice of motion, and, if
necessary, debate such account.
[5]
A number of preliminary matters need to be dealt with. The first is
whether the applicants have made out a case for the relief
sought,
and whether the relief is interim or final in nature. The second is
whether there are disputes of fact on the affidavits
filed.
[6]
Normally
pendente
lite
relief is granted to protect a disputed right pending the right being
finally determined in subsequent proceedings. The test for
interim
relief is trite and was set out by the Appellate Division
[3]
as follows:
‘
An
applicant must establish a
prima
facie
right though open to some doubt, a well-grounded apprehension of
irreparable harm if the interim relief is not granted, the balance
of
convenience must be in favour of granting the interim relief and
there must be no other satisfactory remedy.’
[4]
[7]
If one considers the particulars of claim in the action instituted
under case number 4070/2012, the applicants essentially seek
a
declaratory order declaring that the first respondent was not
entitled to be a trustee of the SGC Dlamini Family Trust.
Consequently,
upon such declaratory order being granted, the master
be directed to remove her as trustee in the trust deed and revoke her
letters
of authority so that both be amended to reflect
inter alia
the first and second applicants as trustees of the trust. In
addition, an order is sought for the debatement of an account which
is to be provided by the first respondent to the applicants of all
income earned in the name of the SGC Dlamini Family Trust from
the
KwaMashu KFC outlet.
[8]
Some of the issues in these proceedings will not be dealt with and
finalised in the action. Consequently, in respect of the
relief the
applicants seek in this application, the relief constitutes final
relief. Both parties acknowledge that there are disputes
of fact in
these proceedings and neither has requested the matter be referred
for the hearing of oral evidence. As such, whether
the applicants are
entitled to final relief is determined by applying the well-known
test
[5]
namely, whether the
facts as stated by the respondent together with the facts alleged by
the applicant which are admitted by the
respondent justify the court
in making such an order.
[9]
Before applying the test as set out in para 8 above, it is convenient
to set out the factual background against which the application
must
be determined. In doing so for purposes of the judgment, I have
summarised the facts as contained in all the affidavits filed.
[10]
The facts can be briefly stated as follows:
[10.1]
Albertina Dlamini (Albertina), the mother of the first to third
applicants, opened the KwaMashu Kentucky Fried Chicken
(KFC) outlet
as a franchisee in 1985. She ran the business from 1985 until 1997
when she retired and the administration of the
business was handed
over to the first applicant, Sifiso Dlamini (Sifiso).
[10.2]
When Albertina died, Sifiso caused the S.G.C Dlamini Family Trust
(The Dlamini Family Trust) to be formed and caused
ownership of the
KwaMashu KFC to be transferred to the Dlamini Family Trust, he being
the sole trustee.
[10.3]
In 2002/2003, Sifiso fell ill and the first respondent, Joy assisted
him in running the KFC business. This arrangement
continued until
2006 when Joy is alleged to have evicted Sifiso from the KwaMashu KFC
outlet on the basis that she owned the business.
[10.4]
Between 1997 and 2006, the trading licence of the KwaMashu KFC outlet
was in the name of Sifiso and thereafter in the
name of the Dlamini
Family Trust. The accounts submitted by the local municipality for
the consumption charges and costs levied
to the KFC outlet, as well
as the vat registration number of the outlet was that of the Dlamini
Family Trust.
[10.5]
In 2006, when Sifiso was allegedly evicted from the business, he did
not have access to documents proving ownership
of the KFC outlet by
Albertina. It was only in 2010 when he came across a box containing
Albertina’s documents that he was
able to confirm ownership of
the business.
[10.6]
In 2012, Sifiso and certain of the other applicants instituted an
action under case number 4070/2012 for
inter alia
the return
of the business, loss of income, return of equipment and the value of
stock.
[10.7]
In the interim, Sifiso discovered that the Dlamini Family Trust
Deed had been amended and suspected that the
letter of resignation by
the second applicant Muntu Hector Dlamini (Muntu) was forged.
[10.8]
Joy formed the Gil Family Trust and in terms of clause 2 of the trust
deed, she was a trustee together with a second
trustee who would have
the power of assumption to assume no more than five other
co-trustees. Joy assumed the second and third
respondents as
co-trustees of the Gil Family Trust, together with Muntu.
[10.9]
Clause 3 of the Gil Family Trust Deed identified the income
beneficiaries of the trust as Muntu, Sifiso, Rayndel Dumisani
Dlamini, Raymond Bongani Dlamini and any of their further
children.
[6]
[10.10]
Although alleging the KwaMashu KFC outlet is owned by the Gil Family
Trust, the interests of the first, second and fourth
applicants as
income beneficiaries of the Gil Trust were recognised by the first
respondent.
[7]
[10.11]
The first, second and fourth applicants were paid a monthly income of
R12 689.00 and the Gil Family Trust acquired
motor vehicles for
them at the instance of Joy.
[10.12]
In light of the dispute between parties, an agreement was brokered in
terms of which the action was held in abeyance, and
the income
received from the KwaMashu KFC would be paid into a bank account,
maintained with First National Bank, Overport in the
name of the Gil
Family Trust. Muntu and Doreen, the second respondent, were the joint
signatories to such account.
[8]
This bank account was utilised to operate the business and the
applicants received payment of the monthly sum of R12 689.00
until March 2012.
[10.13]
Settlement negotiations were unsuccessful and in March 2012, payments
to the applicants of the monthly sum ceased. In addition,
enquiries
revealed that a new bank account had been opened in the name of the
Gil Family Trust and no monies generated from the
KwaMashu KFC outlet
were paid into the bank account mentioned in para 10.12.
Issues
for determination
[11]
It is against this factual background that the following issues in
this application must be determined:
[11.1]
are the applicants entitled to continue to receive a monthly income
in terms of the Gil Family Trust Deed?
[11.2]
did an agreement exist that the income of the KwaMashu KFC outlet
would be paid into the bank account number as stipulated
by the
applicants?
[11.3]
are the applicants entitled to an account and a debatement of such
account?
[12]
In determining these issues, one must remember that the onus rests on
the applicants to show their entitlement to final relief
and that
such a case must be made out in the founding affidavit, unless new
matters are raised in opposition by the respondent.
[13]
Before considering the issues for determination, it is necessary to
deal with the two
points in limine
taken by the respondents in
opposition. The first one does not merit the attention of this court
as it takes the matter no further.
The second relates to the
non-joinder of the “issue” of certain income
beneficiaries who have a direct and material
interest in the
application.
[14]
The applicants submit that the interpretation which the respondents
place on clause 3.1.5 of the trust deed is incorrect and
relates to
‘any further issues of … the income beneficiaries’.
That is, children born after the trust was incorporated
on 2 November
2006. The children of Sifiso who are affected have waived being
joined in the application.
[9]
Consequently, this point likewise is without merit and takes the
matter no further.
I
propose to now consider the issues in the application.
Payment
of the monthly amount of R12 689.00
[15]
The applicants’ case is that they are income beneficiaries of
the Gil Family Trust and had previously been paid the amount
of
R12 689.00 monthly. The respondents admit that the applicants
are income beneficiaries of the trust and that in March 2012
the
trust ceased making payments of these monthly amounts. The
respondents challenge to the continued payment of the monthly amount
appears to rest on two bases, namely:
[15.1]
the monthly payments were salaries due to the applicants whilst they
were employed in the business. These payments
ceased as the
applicants were no longer employed at the business;
[15.2]
the trust deed empowers the trustees in their discretion to allocate
money for the benefit of an income beneficiary.
Income beneficiaries
have no vested rights to the income or capital of the trust and
consequently, the applicants as income beneficiaries
do not
automatically acquire a claim to any income of the trust, until such
time as the trustees adopt a resolution to pay such
income to the
beneficiaries.
[16]
In this regard, the respondents rely on clauses 2.8 and 3.5 of the
trust deed. Clause 2.8. reads as follows:
‘
During
the existence of the Trust, the TRUSTEES may appropriate so much of
the income of the Trust as they in their discretion consider
fit to
the benefit of any INCOME BENEFICIARY (as hereinafter defined) in
such amounts and generally in such manner as the TRUSTEES
in their
absolute discretion think fit. Any appropriation of the Trust must be
approved by the majority of the TRUSTEES. Any distribution
of any
asset or assets forming part of the capital of the Trust must be made
to the CAPITAL BENEFICIARIES (as hereinafter defined)
in the
proportions as set out in Clause 3.1.2 hereof.
Any
distribution whether it be INCOME or CAPITAL, may only be made with
the unanimous decision of all TRUSTEES.’
[17]
Clause 3.5 of the trust deed reads as follows:
‘
Prior
to the termination of the Trust, the BENEFICIARIES shall have no
vested right to the income or capital of the Trust which
has not been
paid over or appropriated to that Beneficiary by the TRUSTEES.’
[18]
It is for these reasons that the respondents submit that an income
beneficiary does not acquire a claim to any income or capital
of the
trust, as beneficiaries have no vested right to the income or capital
of the trust. The trust deed further requires the
MAJORITY
[10]
of trustees to adopt a resolution to pay the income of the trust to
the income beneficiaries. Moreover, any distribution whether
it be
income or capital requires a unanimous decision of all trustees.
[19]
Clause 3.1 of the Gil Family Trust Deed identifies the income
beneficiaries of the trust as being Muntu Hector Dlamini, Rayndel
Dumisani Dlamini, Raymond Bongani Dlamini, S’fiso Goldrich
Dlamini and their futher issues. The capital beneficiaries of
the
trust are not specifically identified but nothing turns on this.
[20]
Clause 3.4 makes provision for the payment of the capital of the
Trust to capital beneficiaries. In addition, it also makes
provision
for monies required by a beneficiary to be made payable prior to the
date of payment of the capital amount by the trustees.
[21]
The relevant portion of clause 3.4 reads as follows:
‘
Notwithstanding
the provision of this Clause if, in the opinion of the Trustees, any
Beneficiary requires any amount for his her
maintenance, support,
education and advancement in life or for his reasonable pleasures or
requires fund for the purpose of any
business which such beneficiary
desires to enter upon, acquire or improve, or for the purpose of a
dowry or for the provisions
of a home, or for the other purpose which
the Trustees shall consider adequate, the Trustees are hereby
empowered to pay such beneficiaries
such sum as they deem fit, out of
the capital amount of any request made to him or her hereunder.
Any amount paid by the
Trustees to such beneficiary shall be deducted
from the capital amount failing to be paid to him or her on his or
her distribution
date.’
[22]
Despite clause 3.4. in the trust deed, the applicants place no
reliance on it for the relief they seek.
[23]
The applicants maintain that as income beneficiaries they are
entitled to this amount indefinitely, whereas the first respondent
submits that this amount was only payable for as long as they were
employed in the business.
[24]
As already alluded to factual disputes exist. The first respondent,
Joy, avers the KwaMashu KFC outlet was opened by her in
1986 and she
concluded a franchise agreement in the name of Sifiso Hyperstores
(Pty) Ltd, a company she formed as sole shareholder.
In 1991, Sifiso
and Albertina forcibly removed her from the business. Even though the
franchisor threatened to cancel the franchise
agreement with her, she
placated them and the business continued to operate.
[25]
When the franchise agreement ended in 2006, a new agreement was
concluded in the name of the Gil Family Trust founded by her.
She
assisted in the running of the KFC outlet not because Sifiso became
ill, but rather as it was her duty to do so in accordance
with the
traditions and customs of their family. Joy, who was the wife of the
applicants’ deceased brother, regarded the
business as
providing a livelihood for the Dlamini sons and their issue in
accordance with traditions and culture.
[26]
It is common cause:
[26.1]
the applicants are income beneficiaries of the Gil Family Trust;
[26.2]
the applicants were paid a monthly sum of R 12 689.00 until
March 2012;
[26.3]
the first respondent purchased vehicles for the three (3) applicants;
[26.4]
the first respondent was married to Mageba Dlamini, the deceased
brother of the first, second and fourth applicants
and Raymond
Bongani Dlamini;
[26.5]
the income derived from the KwaMashu KFC outlet was for the benefit
of the applicants and their children.
[27]
Of relevance to this matter and what is in dispute is the reason for
such monthly payment. The applicants contend that such
payment was
made as they were income beneficiaries of the trust. The first
respondent submitted that this constituted payment of
salaries to the
applicants, which is denied by the applicants. In addition, the
first respondent indicates that the vehicles
purchased for the
applicants, were purchased from income from her other businesses, as
it was her duty to provide financial assistance
to the applicants in
accordance with tradition and culture, and was not paid from income
received from the KwaMashu KFC outlet.
[28]
In my view, the trust deed makes express provision for the income to
be utilised for the benefit of the income beneficiaries.
However, it
is the majority of trustees who are entitled to in their absolute
discretion, to make a decision to effect payment
of the monthly sum
to the income beneficiaries. Even though the applicants allege that
Muntu was excluded from the decision, he
was not the only trustee
co-opted, and there is nothing to suggest that a majority of trustees
did not take such decision.
[29]
As this is a discretionary trust, the common law and the trust deed
itself, confers such discretion on the majority of trustees.
This
court cannot interfere with the exercise of such discretion or usurp
the functions of the trustees. There is a dispute of
fact as to the
reason for the monthly payment to the income beneficiaries.
[30]
The difficulty which I have with the respondents’ version is
the following. The trust deed empowers the trustees by unanimous
decision to distribute income of the trust to the beneficiaries. The
first respondent specifically acknowledges at para 54 of her
answering affidavit that
‘…
I
continued to regard this business as providing a livelihood for the
four Dlamini “sons” and their issue, again out
of respect
for the cultural customs and traditions’. On the respondents’
version, the monthly amounts were paid for
a considerable period of
time. There is nothing in the trust deed which appears to suggest
that income could be used to pay the
beneficiaries salaries.
[31]
In addition, it is also inconsistent with the respondents’
version that the franchisor wanted nothing to do with the
first
applicant and did not want him involved in the business at all. Why
then would the franchisor permit the applicant to be
involved as an
employee and receive a salary? This is inconsistent with the
respondents’ version that the franchisor was
only prepared to
have her involved in the business and that the applicant was to have
no involvement at all.
[11]
[32]
The first respondent contends that the amount paid was not the same
each year as deductions had to be made for PAYE. No further
information is put up relating to the exact period of time the
“salaries” were paid, the amounts each year and the
deductions. In response to a notice in terms of rule 35(12), the
documents at pages 165 and 166 of the papers have been served
and
filed confirming the Gil Family Trust’s registration with SARS
as an employer for the period 2013.
[33]
Even though I may be of the view that the first respondent’s
version that this was a monthly salary is inconsistent with
her
averments that the franchisor did not want the income beneficiaries
involved in the Kwa Mashu KFC outlet at all, or that on
the
probabilities, payments were made in accordance with tradition and
culture to support the applicants, the applicants bear the
onus to
establish the criterion for a final interdict.
[34]
They must establish a clear right to such payment. In my view they
have not done so. Whilst the income is to be utilised for
the benefit
of the income beneficiaries, this is a discretion to be exercised by
the majority of trustees on a monthly basis. The
trust deed itself
makes it clear that such is an absolute discretion. This court cannot
usurp the function of the trustees nor
direct them to do so. Any
order directing them to do so will result in them acting
ultra
vires
the trust deed. Correctly interpreted,
[12]
the discretion is not confined to the amount payable as contended by
the applicants, but rather in keeping with the wording of
the trust
deed itself, relates to whether income is payable at all in the
exercise of their absolute discretion.
[13]
[35]
This matter cannot be decided on what this court perceives to be fair
and reasonable
[14]
in the
circumstances. In addition, even though s13 of the Trust Property
Control Act 57 of 1988 (the Act)
[15]
makes provision for a court to intervene where it is of the view the
trust deed results in a consequence not intended by the founder,
neither of the parties relied on this.
[36]
A matter which also requires mentioning is the question of the
fiduciary duty of trustees. This case was not made in the founding
affidavit but rather in reply by the applicants. It is trite that the
applicants must make out a case for the relief sought in
their
founding affidavit, subject to certain exceptions. There are no facts
alleged which in my view warrants this court considering
the replying
affidavit. In the event of me being wrong in this conclusion, I
propose to briefly deal with this duty.
The
Fiduciary Duty of Trustees
[37]
Trustees have a fiduciary duty to beneficiaries by virtue of the
office they hold. A trustee must act as a
bonus et diligens
paterfamilias
. Such common law duty of care has been reflected in
s9 of the Act. The section reads as follows:
‘
Care,
diligence and skill required of trustee
(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.
(2)
Any provision contained in a trust instrument shall be void in so far
as it would have the effect of exempting a trustee from
or
indemnifying him against liability for breach of trust where he fails
to show the degree of care, diligence and skill as required
in
subsection (1).’
[38]
The applicants in reply submit that irrespective of their discretion,
the trustees have a fiduciary duty to act impartially,
jointly and in
good faith. By terminating the monthly payments, they did so without
Muntu and secondly, did not provide an explanation
for doing so. This
evidences impartiality and bad faith.
[39]
There is nothing to suggest on the facts presented, that the exercise
of such discretion is a breach of the trustees’
fiduciary duty.
Even if I am wrong in this regard, there is nothing on the undisputed
facts of the matter that warrants this court
interfering with the
exercise of such discretion on the basis of a breach of a fiduciary
duty. It also appears that the applicants
in reply are making their
case up as they go along.
[16]
Payment
into the specific bank account and an account and debatement.
[40]
There is a dispute of fact regarding this issue. I accept that the
dispute of fact relating to the ownership of the KwaMashu
KFC outlet
is the subject matter of the action, and strictly speaking, is not
relevant to the adjudication of the relief in this
matter. However,
the other disputes of fact which arise in this matter, in my view, in
the absence of a request for referral to
oral evidence, must be
decided on the respondents’ version. This means that the
applicants are not entitled to the relief
they seek.
[41]
In the action an account and debatement is part of the relief sought.
In light of the dispute of fact, the applicants have
not made out a
case for the interdict, nor has a case been made out for the
respondents to account.
Costs
[42]
It is trite that the general rule is that a successful party is
entitled to its costs. There appears to be no good reason to
depart
from the normal rule. In addition, both parties accept the
application involved complex issues warranting the employment
of two
counsel in the case of the applicants, and, senior counsel in respect
of the respondents. There is thus no reason not to
make such an order
allowing costs of senior counsel.
[43]
In the premises, the application falls to be dismissed with costs.
Such costs to include that of senior counsel.
____________
HENRIQUES
J
Case
Information
Date
of Hearing
: 31
October 2013
Date
of Judgment
:
06 May
2016
Counsel
for Applicants :
A.W.M Harcourt
SC, N.S Beket
Instructed
by
: Hlapane
Attorneys
Nathi
Shozi Chambers 27 Cedar Road, Glenwood
Ref:
NHS/MN/Mr Dlamini
Tel:
031 205 5490
Counsel
for Respondents :
C.J Pammenter SC
Instructed
by
:
Garlicke & Bousfield Inc.
7
Torsvale Crescent
La
Lucia Ridge Office Estate Durban
Ref: A
Trikamjee/mp
Tel:
031 570 5300
[1]
The
action was instituted on 22 March 2012 in this court and pleadings
have closed.
[2]
The
original notice of motion referred to an incorrect bank account
number. At the hearing of the matter both parties confirmed
the
correct details of the bank account number.
[3]
Setlogelo
v
Setlogelo
1914 AD 221.
[4]
My
summary.
[5]
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
(A) at 634.
[6]
Raymond
Dlamini is deceased.
[7]
It
is common cause that the applicants were income beneficiaries of the
Trust.
[8]
The
account number of this bank account was 62138337656.
[9]
These
affidavits are annexed to the papers and appear at pages 137 to 143.
[10]
My
emphasis.
[11]
References to this are to be found at paras 52 to 54, pages 87 and
88 of the indexed papers.
[12]
Natal
Joint Municipal Pension Fund v Endumeni Municipality
2012 (4) SA 593
(SCA) paras 18 to 23.
[13]
The
fiduciary office of trustee and the protection of contingent trust
beneficiaries, François du Toit
BA
LLB LLM LLD,
Associate Professor, University of the Western Cape,
2007 Stell LR 469.
[14]
Potgieter
& another v Potgieter NO & others
2012 (1) SA 637
(SCA)
para
34.
[15]
Section
13 of the Trust Property Control Act empowers the court, where ‘a
trust instrument contains any provision which
brings
about consequences which in the opinion of the court the
founder of a trust did not contemplate or foresee and which
-
(a)
hampers the achievement of the objects of the founder; or
(b)
prejudices the interests of beneficiaries; or
(c)
is in conflict with the public interest', on the ‘application
of the trustee or any person who in the opinion of the court
has a
sufficient interest in the trust property, to . . . delete or vary
any such provision or make in respect thereof any
order which
the court deems just . . .’.
[16]
Para
19. In the founding affidavit they rely on clause 2.8, then in reply
on a breach of fiduciary duty then on a legitimate expectation.