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[2015] ZAGPPHC 3
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Salzwedel N.O. v Rossouw N.O. and Others (51034/2013) [2015] ZAGPPHC 3 (12 January 2015)
IN
THE HIGH COURT OF SOUTH AFRICA
/ES
(
GAUTENG
DIVISION, PRETORIA
)
CASE NO:
51034/2013
DATE:
12/1/2015
IN THE MATTER BETWEEN
GREGORY ANDREW SALZWEDEL N.O.
(in his capacity as Executor of the
Estate Late
Catharina Margaretha
Salzwedel)
..................................................................................
APPLICANT
AND
SARINA ROSSOUW N.O.
(in her capacity as Trustee of the
Karien Rossouw
Familie Trust
IT.1800/02)
...................................................................................
1
st
RESPONDENT
GREGORY ANDREW SALZWEDEL N.O.
(in his capacity as Trustee of the
Karien Rossouw
Familie Trust
IT.1800/02)
...................................................................................
2
nd
RESPONDENT
THE MASTER, PRETORIA
…..........................................................................
3
rd
RESPONDENT
SARINA
ROSSOUW
..........................................................................................
4
th
RESPONDENT
SAMUEL ROSSOUW
(in his capacity as guardian of the
minor child
Rhode
Rossouw)
..................................................................................................
5
th
RESPONDENT
JUDGMENT
PRINSLOO, J
[1] This case turns mainly on the
interpretation of certain clauses in the will of the late testatrix,
Ms Salzwedel, ("the
deceased").
There is also a
counter-claim by the first, fourth and fifth respondents to have the
applicant removed from his office as executor
of the estate of the
late deceased in terms of the provisions of
section 54(1)(a)(v)
of
the
Administration of Estates Act no 66 of 1965
.
[2] Before me, Mr Klopper appeared for
the applicant and Mr Van Ryneveld appeared for the first, fourth and
fifth respondents.
[3] The third respondent, the Master,
did not play an active role in the proceedings.
Introduction, affidavits and
applications exchanged and some notes about the chronology of the
case
[4] The deceased, by all accounts, was a
very active and successful business woman. She won some awards
for her enterprising
work. She was evidently involved in
pursuits such as insurance brokerage, advising on finances and risk
management.
In the process she floated a number of companies of
which she was, for the most part, the sole director.
[5] The deceased used to be married to
the fifth respondent, Mr Samuel Rossouw. From this marriage two
daughters were born,
the first respondent (also the fourth
respondent), in her own right a business woman evidently also
involved in risk management
activities and now 28 years old, and a
younger daughter, Rhode, who turned 18 very recently and who is
being assisted by her
father, the fifth respondent.
Technically, Rhode has now attained the age of majority, so that,
strictly speaking, she can
now be substituted as the fifth respondent
in place of her father who, up to now, featured as her guardian.
When the hearing
before me took place, Rhode was still a minor.
Nothing turns on this.
[6] In about February 2002, the deceased
founded the Karien Rossouw Familie Trust. The trust was duly
registered in terms
of the Trust Property Control Act, no 57 of 1988
under no IT.1800/02. The original trustees were the deceased,
Ms Nerine
Botes and Ms Jennifer Anne Hall. At one stage,
Ms Botes resigned but she was later, indeed only in November 2013 and
when
this case was well underway, reappointed. The relevant
letters of authority issued by the third respondent and dated
1 November
2013, features the applicant, the first respondent
and Ms Botes as the present trustees. No mention was ever
made of
Ms Hall, so that she must have resigned somewhere along the
way. At one stage the applicant's attorney of record,
Mr L A Meyer,
was also a trustee but he resigned as
recently as on 10 June 2013 after the attorney acting for the
first, fourth and fifth
respondents raised some questions about his
involvement, given the nature of this case.
[7] In terms of the Trust Deed of the
Karien Rossouw Familie Trust ("the trust") and, in
particular, clause 4.1 thereof,
the beneficiaries are the deceased
and her descendants, namely the two daughters. There are no
other descendants and there
is no record of any other trust which has
been created for the aforesaid beneficiaries (clause 4.1.3 of the
Trust Deed).
In terms of clause
6.1 of the Trust Deed the trust will become dissolved upon the death
of the deceased on condition that the trustees,
in the exercise of
their discretion, may dissolve the trust either before or after such
demise. This issue did not receive
attention before me, but it
is fair to assume that the trustees decided not to dissolve the trust
upon the death of the deceased
on 13 September 2012.
In terms of clause
9.2 of the Trust Deed, the beneficiary has a conditional right to
receive benefits from the trust and one of
those is that the
beneficiary must be alive. On strict application of this
clause, it would mean that the only beneficiaries
are the daughters.
There is another, somewhat contradictory, clause (9.3) which provides
that if the beneficiary is no more
alive, the trustees may decide to
pay the benefit to the estate of the beneficiary or to dispose of the
benefits in such a manner
as if the beneficiary never lived.
This issue was never debated before me, and for present purposes, I
assume that the sole
beneficiaries are the two daughters. In
any event, given the nature of the case and the dispute, to which I
will refer, nothing
turns on this.
[8] The deceased and the fifth
respondent were divorced in 2001. On 20 September 2003 the
deceased and the applicant got married
to each other out of community
of property. According to my calculations, the deceased was
then 41 years old and the applicant
35. The applicant also has
two children from a previous marriage.
[9] On 12 December 2007, the deceased
signed her last will and testament ("the will") which forms
the subject of this
dispute. In terms of the will, the
applicant was appointed as the executor.
[10] On 13 September 2012, as I have
said, the deceased passed away from natural causes, evidently after
some illness. No
details about the illness appear from the
papers.
[11] After the death of the deceased,
and while the estate was to be administered and finalised, a number
of disputes emerged, and
were identified, between the applicant on
the one side and the first, fourth and fifth respondents on the other
side. For
the sake of brevity, I will refer to them as "the
opposing respondents".
[12] The main dispute, which forms the
subject of this case, involves the question whether the will should
be interpreted in such
a way that all shares owned by the deceased at
the date of her death (and also all loan accounts listed in her
favour) including
specifically 58 very valuable shares held in
Gulfstream Energy (Pty) Ltd with registration number 2006/031199/07,
is to be
included in the legacy to the applicant, personally, or in
the legacy of the trust beneficiaries (in fact, the two daughters).
[13] In an effort to resolve the
dispute, the applicant, in his capacity as executor of the deceased
estate, launched this application,
in August 2013, for declaratory
relief to the effect that the mentioned shares and loan accounts are
to be included in his legacy.
[14] The opposing respondents filed an
opposing affidavit coupled with a counter-application seeking orders
for the removal from
his office as executor of the applicant in terms
of
section 54(1)(a)(v)
of the
Administration of Estates Act no 66 of
1965
and for the applicant to be directed to return the Letters of
Executorship dated 2 November 2012 issued to him by the third
respondent.
[15] Then followed a flurry of activity:
there was a replying affidavit, an application to amend the notice of
motion, an opposing
affidavit to the counter-application and a
replying affidavit thereto.
Thereafter, the
opposing respondents filed a duplicating affidavit which inspired the
applicant to file an application to strike
out the duplicating
affidavit, with a supporting affidavit thereto, and an affidavit
opposing the application by the opposing respondents
to file the
duplicating affidavit. This was met with a notice of intention
to oppose the application to strike out as well
as a replying
affidavit to the opposing affidavit to the application to file the
duplicating affidavit. Not to be outdone,
the applicant also,
as a precautionary measure, filed an answer to the duplicating
affidavit.
[16] In the end, the parties managed to
generate a record running into some 477 pages.
[17] During the course of the
proceedings, Mr Klopper indicated that the filing of the duplicating
affidavit was no longer an issue.
For purposes of this
judgment, I considered the contents of all these papers.
The dispute forming the subject of
this application
[18] I have broadly outlined the details
of the dispute, but it is useful to quote the first two paragraphs of
the notice of motion:
"1. That it is
declared that the correct interpretation of paragraph 5.1 of the last
will and testament of the late Catharina
Margaretha Salzwedel
executed on 12 December 2007 at Centurion is that all shares
owned by the testatrix on the date of her
death on 13 September 2012,
including specifically (but not limited to) the 58 shares held in
Gulfstream Energy (Pty) Ltd with
registration number 2006/031199/07,
is to be included in the legacy to her husband, the applicant;
2. that it is
declared that the correct interpretation of paragraph 5.1 of the last
will and testament of the late Catharina Margaretha
Salzwedel
executed on 12 December 2007 at Centurion is that all loan
account(s) listed in favour of the testatrix on the date
of her death
on 13 September 2012, including specifically in (but not limited
to) Gulfstream Energy (Pty) Ltd with registration
number
2006/031199/07, is to be included in the legacy to her husband, the
applicant."
[19] In the opposing affidavit, the
opposing respondents pointed out that there is a contradiction in the
manner in which the relief
is sought: the relief is sought for the
benefit of the husband, Gregory Andrew Salzwedel, personally and not
for the applicant.
The husband is litigating in his capacity as
the executor of the estate. He did not, for example, join
himself in his
personal capacity as a co applicant. The
relief can therefore not be sought for the benefit of "the
applicant".
To cure this apparent discrepancy, the
applicant amended the notice of motion by replacing the last phrase
in each paragraph with
the following: "... is to be
included in the legacy to her husband, Gregory Andrew Salzwedel".
The applicant
ascribed the discrepancy to a "typing error".
The amendment was not opposed.
[20] The case really turns on the 58
shares which the deceased held in Gulfstream Energy (Pty) Ltd
("Gulfstream") at the
time of her death. No details
were supplied, in the proceedings before me, about loan accounts and
other shares, as mentioned
in the notice of motion.
Nevertheless, the result of the decision made in respect of the
relief sought in terms of paragraph
1 of the notice of motion, will
be reflected in the decision in respect of paragraph 2.
[21] The terms in the will which the
applicant seeks to have interpreted in his own favour in his personal
capacity are paragraphs
5 and 6 of the will which read as follows:
"5.
Legacies
:
I
bequeath my estate as follows:
5.1 To my husband,
Gregory Andrew Salzwedel, all my shares, and any credit loan account
in INTRA FINANCIAL ADVISORS HOLDINGS (PTY)
LTD, INTRA FINANCIAL
ADVISORS (PTY) LTD, HORUS MANAGEMENT CC, INTRASURE INSURANCE BROKERS
(PTY) LTD AND ALEXANDER HUTCHINSON (PTY)
LTD.
5.2 To the Trustees
of the KARIEN ROSSOUW FAMILIE TRUST (NO IT.1800/02), a cash amount
equal to the amount due to me by the said
trust as at date of my
death, to be administered for the benefit of the trust beneficiaries
in terms of such Trust Deed.
6.
Heirs
:
6.1 The residue of
my estate to the Trustees of the KARIEN ROSSOUW FAMILY TRUST (NO
IT.1800/02), to be administered for the benefit
of the trust
beneficiaries in terms of such Trust Deed."
[22] In his founding affidavit, the
applicant gives an overview of the business career of the deceased,
describing her as a dynamic
and well experienced business woman who
"received many awards" and was a business woman of note.
Details of this
overview, which are, by and large, common cause, can be summarised as
follows: the deceased kicked off in the 1980's
with a catering
business and a florist business. In the mid 1990's she started
her own insurance brokerage and also developed
her own financial risk
management product which she marketed to Shell in the late 1990's.
During 1998 she started the business
Intra Financial Advisors
(mentioned in paragraph 5.1 of the will) as a marketing and
management company. In 2003 she
moved to Pretoria to
expand the Intra Financial Advisors business and also established a
holding company, Intra Financial Advisors
Holdings (also mentioned in
paragraph 5.1 of the will) and another property holding entity, Horus
Management Services (also mentioned
in the will). She also
established another short term insurance brokerage, Intra-Sure
(also mentioned in the will) and
in 2006 she purchased another
brokerage, Alexander Hutchinson Brokers (also mentioned in the will).
[23] Perhaps the most critical part of
this case, in my view, is the fact that Gulfstream (or its
predecessor, as I will explain)
is not mentioned in the will.
The same, obviously, applies to the shares and loan account of the
deceased in Gulfstream at
the time of her death.
In the founding
affidavit, the applicant points out that the deceased, during 2006,
as part of the group of businesses referred
to, started the business
Intra Credit Risk Management (Pty) Ltd with registration number
2006/031199/07. It will be noted
that this is the same
registration number as the one of Gulfstream, mentioned in the notice
of motion. The reason for this
is that the name of Intra Credit
Risk Management (Pty) Ltd (which I will refer to as "ICRM",
to avoid confusion and to
distinguish it from the other Intra
companies) was changed on 2 October 2009 to Gulfstream Energy (Pty)
Ltd.
[24] Unlike the other Intra companies
and other businesses of the deceased, as described above, ICRM was
not mentioned in the will,
although it came in existence about a year
before the will was signed in December 2007. It came into
existence about three
years after the deceased married the applicant
and the will was signed about four years after that happy event.
[25] According to the applicant, the
purpose of floating ICRM was to use it to promote the financial risk
management product the
deceased had developed and successfully sold
to Shell and to other companies within the petroleum industry.
The idea was
to channel business through ICRM to avoid any potential
conflict of interest between Shell and the other fuel companies.
The opposing respondents, on the other hand, state that ICRM was
started in order to split the insurance business from the risk
management done for the fuel companies. There were no fears
regarding a conflict of interest.
[26] It is common cause that, according
to the financial statements of ICRM, it conducted very little or no
business from its registation
until the latter part of 2009. It
seems that the new business, aforementioned, was simply channelled
through Intra Financial
Advisors. It is noteworthy that in the
financial statements the deceased is listed as the sole director.
[27] The applicant states that during
the latter part of 2009 the business known as Gulfstream Energy (Pty)
Ltd was started by himself
and a business associate, Mr Shane
Jegels. The opposing respondents deny this, stating that the
business was started
by the deceased and Mr Jegels.
The applicant then
states that it was decided to place the shareholding in the name of
the respective spouses (the deceased and
Ms Jegels), "... as BEE
requirements and in particular women empowerment was, and still is, a
key driving factor in obtaining
licensing and doing business in the
petroleum industry". Where the applicant appears to openly
admit having been guilty
of what is generally described as
"fronting", it also seems that, in the process, he was
hoisted by his own petard.
The applicant goes
on to confirm that the name of ICRM was changed on 2 October
2009 to Gulfstream Energy (Pty) Ltd and the
share capital of 120 was
divided between the two spouses to the tune of 58 for the deceased
and 62 for Ms Jegels.
The applicant goes
on to state that from its inception in 2009 Gulfstream was then
developed into a thriving business showing a
turn-over in excess of
R1,6 billion in the "last financial year" which would
have been, probably, 2012.
The opposing
respondents deny allegations by the applicant that he was the driving
force behind Gulfstream, that it was his brain
child and that he was
working in the position of managing director. They point out
that Mr and Ms Jegels had made a
major contribution towards
conducting the business both in their time, effort and money.
They repeat that the deceased was
listed in the financials as the
sole director. They also referred to the shareholders agreement
entered into in November
2009 between the deceased and Ms Jegels.
In terms thereof, upon the demise of one of the shareholders, the
remaining
shareholders "shall be obliged to purchase the
shares". The shares are to be valued and then sold to the
remaining
shareholders. On the weight of the evidence, in this
case, the shares have since been valued at some R5,2 million and
Ms Jegels has offered to purchase them. This transaction,
according to the applicant, is being resisted by him.
He states
that the transaction is "simply being put on ice" and that
the "payment" is being kept in trust on
an interest bearing
investment pending the finalisation of this application for a
declaratory order.
[28] In contesting the argument of the
applicant that the will should be interpreted on the basis that it
was the intention of the
deceased that all her shares and loan
accounts, including those relating to Gulfstream, were bequeathed to
the applicant in his
personal capacity, the opposing respondents
argue as follows: if this was the case, there is no reasonable
explanation for the
fact that the deceased, including all her other
businesses, specifically excluded ICRM from her will, which was
already signed
more than a year after ICRM was floated.
Moreover, if the
deceased, as an exceptional business woman, well versed in the
activities of all her companies, had the intention
of bequeathing the
shares in ICRM (and later in Gulfstream) to her husband, she could
quite easily have amended the will, something
which she refrained
from doing. Even when she entered into the shareholders
agreement with Ms Jegels, she gave no indication
that she wanted the
shares to devolve upon her husband. At the time of her demise,
in September 2012, Gulfstream was already
up and running and doing
very well, on the applicant's own version, since three years earlier
in 2009. As the sole director
and the major shareholder, the
deceased would have been well aware of this. Had she had any
intention of giving the shares
to her husband, there was nothing
stopping her from doing so.
[29] Moreover, the opposing respondents
point out that when the will was signed in 2007, Gulfstream, in its
present form, was not
yet known to the deceased. They argue
that the applicant now wishes this court to interpret the will as
including an entity
not yet known to the testatrix when she signed
the will.
[30] In my view, there is much to be
said for the arguments advanced by the opposing respondents.
[31] The applicant also submitted in his
founding affidavit that the "normal and natural meaning of the
words 'all my shares'
should be indicative of the intention of the
testatrix that she referred to all her shares at the date of her
death and not to
some part thereof". This is a reference
to the wording of clause 5.1 of the will. The opposing
respondents counter
this by arguing that if that had been the
intention of the deceased she would not have mentioned the entities,
the shares of which
she was bequeathing to her husband. The
fact that she by name mentioned the relevant entities is, so they
argue, indicative
that those entities not mentioned, are excluded.
I also find myself in respective agreement with this argument.
[32] In his argument, counsel for the
applicant referred to the case of
Ex Parte Weir's Executors
1939 CPD 340
where the testator bequeathed "my shares" in a
certain company and it was held that these shares included certain
preferent
shares acquired by the same testator in the same company
subsequent to the making of the will. This state of affairs is
clearly
distinguishable from the present: the deceased bequeathed all
her shares in specifically identified companies. She bequeathed
no shares at all in the entities that are relevant to this case,
namely ICRM and, later, Gulfstream.
Mr Van Ryneveld
argued that where these last-mentioned entities are specifically
excluded from the will, or, for that matter, from
a subsequent will,
the maxim
expressio unius est exclusio
ulterius
is applicable (meaning
"vermelding van een is uitsluiting van die ander" or
"expression of one thing is the exclusion
of the other" –
see Hiemstra and Gonin
Trilingual Legal
Dictionary
2
nd
ed p196). In this regard, I was also referred by counsel
to
Dison and others v Hoffmann and
others NNO
1979 4 SA 1004
(AD) at
1016A E.
[33] In his diligent address, Mr Klopper
also urged me to recognise the significance of the comma used in the
first line of clause
5.1 of the will: "... all my shares, and
any credit loan account in ..." If I understood the
argument correctly,
it is this: "all my shares" should be
distinguished from "any credit loan account ...", so that
the specified
companies are only brought in line with the loan
accounts whereas "all my shares" means all the shares of
the deceased
including those in the specified entities. I cannot
accept this argument: there is no apparent or conceivable reason
why
the deceased would divorce the shares from the credit loan accounts
in the specified entities. Both shares and credit
loan accounts
are assets in those companies. This is what the deceased
bequeathed to her husband. There is no conceivable
reason why
she would embark upon such a complicated and cryptic exercise to
separate the destiny of the shares from the credit
loan accounts and
only specify the entities relating to the latter.
It should also be
born in mind that the applicant chose to approach the court by way of
motion, so that no
viva voce
evidence was offered to advance the case of the applicant or to throw
further light on the subject.
[34] Another argument offered on behalf
of the applicant for the exclusion of ICRM (and, perhaps later,
Gulfstream) from the will,
is the fact that ICRM was dormant in 2007
when the will was signed. This argument was countered on behalf
of the opposing
respondents on the basis that if this were the case,
no clearer proof can be found that the deceased did not intend
including ICRM
in the will! This would also be in line with the
authorities to the effect that in interpreting a will the court is
entitled
to have regard to the material facts and circumstances known
to the testator when he made it: it puts itself in the testator's
arm-chair – see
Dison
,
supra,
at 1035G 1036B,
and also the passage quoted there from
Allen and another NNO v
Estate Bloch and others
1970 2 SA 376
(C) at 380A E.
See also, generally,
Campbell v Daly and others
1988 4 SA 714
(TPD) at 717I-719D.
[35] In all the circumstances, I have
come to the conclusion that the applicant failed to make out a case
which supports his proposed
interpretation of the will.
In my view, the
failure of the testator to mention ICRM with the other Intra entities
in the will (or, for that matter, to introduce
a reference to ICRM or
Gulfstream by way of a later amendment to the will) inevitably points
to the inclusion of the Gulfstream
shares (and, for that matter, any
credit loan account which the deceased had in Gulfstream) and, if
applicable, any other unspecified
shares and credit loan accounts, as
part of the residue of the estate of the deceased which has to be
administered for the benefit
of the trust beneficiaries as specified
in clause 5.2 and clause 6 of the will.
[36] In the result, the application must
fail.
[37] Before turning to the question of
costs, I must deal with the counter-application.
The counter-application
[38] The relevant paragraphs of the
notice of motion of the counter-claim read as follows:
"1. That in
terms of
section 54(1)(a)(v)
Gregory Andrew Salzwedel NO be removed
from his office as Executor of the Estate Late Catharina Margaretha
Salzwedel;
2. That Gregory
Andrew Salzwedel NO forthwith and immediately return the Letters of
Executorship dated 2 November 2012 to the Master,
High Court,
Pretoria."
[39] Prayer 2 is in line with the
provisions of
section 54(5)
of the
Administration of Estates Act, no
66 of 1965
.
[40] Section 54(1)(a)(v) of the
Administration of Estates Act no 66 of 1965 ("the Act")
reads as follows:
"54.
Removal
from office of executor.
- (1) An executor may at any
time be removed from his office –
(a)
by the Court –
(i)
...
(ii)
...
(iii)
...
(iv)
...
(v) if for any
other reason the Court is satisfied that it is undesirable that he
should act as executor of the estate concerned
..."
[41] The other subsections preceding (v)
have not been shown to apply to this case.
[42] What is plain from a general
reading of the papers is that the parties are at arm's length and
that their relationship has
broken down to such an extent that I see
no reasonable prospect of trust and goodwill ever being restored
between them. I
refer to the applicant on the one hand and the
first, fourth and fifth respondents on the other hand. For
example, the applicant
alleges that the fourth respondent was
influenced by the fifth respondent and their attorney to make certain
allegations in her
papers. This she denies. There is a
hot debate on the papers as to whether or not the applicant, as a
co trustee,
took sufficient steps to timeously have a third
trustee appointed after the resignation of the applicant's attorney.
The
applicant describes the fourth respondent's allegations in this
regard as "false". The appointment had to take place
because, in terms of clause 10.1.2 of the Trust Deed, should there be
less than three trustees, all the powers of the remaining
trustees
are suspended except the power to appoint a third trustee.
In passing, I mention that the newly appointed trustee,
Ms Botes, (who was also one of the first trustees as I have
explained) was not officially joined as a party to this litigation.
The opposing respondents raised this issue but never proceeded with
an argument for non-joinder. On a general reading of
the papers
I am under the impression that Ms Botes (now Ms Schoeman-Botes) is
aware of this pending application. I am
not persuaded that
a failure of justice occurred through the non joinder and
decided not to
mero motu
take the issue any further.
Still on the issue of
the appointment of a third trustee, the following exchange between
the parties illustrates the poor relationship
and state of aggression
that prevails: the fourth respondent, in the opposing affidavit of
October 2013, makes the following allegation:
"15.10
In the interim and until a third Trustee has been appointed, the
trust cannot really act without a resolution.
I can quite
emphatically state that Salzwedel would never have agreed in the
present circumstances to sign a resolution in his
capacity as Trustee
to allow me to act in my capacity as Trustee and to oppose the
applicant's application on behalf of the trust."
The applicant
responded as follows:
"The content
is blatantly false and another example of the fact that the content
of the affidavit was prepared by a drafter
who did not obtain proper
instructions from Sarina Rossouw and that she herself did not read
the contents before signing same."
The fact of the matter is, however, that
the applicant, not only as executor of the estate but also as a
trustee, and bearing in
mind his fiduciary duties towards the trust,
contends for an interpretation of the will which militates against
the interests of
the trust and is aimed at depriving the trust
beneficiaries of a substantial bequest from the deceased. This
is a clear case
of a clash of interests and a point raised repeatedly
in the papers by the opposing respondents but the applicant,
throughout,
remained silent on this particular issue. What is
plain, is that he is not prepared to resign as a trustee or, for that
matter,
as the executor of the estate.
It is also clear from a number of
affidavits deposed to by the fourth respondent, a 28 year old
business woman, that she fully
supports the stance adopted by the
opposing respondents and it is clear that she has not been influenced
to make submissions which
she does not agree with. She also
indicated that she was, even without a resolution from the trust,
opposing the application
on behalf of the trust in the interest of
justice. In this regard, she relies on the provisions of
clauses 10.12.11 and 10.17
of the Trust Deed. The
last-mentioned provision reads as follows:
"Alle handelinge te goeder trou
verrig deur die trustees sal geldig bly ten spyte van enige gebrek in
die aanstelling van die
trustees."
In their answering affidavit, the
opposing respondents complain that in his notice of motion, the
applicant seeks a costs order
against any opposing respondent whilst,
for himself, if the matter were to remain unopposed, he asks for the
estate to pay the
costs. They complain that he also does not
observe the utmost good faith (
uberrima fides
) towards the
trust. In denying this, the applicant alleges that the first,
fourth and fifth respondents and their attorney
are motivated by
"nothing but greed" judging by the manner in which they
approached the application.
These are some examples from the papers
illustrating the high level of aggression between the two camps.
There are many more
examples, which I will not dwell upon.
[43] There are other areas of deep
conflict between the parties which are described in the papers
including in lengthy and, at times,
acrimonious correspondence
between the respective attorneys. I briefly mention some of
them:
1. The attorney of
the opposing respondents wrote in a letter, already dated 19 December
2012, some three months after the
passing of the deceased, that he
had met with the applicant to discuss the finalisation of the
estate. According to the attorney,
the applicant told him that
he wanted to create a new trust also featuring his own two children
from a previous marriage, together
with the two daughters, the fourth
respondent and Rhode, as beneficiaries. The applicant then
wanted to transfer some of
the properties bequeathed to the Karien
Rossouw Family Trust in terms of the will, into the name of the new
trust. This idea
was rejected by the opposing respondents.
The fourth respondent, in deposing to one of a number of affidavits
referred to,
alleged that the applicant stated that if the
beneficiaries turn down his suggestion of a redistribution of assets,
as explained,
he would file personal claims against the estate to
decrease the value of the inheritance of the beneficiaries.
2. According to the
correspondence, Rhode already moved out of the home of the deceased,
which she had occupied with the deceased
and the applicant, at the
end of 2012. This is because the relationship between the
applicant and the two daughters was deteriorating
rapidly.
3. There was a
dispute about the bank account of the deceased at Rand Merchant
Private Bank in which monies were deposited, including
pay-outs from
insurance policies, and the reluctance on the part of the applicant
to "freeze" the account and to preserve
the assets.
These allegations are not necessarily common cause, but they
illustrate this particular area of dispute.
4. There was
unhappiness about the applicant's continued residence in the house of
the deceased without official authority for him
to do so. He
states in his papers that he is renting the house at a market related
rental, but furnishes no particulars.
5. There was an
objection by the opposing respondents about the continued use by the
applicant of the assets, movable and immovable,
of the deceased, as
though nothing had happened. It was pointed out to the
applicant in correspondence that he was supposed
to administer the
assets to the benefit of the trust and its beneficiaries and not to
use the assets for his own benefit.
6. I have referred
to the sale of the contested Gulfstream shares, valued at
R5,2 million, to Ms Jegels. In the
duplicating
affidavit, the fourth respondent alleges that Mr Jegels, who told her
about this transaction, also told her that the
applicant had
requested him (Mr Jegels) not to disclose details of the transaction
to the fourth respondent. This allegation
was not specifically
denied by the applicant. He did, however, allege, as I
mentioned earlier, that the "payment"
was being kept in an
interest bearing "investment" pending the finalisation of
this case. There is an allegation
by the opposing respondents
that the applicant was dissipating the assets of the estate, but this
he denies.
7. After lengthy
discussions, over many months, the applicant now appears to have
lodged a claim, in his personal capacity, against
the estate, to the
tune of some R2,7 million. The bulk of the claim has to do
with an insurance pay out following
the death of the deceased.
There is also a claim for interest, alleged expenses and 50% of the
profits of the sale of a property.
It clearly appears from the
papers that these claims are hotly contested by the opposing
respondents, who also claim that this
state of affairs makes the
position of the applicant as executor untenable: he will play a role
in deciding whether or not to admit
his own claim against the
estate. In this regard, for example, the provisions of sections
29, 31, 32, 33 and 35 of the Act
will come into play: in terms of
section 29 he must publish invitations in the
Gazette
and
local newspapers to all persons having claims against the estate to
lodge them with him (the executor, in this case the applicant
himself) within a certain time. This invitation must be
published "as soon as may be after Letters of Executorship have
been granted to him (the executor)". The applicant must
therefore invite himself to lodge his own claim. It is
not
clear whether this was done given that the deceased already passed
away more than two years ago. The Letters of Executorship
issued to the applicant is dated 2 November 2012, more than two years
ago. Section 31 makes provision for the filing of late
claims
and for the consequences if that happens. Section 32 provides
for disputed claims. If the executor disputes
any claim against
the estate he must take certain steps. In this case it is
unlikely given what he says in the papers, that
he will dispute his
own claim. This is an untenable situation. It is also
unlikely that he will reject his own claim
as foreshadowed in section
33. It can be assumed that in terms of section 35 he will
include his own claim in a liquidation
and distribution account which
will probably then be disputed by the opposing respondents and
referred to court. The parties
will remain at loggerheads.
This state of affairs cannot be in the interests of the
beneficiaries, the trust and the estate
in general.
[44] In summary, there is a clash of
interests between the applicant in his capacity as executor and in
his personal capacity.
There is a clash of interests between
the applicant in his capacity as executor and personal capacity on
the one hand and the trustees
(beneficiaries of the will) of the
trust of which the applicant is a co trustee. At the
same time, there is a clash
of interests between the applicant in
both his capacities and the beneficiaries of the trust of which he is
a trustee. Lastly,
there is a clash of interests between the
applicant in both capacities, and the heirs and/or legatees mentioned
in the will.
[45] In
Reichman v Reichman and
others
2012 4 SA 432
(GSJ) the learned Judge, at 445I, points out
that "in a number of cases our courts have had to consider the
position of an
executor who had a conflict between his personal
interests and his duties as the executor of an estate or trustee of a
trust".
The learned Judge then proceeds to provide a
useful summary of the relevant case law and the principles enunciated
in those cases.
See, generally, the judgment at paragraphs [14]
to [20] at 445I-450A. I refer briefly to some of these
decisions dealt
with by the learned Judge in
Reichman
.
[46] In
Lindenberg v Giess NO and
another
1957 3 SA 30
(SWA) at 33G-34A the following is said:
"The question
of costs must be considered. The executor was faced with an
objection to the account. He acted on
a valuation not in terms
of the will. When confronted with another valuation of Van
Helsdingen he was placed in a position
where his fiduciary functions,
which required the exercise of the utmost good faith, conflicted with
his own interests. He
followed the line dictated by his own
interests. Such conduct cannot be allowed to stand ..."
It appears that in this case the first
respondent (seemingly the executor) being personally interested and
having acted in his own
interests in a position where his own
interests conflicted with his duty, was ordered to pay the costs
de bonis propriis
.
[47] In
Grobbelaar v Grobbelaar
1959 4 SA 719
(A) VAN BLERK, JA said the following at 724G-725A:
"Dit is
duidelik dat hier 'n wesenlike botsing bestaan tussen die persoonlike
belange van die respondent en dié 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.
'n Dergelike
posisie het ontstaan in die saak van
Barnett v Estate Beattie
1928 CPD 482
, 'n appèl teen 'n beslissing van die
Hooggeregshof van Suid Rhodesië, waar 'n eksekuteur vir die rede
uit sy amp ontset
is.
Daar het die hof heeltemal tereg
daarop gewys dat op hierdie stadium dit nie nodig is nie om in te
gaan op die geldigheid van respondent
se eis, want die vraag oor wie
reg of verkeerd is, is nie hier ter sprake nie.
"
(Emphasis added.)
It appears, therefore, that when
considering an application to remove an executor from his office in
terms of section 54 of the
Act, it is not necessary, at this stage,
to consider the validity of his claim against the estate.
This is over and above the fact that the
applicant in the present case seeks an interpretation of the will
which furthers his personal
interests and militates against those of
his co-trustees, the beneficiaries of the trust and the
heirs/legatees in terms of the
will.
[48] In
Harris v Fisher NO
1960 4
SA 855
(A) the learned Judge of Appeal, at 861H-862E, also refers to
other cases including
Grobbelaar
,
Sackville West v Nourse
and another
1925 AD 516
at 533-534 and the following passage from
Story
Equity Jurisprudence
, 2
nd
ed p212:
"Executors or
administrators will not be permitted, under any circumstances, to
derive a personal benefit from the manner in
which they transact the
business or manage the assets of the estate."
[49] In
Reichman,
the learned
Judge, at 447I-449G, offers a full discussion of the judgment in
Die
Meester v Meyer en andere
1975 2 SA 1
(T) where a full court was
faced with an application to remove an executor in accordance with
section 54(1)(a)(v) of the Act.
I only refer to a few of
those passages
In fairness to the
applicant, the learned Judge in
Reichman
at 448D-F refers to the following passage from
Meyer
at 16C-17F:
"Die hof sal
nie ligtelik 'n eksekuteur van sy amp onthef nie, veral waar hy 'n
eksekuteur-testamentêr is. Tog
is hierdie oorweging nie
deurslaggewend nie. In
Port Elizabeth Assurance Agency and
Trust Co Ltd v Estate Richardson
1965 2 SA 936
(K), het VAN
WINSEN R, op bl 940, gesê:
'I have no doubt
that in the exercise of its power to appoint or remove an
administrator the Court will pay close attention to the
wishes of the
testator as expressed in or implied from the terms of the will.
The Court cannot, however, necessarily be bound
by these wishes even
to the detriment of the beneficiaries to whose interest it must
equally clearly have regard.'"
In
Meyer
, (the details appear
from
Reichman
at 449B-G) the learned Judges also deal with an
important principle mentioned in
Volkwyn NO v Clarke and Damant
1946 WPA 456 at 474:
"... it must
therefore appear, I think, that the particular circumstances of the
acts complained of are such as to stamp an
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."
The learned Judges in
Meyer
,
dealing with the words of MURRAY, J, in
Volkwyn
, then say the
following (the reference is at
Reichman
449E-G):
"Hierdie
beginsel is deur MURRAY R omskryf slegs in verband met 'acts
complained of', dit wil sê die doen en late van
'n eksekuteur
wat hom onbevoeg maak om sy pligte uit te voer.
Die beginsel
is nie veelomvattend nie. Dus, byvoorbeeld kan omstandighede
ontstaan waar 'n eksekuteur hom in 'n onhoudbare
posisie teenoor die
boedel vind.
Grobbelaar v Grobbelaar
1959
4 SA 719
(AA) op 724G. In die geval van botsende belange is die
blote feit dat 'n eksekuteur nie onpartydig kan wees by die
beoordeling
van eise teen die boedel nie,
prima facie
'n grond vir sy verwydering.
Webster v Webster en 'n
ander
1968 3 SA 386
(T) op 388C-D.
Hoe
dit ook al sy onder die gemene reg en ingevolge die gewysdes onder
die ou Boedelwet 24 van 1913, is die hof nou gemagtig kragtens
artikel 54(1)(a)(v) van die huidige Boedelwet om 'n eksekuteur te
verwyder indien dit onwenslik is dat hy as eksekuteur van die
betrokke boedel optree. Die hof het hier 'n diskresie en myns
insiens bly die oorheersende oorweging die belange van die
boedel en
van die begunstigdes.
"
(Emphasis added.)
[50] In
Oberholster NO v Richter
[2013] 3 All SA 205
(GNP) the executor was held to be beyond
reproach. At 210c-f the learned Judge held, by reference to
earlier authorities,
that -
"Mere
disagreement between an heir and the executor of a deceased estate,
or a break-down in relationship between one of the
heirs and the
executor, is insufficient for the discharge of the executor in terms
of section 54(1)(a)(v) of the Act. In
order to achieve that
result, it must be shown that the executor conducted himself in such
a manner that it actually imperilled
his proper administration of the
estate. Bad relations between an executor and an heir cannot
lead to the removal of the
executor unless it is probable that the
administration of the estate would be prevented as a result ..."
Nevertheless, the learned Judge
recognised the principles laid down in
Meyer
by referring
thereto at some length and also dealing with
Volkwyn
–
see
Oberholster
at 208d 209h. At 209g h the
learned Judge said:
"In both the
Grobbelaar
and
Webster
matters referred to, the
executor stood to benefit financially in his personal capacity,
depending on what actions he took as executor.
In such
instances his personal interests are in conflict with the interests
of the estate and his inability to be impartial may
be a
prima
facie
ground for his removal as executor. Section
54(1)(a)(v) gives the court a discretion and the main consideration
remains a
consideration of the interests of the estate and the heir."
[51] In my view the present case is
distinguishable from
Oberholster
where the conduct of the
executor was held to have been beyond reproach. It was held
that his conduct had caused no prejudice
to the estate.
[52] In the present case, the
counter-claim is based on the principles adopted in
Reichman,
Grobbelaar, Meyer
and other cases.
[53] In
Meyer
, the executor was
removed from his office and it was ordered that the costs dealing
with the interpretation of the will had to
be paid by the estate
whereas the remainder of the costs (presumably those flowing from the
application to remove the executor),
had to be paid jointly and
severally by the executor and the second respondent (a firm of
attorneys). The liability for costs
of the executor was fixed
on the
de bonis propriis
scale.
[54] In all the circumstances, I have
come to the conclusion, in the spirit of section 54(1)(a)(v), that it
is undesirable that
the applicant should act as executor of the
deceased estate. Accordingly, the counter-claim ought to
succeed.
The costs
[55] Before me, both counsel were in
agreement that the costs of the application for declaratory relief
ought appropriately to be
paid by the estate.
[56] As to the costs of the
counter-application, I am not impressed with the conduct of the
applicant. In my view, his insistence
on remaining in his
office as executor under these circumstances is inappropriate.
The same applies to his consistent failure
to deal with allegations
of his breach of his fiduciary duties as a trustee.
Nevertheless, although costs are sought against
the applicant in his
personal capacity on a punitive scale in the counter-application, I
understood Mr Van Ryneveld, in the
end, to suggest that a costs
order directing the estate to pay the costs in respect of the
counter-claim would also not be inappropriate.
To that extent,
I will exercise my discretion in favour of the applicant.
The order
[57] I make the following order:
1.
As to the application:
1.1
The application is dismissed.
1.2
The costs of the application are to be paid by the deceased estate.
2.
As to the counter-application:
2.1 The
counter-application is upheld, and the executor, Gregory Andrew
Salzwedel, is removed from his office as executor of the
estate late
Catharina Margaretha Salzwedel.
2.2 The applicant
is ordered, in terms of the provisions of
section 54(5)
of the
Administration of Estates Act, to
forthwith return his Letters of
Executorship to the third respondent.
2.3 The third
respondent is requested to, as soon as possible, exercise his powers
under the
Administration of Estates Act to
appoint and grant Letters
of Executorship to such person or persons whom he may deem fit and
proper to be the executor or executors
of the estate of the deceased.
2.4 The costs of
the counter-application are to be paid by the deceased estate.
W R C
PRINSLOO
JUDGE
OF THE GAUTENG DIVISION, PRETORIA
51034-2013
HEARD ON: 27 AUGUST 2014
FOR THE APPLICANT: J C KLOPPER
INSTRUCTED BY: D B M ATTORNEYS
FOR THE
1
ST
, 4
TH
AND 5
TH
RESPONDENTS: P M VAN RYNEVELD
INSTRUCTED BY: SAVAGE JOOSTE &
ADAMS