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[2013] ZAGPPHC 542
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Council for Medical Schemes and Others v Liberty Medical Scheme and Another (35254/2012) [2013] ZAGPPHC 542 (28 May 2013)
REPUBLIC
OF SOUTH AFRICA
NORTH
GAUTENG HIGH COURT, PRETORIA
CASE NO:
35254/2012
DATE: 28 MAY 2013
REPORTABLE
OF INTEREST TO
OTHER JUDGES
In the matter
between:
COUNCIL
FOR MEDICAL
SCHEMES
..................................................................................
First
Applicant
THE
REGISTRAR OF MEDICAL
SHEMES
.....................................................................
Second
Applicant
HENNIN
ROBERT
....................................................................................................................
Third
Applicant
and
LIBERTY
MEDICAL
SCHEME
...........................................................................................
First
Respondent
MKHIZE,
BOYCE
MACKESON
......................................................................................
Second
Respondent
JUDGMENT
KATHREE-SETILOANE.
J
:
[1] This matter
concerns the question of whether a trustee, who resigns from a board
of trustees of a medical scheme, is entitled
to a golden handshake in
the form of a restraint of trade and lost opportunity payment, where
the rules of the medical scheme do
not expressly provide for the
payment of such remuneration to a trustee.
[2]
The First Applicant is the Council for Medical Schemes (“the
Council”), established in terms of
s 3(1)
of the
Medical
Schemes Act, 131 of 1998
. Its primary role is to regulate the medical
schemes industry. The Second Applicant is the Registrar of Medical
Schemes (“the
Registrar), and the Third Applicant is Mr Robert
Henning, a member of the First Respondent, Liberty Medical Scheme
(“the
Scheme”). The Second Respondent is Mr Boyce
Mackeson Mkhize (“Mkhize”), an erstwhile trustee of the
Scheme. He
resigned as a trustee of the Scheme during May 2011.
[3] Pursuant to
Mkhize’s resignation from the Board, on 20 May 2011, a so
called termination and restraint agreement (“the
termination
and restraint agreement”) was concluded between the Scheme and
Mkhize, in terms of which the Scheme paid Mkhize
R700 000, 00 in
consideration of a restraint of trade covenant in favour of the
Scheme, and R962 500, 00 in consideration of his
resignation with
effect from 19 May 2011.
[4]
The Applicants seek to set aside the termination and restraint
agreement on the basis that the Board of Trustees of the Scheme
(“the
Board") acted
ultra
vires
the
Medical Schemes Act and
the Rules of the Scheme (“the Rules”).
They also seek an order declaring Mkhize liable to the Scheme for
disgorgement
of profit in the sum of R1 622 500, 00 and, an order
directing him to pay the said amount back to the Scheme.
Circumstances
leading up to the termination and restraint agreement
[5]
The Scheme came into existence on 1 January 2010, as a result of the
amalgamation between Liberty Health Medical Scheme and
Medicover
Medical Scheme. As a result of the amalgamation, the Board which
consisted of ten trustees (five from each Board) had
to be reduced to
seven by the annual general meeting to be held in 2011. The Rules of
the Scheme provided for the reduction in
the number of Board members
in clauses 18.1.4 to 18.1.6 which read:
"18.1.4
The number of Board members will reduce from ten to no more than
eight by the Annual General Meeting to be held in
2010. The number of
Board members will further reduce to no more than seven by the Annual
General Meeting to be held in 2011.
18.1.5 The Board
members shall endeavour to secure the voluntary resignation of
members of the Board in order to reduce their number
in accordance
with clause 18.1.4.
18.1.6
In the event of the Board failing to secure the voluntary resignation
of members of the Board as contemplated in 18.1.4 then
in such an
event, the Board shall decide on which members of the Board are to be
removed to bring the total of trustees to the
number stipulated in
clause 18.1.4 by secret ballot. The members of the Board with the
highest number of votes shall be removed
from the Board
..."
[6]
Mkhize was a member of the Board of the Scheme after the
amalgamation. Mkhize, it seems, adopted the stance that his term of
office as trustee would only end in June 2012, but because the then
Chairman of the Board, Larry Jacques’ term of office
had come
to an end, there was no need for the Board to invoke the provisions
of Rule 18.1.6 to vote on the removal of a member
from the Board. In
an effort to obtain certainty on the question of when Mkhize’s
term of office as trustee terminated, the
Board obtained counsels’
opinion which concluded that Mkhize’s term of office as trustee
would expire in June 2011.
The Board, however, elected not to invoke
Rule 18.1.6 and, instead, concluded the termination and restraint
agreement with Mkhize,
on 20 May 2011, in terms of which Mkhize
resigned
inter
alia
on
condition that the Scheme would procure the written withdrawal of a
complaint lodged against him, with the Council, by a member
of the
Scheme and, in consideration for his resignation, the Scheme
undertook to pay Mkhize an amount of R962 500, 00 and, in
consideration for a restraint of trade covenant, the Scheme undertook
to pay Mkhize a further sum of R700 000,00. It is common cause
that,
pursuant to the conclusion of the termination and restraint
agreement, the Scheme paid Mkhize the amount of R1 622 500, 00.
The
motivation for the transaction is recorded in the preamble to the
termination and restraint agreement, which reads:
“
3.1
The medical scheme industry is an extremely competitive industry and
as
a
result
the Scheme is in the process of considering amalgamation with
possible suitors in terms of the provisions of Section 63 of
the MSA.
3.2 One of the
thorniest issues which inevitable leads to difficulties about
amalgamation is that a proposed amalgamation must of
necessity result
in some of the Trustees of existing Boards of Trustees of the
amalgamating Schemes agreeing to step down. This
is required to
downsize the Board of Trustees of the amalgamated Scheme to a
manageable size.
3.3 In the
interest of the Scheme, discussions were commenced with some of the
trustees as regards the possibility of them stepping
down from office
so as to avert a legal dispute regarding the composition of the Board
of Trustees as contemplated in the Exposition
Document of the
amalgamation between the Scheme and Medicover Medical Scheme
(“Medicover
1
’) as well as subsequent rule
amendments to give effect thereto. ”
[7] On becoming
aware of the payment, which the Scheme made to Mkhize pursuant to the
termination and restraint agreement, the Council
wrote to the Scheme,
on 20 September 2011, indicating that the payments to Mkhize were
illegal, and enquiring about the steps that
the Scheme proposed
taking to recover the monies so paid. The Scheme replied by letter,
dated 10 October 2011, indicating that
it was not prepared to recover
the monies from Mkhize. The Council then wrote to Mkhize, on 14
December 2011, demanding repayment
of the monies to the Scheme.
Mkhize replied by letter, dated 9 January 2012, stating that there
was no basis to demand repayment
of the monies which the Scheme had
paid to him.
The Authority of
the Attorney to Act on behalf of the Applicants
[9]
Prior to determining whether the termination and restraint agreement
was concluded
ultra
vires
the
Rules of the Scheme, I must turn to the question of the authority and
locus standi
of
the Applicants to bring this application. The Respondents challenge
the authority of Savage, Jooste and Adams Inc (“SJA
Inc”)
to act on behalf of the Applicants in terms of Rule 7(1) of the
Uniform Rules of Court. The Applicants’ attorney,
Mr Marius van
Staden, a director of SJA inc, states on affidavit that the
application in this matter was served on the Scheme on
22 June 2012,
and the Scheme’s purported notice in terms of Rule 7 was served
on the Applicants on 16 July 2012; sixteen
court days after it had
come to the First Respondent’s notice that SJA Inc was acting
on behalf of the Applicants in this
matter.
[10]
Rule 7(1) of the Uniform Rules of Court provides that subject to the
provisions of sub-rules 2 and 3 a power of attorney to
act need not
be filed, but the authority of anyone acting on behalf of a party
may, within 10 days after it had come to the notice
of a party that
such person is so acting, or with the leave of the court on good
cause shown at any time before judgment, be disputed,
whereafter such
person may no longer act unless he satisfied the court that he is
authorised to act. The Applicants served a Rule
30(2) notice on the
Scheme, pointing out that it did not have the Court’s leave, in
terms of Rule 7(1), to dispute the authority
of SJA Inc to act, on
behalf of the Applicants, sixteen days after it had come to its
notice that SJA Inc are so acting, and that
its purported Rule 7(1)
notice constituted an irregular step. The Scheme’s attorneys
responded by email, dated 13 August
2012, indicating,
inter
alia,
that
the Scheme
“
has
no alternative but to file a formal application under Rule
7
which will be
served...shortly.”
[11] Needless to say
no application under Rule 7 was filed seeking leave from the Court,
on good cause shown, to challenge the authority
of SJA Inc to act on
behalf of the Applicants, outside the prescribed period as provided
for in Rule 7(1). I am of the view that
the Scheme is disallowed, in
the absence of such an application, from challenging the authority of
SJA inc, to act on behalf of
the Applicants, sixteen days after this
had come to its notice. The Scheme’s remedy was to challenge
the authority of SJA
Inc, to act on behalf of the Applicants, by
filing a Rule 7(1) notice within ten days after it had come to its
notice that they
were so acting, alternatively by seeking leave of
the Court on good cause shown - and not to raise the challenge during
argument
1
.
The Scheme has, however, failed to file a Rule 7(1) notice timeously,
nor has it brought an application, seeking leave from the
Court on
good cause shown, to challenge the authority of SJA Inc to act on
behalf of the Applicants outside the prescribed time
period provided
for in Rule 7(1). The Respondents’ challenge to the authority
of SJA Inc to act on behalf of the Applicants
must accordingly fail.
Locus Standi
of the Applicants
[12]
The Respondents also challenge the
locus
standi
of
the Applicants. I, however, find their challenge to the Applicants’
locus standi
to
be manifestly unfounded for the following reasons. The Council is
obliged in terms of
s 7(a)
of the
Medical Schemes Act to
“
protect
the interests of beneficiaries at all times”. “Beneficiary”
is
defined in
s 1
of the
Medical Schemes Act to
mean “
member
or a dependant of a member of a medical scheme”.
In
discharging its obligation to protect the interests of the Scheme’s
beneficiaries, the Council is empowered by
s 8(k)
of the
Medical
Schemes Act to
“
in
general, take any appropriate steps which it deems necessary or
expedient to perform its functions in accordance with the provisions
of this Act. ”
Those
steps would include the launching of this application.
[13]
In so far as the Registrar’s
locus
standi
is
concerned, he has the right and obligation to bring this application
in terms of s 6(1) of the Financial Institutions (Protection
of
Funds) Act, 28 of 2001 (“the Protection of Funds Act”),
which permits the Registrar to institute proceedings in
respect of
“
institutions
Section
6(1) of the Protection of Funds Act provides:
“
The
registrar may institute proceedings in the High Court having
jurisdiction in order to-
(a)
Discharge any duty or responsibility imposed on the registrar in
terms of any law;
(b) Compel any
institution to comply with any law or to cease contravening a law;
(c) Compel any
institution to comply with a iawful request, directive or instruction
made, issued or given by the registrar under
a law; or
(d) Obtain a
declaratory order on any point of law relating to any law or the
business of an institution. ”
[14]
The Applicants submit that both the Scheme and Mkhize are
"
institutions”
for
the purposes of s 6 (1) of the Protection of Funds Act; the Scheme by
virtue of being a
"financial
institution”
under
s 1 of the of the Protection of Funds Act which, amongst other
things, defines
“
financial
institution”
to
mean “
any
medical scheme contemplated in section 1 of the Medical Schemes Act,
1998 (Act 31 of 1998)’’,
and
Mkhize by virtue of being a trustee who manages the affairs of the
Scheme. The word
“
institution”
for
purposes of s 6 of the Protection of Funds Act is defined in
s 1
of
the
Medical Schemes Act to
mean:
“
(a)
a financial institution;
(b) any person,
partnership, company or trust in which, or in the business of which a
financial institution or an unregistered person
has or had a direct
or indirect interest;
(c) any person,
partnership, company or trust which has or had a direct or indirect
interest in a financial institution or unregistered
person, or in the
business of a financial institution or an unregistered person;
(d) a
participating employer in a pension fund organisation;
(e) any person,
partnership, company or trust that controls, manages or administers
the affairs or part of the affairs of a financial
institution or an
unregistered person; or
(f) any
unregistered person. ”
[15]
In my view, the Applicants’ reliance on
s 1(e)
of the
definition of
“
institution”
to
found
the standing of the Registrar to institute proceedings against Mkhize
is misplaced because at 20 June 2012, when the proceedings
against
Mkhize were instituted, he was not a trustee who managed or
controlled the affairs of the Scheme. Section 1(e) of the Protection
of Funds Act clearly contemplates the Registrar instituting
proceedings against a person who, at the time of institution of such
proceedings, controlled, managed or administered the affairs of a
medical scheme. The Registrar would, nevertheless, have standing
under s 1(c) of the Protection of Funds Act, which defines
“
institution”
to
also mean
“
any
person, partnership, company or trust which has or had a direct or
indirect interest in a financial institution or unregistered
person,
or in the business of a financial institution or an unregistered
person.”
As
a trustee of the Scheme, until his resignation on 20 June 2011,
Mkhize most certainly had a direct interest in the Scheme.
[16]
The
Medical Schemes Act and
the Protection of Funds Act clearly
afford both the Council and the Registrar the requisite
iocus
standi
to
bring this application against Mkhize and the Scheme. Both the
Council and the Registrar also have a right, in a representative
capacity, to act on behalf of, and in the interest of beneficiaries
of the Scheme. Indeed, the Council did request the Scheme to
recover
the monies from Mkhize. However, upon the Scheme’s refusal to
do so, the Registrar and the Council are entitled to
approach the
High Court to compel compliance with that request under s 6(1) (c) of
the Protection of Funds Act.
[17]
Similarly, the Third Applicant’s standing to bring this
application cannot be seriously challenged. As a member of the
Scheme
he stands to be prejudiced if the alleged unlawful payments by the
Scheme to Mkhize are allowed to stand. It is no secret
that the Third
Respondent was joined as an applicant in these proceedings in order
to bolster the
locus
standi
of
the Council and the Registrar, and that the Council is funding the
litigation on behalf of the Third Applicant. In as much as
the
Respondents contend that it is wholly inapposite for a regulatory
body, such as the Council, to be funding the litigation of
an
individual member against the Scheme, I find nothing improper with
the funding arrangement, particularly because the relief
which the
Applicants seek is aimed at protecting the interests of the
beneficiaries of the Scheme. Accordingly, I find that the
Applicants
have
locus standi
to
approach this Court for the relief claimed against both the Scheme
and Mkhize.
Agreement
and Payment are
ultra vires
the
Rules
[18]
I now turn to the question of whether the Board acted beyond the
scope of its powers under the Rules of the Scheme. The Applicants’
principal contention is that the Scheme has acted
ultra
vires
the
Schemes Rules by entering into the termination and restraint
agreement with Mkhize and making payment to him pursuant thereto,
in
order to secure his resignation from the Board. The Scheme denies
that the Board acted
ultra
vires
the
Scheme’s Rules. It contends that the termination and restraint
agreement was concluded in very specific circumstances
that gave rise
to acrimony and a severe breakdown in relations between trustees on
the Board, as a result of outside interference
and litigation by the
Scheme’s administrator, V-Med, shortly after the cessation of
the Scheme’s amalgamation negotiations
with Spectramed. V-Med,
who was also Spectramed’s administrator at the time, was
concerned that as a result of the cessation
of the amalgamation
discussions between the Scheme and Spectramed, the Scheme would
terminate the administration agreement with
V-Med. Mkhize and the
Registrar supported V-Med against the Scheme. This, according to the
Scheme, damaged the relations between
members of the Board and
Mkhize, and had the potential to threaten and disrupt the effective
and efficient functioning of the Board
to the detriment of the Scheme
and its members.
[19] The Scheme
contends that central to the acrimony amongst Board members was the
dispute between Jacques, the then Chairman of
the Scheme, and Mkhize
as to the termination dates of their respective terms of office. In
view of the acrimonious relations on
the Board at the time, and the
recalcitrant stance adopted by both Mkhize and Jacques, the Board
took the view that a vote in terms
of Rule 18.1.6 was highly
undesirable, as it would have inevitably led to expensive and
damaging litigation. In an attempt to seek
certainty on the terms of
office of both Mkhize and Jacques, the Scheme requested counsel’s
opinion but both Jacques and
Mkhize disagreed with the opinion. The
Board, however, took the view that the resolution of the dispute
between Mkhize and Jacques
could only be achieved if both of them
resigned from the Board. It, therefore, resolved to procure their
resignation from the Board,
after obtaining counsels’ opinion
on the question of the legality of making a restraint of trade
payment to both Jacques
and Mkhize. The opinion concluded that the
payment of a restraint fee to a trustee who resigns, in circumstances
where it is “necessary
and deserving”, is neither
precluded by the provisions of the
Medical Schemes Act nor the
Rules
of the Scheme. The Scheme submits, on the basis of the legal opinion,
that Mkhize clearly fell within the category of “necessary
and
deserving” as he is highly qualified and experienced - and
should he so choose -would have little difficulty in becoming
a
trustee of another medical scheme. Accordingly, the Scheme contends
that not only was the resignation of the Mkhize necessary
to achieve
the necessary reduction of the number of trustees on the Board, but
it was important for the Board to achieve this amicably,
in order to
avoid further litigation and ensure harmonious relations on the
Board. The Scheme implores the Court, in this regard,
to view the
termination and restraint agreement as a “compromise
agreement”, with which the Court should not interfere.
[20]
Moreover, the Scheme contends that it was necessary to properly
manage the termination of relations with Mkhize, in order to
prevent
him from disclosing the Scheme’s confidential information to
the its competitors, since Mkhize’s duties as
a trustee exposed
him to financial information, strategy, business modules, know-how
and other confidential information of the
Scheme. It points out, in
this regard, that in view of the competitive nature of the medical
scheme industry, medical schemes constantly
seek to augment and
enhance their membership base by employing a variety of business and
marketing strategies, know-how, and business
modules to remain
competitive, and that if Mkhize, who is in possession of highly
confidential and commercially lucrative information
concerning the
Scheme’s affairs, was left unrestrained he could very well
tender his services to, amongst others, competing
medical schemes or
medical scheme administrators. The Scheme goes on to contend that
although not expressly defined in the termination
and restraint
agreement, the confidential information that the Scheme needed to
protect included,
inter
alia
,
its distribution strategies (which are unique and highly
confidential), its amalgamation and growth strategies, details
regarding
current and future claims and the details and contents of
the Scheme’s third party contracts. Accordingly, it argues that
like other commercial companies, it is fully entitled, and indeed
obliged, to protect itself from potential disclosure of its
confidential information by way of a restraint of trade.
[21] Mkhize, in his
answering affidavit, justifies the payments to him on the basis that,
at the date on which the termination and
restraint agreement was
concluded, there was no obligation on him to resign as a trustee of
the Scheme. However, the amalgamation
would not have happened
smoothly and would have resulted in an unmanageable board of trustees
if he did not step down. Therefore,
in order to ensure that the
Scheme achieved its objective of having a manageable board of
trustees, he agreed to resign on the
terms contained in the
“settlement agreement”, and that he would not have
resigned if the terms contained in the “settlement
agreement”
or some other favourable terms were not agreed upon. He goes on to
state that the amount of R962 500,00 was paid
to him as compensation
for leaving office in circumstances where he otherwise would not have
left office, and where he could still
have been re-elected for
another term of office, which would not have been in the interests of
the Scheme. He says that he finds
nothing legally or morally wrong
with the arrangement, because if he had not offered to resign as a
trustee, he would have continued
to be entitled to receiving a
monthly payment from the Scheme in his capacity as trustee. In
respect to the restraint payment,
Mkhize states that he was not
prepared to be restrained in the manner contemplated in the
“settlement agreement” without
first being compensated
for it.
[22]
The Respondents submit that the Court must decide the matter on the
allegations made in the First and Second Respondents’
answering
affidavits, because the Council, which seeks final relief in the
application, has failed to dispute certain core allegations
in reply.
I am unable to agree with this contention. Whether or not the
Applicants had disputed each and every allegation, as set
out in the
First and Second Respondents’ respective answering affidavits,
is immaterial to the determination of the principal
issue in this
matter, namely whether the Board acted
ultra
vires
the
Scheme’s Rules in concluding the termination and restraint
agreement with Mkhize, and paying him pursuant thereto. On
consideration of this question, the Court need only have regard to
the termination and restraint agreement, which deals fully and
adequately with the rationale and motivation for the Scheme having
entered into the “special arrangement” with Mkhize.
All
facts incidental to the rationale for the agreement as detailed
therein, such as the possible merger between the Scheme and
Spectramed, or the divisive role which V-Med, Mhkize and the
Registrar took in that regard, is simply irrelevant to the
determination
of the issues in this matter. I am, therefore, not
inclined to decide the matter on the First and Second Respondents’
respective
versions.
[23]
The status of the Rules of the Scheme is central to the question of
whether the Board acted
ultra
vires
the
Rules. The Rules of a medical scheme are equivalent to the terms of a
reciprocal contract between the medical scheme and its
members
2
.
Section 32
of the
Medical Schemes Act provides
that the Rules of a
medical scheme and any amendment thereof
"shall
be binding on the medical scheme concerned, its members,
officers...”.
The
rules of a medical scheme, furthermore, prescribe the extent of, and
demarcate, the powers and authority of the board of trustees
of the
medical scheme. The powers of the Board, in the current matter,
derive solely from the
Medical Schemes Act and
the Rules of the
Scheme. The Board does not have the power to act outside the ambit
and confines of the Scheme's Rules or the
Medical Schemes Act. Proper
compliance with the Rules of the Scheme and the
Medical Schemes Act
is
, therefore, vital.
[24] Although
Rule
18
of the Rules of the Scheme provides for the governance of the
Scheme by a board of trustees; the reduction of the Board to no more
than seven members by the annual general meeting to be held in 2011;
and the mechanism to achieve the downsizing, it is silent
on the
question of procuring the voluntary resignation of a trustee against
payment of any amount of money. Whilst
Rule 18.1.5
of the Rules of
the Scheme clearly envisages the voluntary resignation of a trustee,
it cannot, in my view, be interpreted to mean
the procurement of a
resignation against payment of a sum of money. Such an interpretation
would simply not give effect to the
plain meaning of the expression
"voluntary resignation”. Furthermore, the mechanism of a
secret ballot, as provided
for in
Rule 18.1.6
, for reducing the
number of Board members in the event of the Board failing to secure
the voluntary resignation of members of the
Board, clearly does not
provide for any compensation to be paid to a trustee who, as a result
of the result of the ballot, is required
to step down as a trustee of
the Scheme.
[25] Since the Board
is bound by the Rules of the Scheme, it was required, in terms
thereof, to procure the voluntary resignation
of Mkhize and, failing
which, it was obliged to invoke the mechanism of a secret ballot as
provided for in
Rule 18.1.6.
The Scheme was, therefore, obliged to
hold a ballot once it became clear that Mkhize was not prepared to
resign voluntarily. It
was a dereliction of duty -indeed, a
subversion of its obligations - for the Board to disregard the Rules
of the Scheme in favour
of an arrangement, which was neither
authorised nor contemplated in the Rules. Yet that is precisely what
the Scheme did. In May
2011, a month before the termination of
Mkhize’s tenure as trustee, the Scheme concluded the
termination and restraint agreement
with Mkhize, pursuant to which
Mkhize would resign as trustee and be paid the amount of R1 622 500,
00. Astonishingly, the Scheme
followed this approach despite sound
legal advice that Mkhize’s term of office would expire in a
month’s time, in June
2011. In my view, the correct and prudent
approach to have adopted in the circumstances, was for the Scheme to
simply wait for
that period to run out - and a reduction of the
number of trustees on the Board would have been automatically
achieved.
[26] There is a
distinction between the removal of a trustee in the ordinary course,
which the Scheme could do under
Rule 18.1.5
, and his removal in terms
of
Rule 18.1.6
of the Rules of the Scheme. The latter is a transition
mechanism by which the reduction of trustees would be achieved. In
neither
case, however, is there a provision for compensating the
outgoing trustee. Similarly, a trustee is entitled, in the ordinary
course,
to resign from the Scheme by giving notice in terms of
Rule
18.3.
It is not suggested that, in that event, the trustee should be
compensated for what he would have been entitled to if he had chosen
not to resign. Thus should a trustee resign, after being persuaded to
do so under
Rule 18.1.5
, it would be unreasonable to expect payment
for agreeing to resign as the justification for the payment must
necessarily, in both
instances, be the same namely, the opportunity
cost entailed by a resignation. But there is no general principle
that a trustee
must be reimbursed for future earnings forgone
pursuant to a resignation. On the contrary, the reverse is the
position. Similarly,
the removal of a trustee by the way of a vote
under
Rule 18.1.6
would not entitle the trustee to compensation for a
lost opportunity. To insist otherwise would be absurd since there can
be no
opportunity costs if a person becomes a trustee knowing full
well that he can be removed in terms of
Rule 18.1.6.
That person
takes into the bargain a possible removal as a result of the
amalgamation. In other words, Mkhize cannot assert, as
he does, that
he expected not to be removed. Such an expectation is unreasonable in
the circumstances.
Remuneration of
trustees under the common law
[27]
Underlying the differences between the parties in this case is their
different conceptions of the remuneration that a trustee
is entitled
to receive. Seemingly, the Scheme considers the trusteeship of a
medical scheme as equivalent to that of a directorship
of a company,
with all the perks and benefits pertaining thereto. It is only on
that basis that talk of opportunity costs and restraint
payments can
make sense.
But
this, in my view, is a fundamental misconception of a medical scheme
trusteeship, as medical schemes are non-profit entities
and not
for-profit companies and, unlike company directors, trustees are
democratically elected by the members of the scheme. Consistent
with
this notion of a trusteeship, at common law a trustee is only
entitled:
3
"[T]o be
indemnified out of the trust property for expenses properly incurred
in the course of administration and to remuneration
for services as
provided for in the trust instrument, or if no such provision is
made, to a reasonable remuneration. A trustee
is not entitled to make
a profit from the administration of the trust, whether directly, and
must account to the trust for any
such profit. ”
[28]
The common law is clear - a trustee is entitled to be reimbursed or
compensated for expenses properly incurred in the course
of
administration of the trust, and to remuneration for services
rendered as provided for in the trust instrument. The common law
is,
however, silent on the question of remunerating a trustee for lost
opportunity or a restraint of trade fee on resignation because
such
payments are not in the general scheme of a trustee’s
relationship and duties to a trust. Since, payments for lost
opportunity and restraint of trade do not constitute payments for
expenses properly incurred in the administration of the trust
and,
for services rendered, they would be impermissible under the common
law. Hence, to the extent that payments such as these
provide a
trustee with a gain or an advantage, they may be considered to be
tantamount to making a profit which is impermissible
under the common
law
4
- since the trustee is not paid for services rendered or expenses
properly incurred - but is rather compensated for resigning as
a
trustee and, for being restrained from joining or disclosing
confidential information to another scheme. Presuming that such
payments were permissible under the common law, then a trustee could
disburden herself of her fiduciary duties, by the simple device
of
resignation, and insist that she will only assume those duties again
once she is paid a restraint of trade fee. Such an arrangement
could
never be countenanced, because the interests of that trustee would
conflict with her fiduciary duties. The
dictum
of
the Australian High Court in
Breen
y
Williams
5
pertinently
describes why this approach is wrong in principle:
“
The
law of fiduciary duty rests not so much on morality or conscience as
on the acceptance of the implications of the biblical injunction
that
'[n]o man can serve two masters’ (Matt 6:24). Duty and self-
interest, like God and Mammon, make inconsistent calls
on the
faithful. ”
[29] Therefore, once
the element of profit is introduced into a trustee’s
remuneration - whatever its shape or form - the
trustee is expected
to heed two masters. This is contrary to the principle that a trustee
may not place herself in a position in
which her personal interests
may conflict with her duty to act in the interests of the trust It is
primarily for this reason that
a trustee is not permitted, under the
common law, to make a profit from the administration of a trust,
whether directly or indirectly,
and must account to the trust for any
such profits.
Remuneration of
trustees under the Scheme’s Rules
[30] Turning then to
the treatment of the remuneration, which a trustee would be entitled
to receive under the Rules of the Scheme.
Rule 18.17
provides that
members of the Board may be reimbursed for all reasonable expenses
and disbursements incurred in, and professional
fees arising from,
the performance of their duties as trustees. The Respondents contend
that Council’s reliance upon the
provisions of
Rule 18.17
is
mis-directed because
Rule 18.17
only deals with payments in respect
of expenses, disbursements and professional fees, and not with
payments in respect of remuneration.
This contention, in my view, is
unsustainable for the following reasons. The payment of professional
fees, to a trustee, for work
performed as provided for under
Rule
18.17
is synonymous with the payment of remuneration to a trustee as
contemplated under the common law.
Rule 18.17
is clear in this regard
- trustees may be reimbursed for all professional fees arising from
their duties as trustees. Trustees
are, therefore, entitled to be
paid professional fees for work performed arising from their duties
as trustees. Thus, the only
remuneration which trustees of the Scheme
are entitled to, under the Rules, is of the nature described in
Rule
18.17.
[31] The payment of
remuneration to a trustee under the
Rule 18.17
is linked to
performance of a trustee’s duties. No performance, no
professional fees. Thus, once a trustee stops performing
duties on
resignation from the Scheme, the trustee is not entitled to payment
of remuneration. Therefore, a trustee cannot on resignation
claim
compensation for the loss of future professional fees arising from
his or her resignation. Yet that is precisely the basis
on which
Mkhize seeks to justify the “lost opportunity” payment to
him. It is abundantly clear from the Rules of the
Scheme, providing
as they do for post-amalgamation reduction, as well as ordinary
removal of trustees, that there is no scope for
compensating a
trustee on the basis of his or her resignation from the Scheme.
[32]
Rule 20.18
of the Rules of the Scheme provides the Board with a
residual power to do anything, which it deems necessary or expedient
to perform
its functions in accordance with the provisions of the
Medical Schemes Act and
the Rules. This Rule, in my view, does not
provide the Board with the power to remunerate trustees in a manner
that is in conflict
with the Rules. Thus, any payments by the Board,
to a trustee, in contravention of
Rule 18.17
, which provides
specifically for the circumstances in which a trustee may be
remunerated, would be
ultra
vires
the
Rules of the Scheme. Nor, in my view, can the Scheme’s Rule be
read impliedly to authorise payments of the nature of a
restraint of
trade and “lost opportunity” payment. Any importation of
implied powers to make these payments would have
to contend with the
position under both the common iaw and
Rule 18.17
, in terms of which
such payments are simply not competent. The Supreme Court of Appeal,
in
Absa Bank Ltd v
South African Commercial Catering and Allied Workers Union National
Provident Fund,
6
has
recently held, in relation to a pension fund, that an implication of
a power to perform certain functions will not be lightly
made:
"No
doubt it may be said to be desirable that there should be a provision
in the Rule that would enable the principal officer
to enter into
written contracts with regard to the day-to-day functioning to the
fund. But there is no such express provision.
Nor for that matter
does one find any such provision in the Act. The question that then
arises is whether it can be inferred by
necessary implication from
the Rules
(Cape
Union Sick Fund v Forrest
at
532D).
Needless
to say a court should be very slow to do so
(Mullin
(Pty) Ltd v Benade
1952
(1) SA 211(A))
’
[33]
There is no express provision in the Rules of the Scheme, which
empowers the Board to make payments, of the nature contended
for by
the Respondents, to a trustee who agrees to resign from the Board.
Nor, in my view, can this power be inferred by necessary
implication
from the Rules of the Scheme. To import into the Rules of the Scheme
a power to pay a trustee for not performing his
duties but, in fact,
for relinquishing them would, in my view, be contrary to the
provisions Rule 18.17 of the Rules of the Scheme.
Our courts have, in
this regard, made it clear that an implied term which conflicts with
an express term may not be imported into
a contract. Rumpff JA in
Pan
American World Airways Incorporated v SA Fire and Accident Insurance
Co Ltd
7
stated
thus:
“
When
dealing with the problem of an implied term the first enquiry is, of
course, whether, regard being had to the express terms
of the
agreement, there is any room for importing the alleged implied term."
[34]
The Council, in 2011, commissioned a study of the factors in the
medical schemes industry, which influence the differences
in the
remuneration strategies and policies of boards of trustees. The
study, entitled
“
Medical
Scheme’s Board of Trustee Remuneration”
8
(“the
discussion document”), sets out the Council’s proposals
for the remuneration of trustees in the medical
schemes industry.
Citing the discussion document
9
,
the Scheme contends that in view of the fact that the boards of
trustees of medical schemes collectively govern an industry valued
at
R96.5 billion (of the total annual contributions paid by members in
2010), and that remuneration principles guiding private
health
insurance entities are designed to attract, retain and motivate
members of the board of trustees and the executive management
to do
their work efficiently and effectively, medical schemes are required
to provide remuneration that is high enough to attract
and retain
appropriately skilled and qualified executives, but not as high as to
cause unnecessary financial burden to beneficiaries.
Hence,
remuneration decisions, particularly in large schemes, must take
cognisance of economic, efficient and effective use of
resources by
the health insurer, where the office of trustee requires particular
skills, and is very time consuming. The Scheme
consequently argues
that a large scheme, like itself, cannot be expected to attract
top-notch, skilled and responsible people to
serve as trustees and
then, without proper remuneration, expect those trustees to act to
the detriment of their own personal and
professional lives.
[35]
Whilst the Court recognises, the need for medical schemes to pay
trustees in accordance with the expertise and demands of the
office,
which are essential to the proper and sound management of medical
schemes and, that the approach to remuneration of trustees,
in the
medical schemes industry, is not homogeneous, it must be borne in
mind that the dispute before court does not concern the
question of
paying trustees of medical schemes a proper remuneration, but rather
whether the Board acted beyond the scope of its
powers under the
Rules of the Scheme by making payments to an ex-trustee, which are
not expressly provided for in the Rules. That
the medical scheme
industry is worth billions of rands does not, in my view, give a
board of trustees of a medical scheme
carte
blanche
to
conduct itself in a manner that goes beyond the scope of its powers
as provided for in that scheme’s rules. Significantly,
a core
proposal of the Council, as set out in the discussion document,
10
is that a medical scheme’s remuneration policy/strategy must be
outlined in the scheme’s rules in order to promote
transparency
and public accountability. The Council furthermore proposes that the
remuneration policy for the board of trustees
of a medical scheme
should be supported by performance reviews linked to measurable
quantitative and qualitative indicators, and
that it should clearly
state that trustees will be rewarded according to the effective
execution of the job as determined by a
performance management
system
11
.
Council’s proposal’s for the remuneration of trustees of
medical schemes are, in my view, completely in line with
the common
law position on the remuneration which a trustee is entitled to
receive, and like the common law, it is silent on the
question of the
payment of a restraint or “lost opportunity” fee to a
trustee who agrees to resign - because such payments
are not in the
general scheme of a trustee’s relationship and duties to a
medical scheme, which is manifestly not an organisation
for gain.
Thus, the guiding philosophy that must inform trustee remuneration in
the medical schemes industry, as articulated in
the discussion
document, is that:
12
“
1.
Serving on a board of trustees must not be economically motivated but
rather essentially inspired by attainment of a social good,
public
benefit and solidarity.
2. The Board of
Trustees should seek to balance the economic and social goal of the
scheme being mindful towards protecting beneficiaries
as well as in
cognisance of the fact that a medical scheme is a mutual fund whose
ownership vests in members.
...
5. The Board of
Trustees shall uphold the fiduciary duty of loyalty and the duty of
care.
6. In exercising
their fiduciary responsibilities the Board shall maintain integrity,
objectivity, honesty, competency and confidentiality.”
“
Compromise”
payment
ultra vires
the
Rules of the Scheme
[36]
The Scheme explanation for not following its Rules is that it wanted
to avoid “damaging litigation”. The explanation
is
unconvincing for a number of reasons. First, the Respondents do not
make out a case, on the papers, that Mkhize threatened litigation
if
the Board opted to vote him out as a trustee by way of a secret
ballot as provided for in Rule 18.1.6 of the Rules of the Scheme.
However, assuming that there was a threat of litigation from either
Mkhize or Jacques, this can never be a legitimate excuse for
trustees
of a medical scheme not to carry out their fiduciary and statutory
duties
13
as provided for in the scheme’s rules. Secondly, by entering
into the so-called “special arrangement” with Mkhize,
which was clearly at odds with its obligations under the Rules, the
Board had allowed itself to be held at ransom by Mkhize, whose
peculiar view of the impending expiry of his tenure was that it
presented
“
a
unique challenge which necessitated a special arrangement such as the
one entered into between the scheme and myself."
Even
if it is accepted that the Scheme could legitimately ignore the legal
advice obtained from counsel, in order to avoid litigation,
it is
perplexing why the Scheme could not, in avoiding litigation, simply
follow the provisions of Rule 18.1.6. It cannot be seriously
maintained that Mkhize would have engaged in
“
damaging
litigation”
against
the Scheme if he had been properly removed by way of a vote under
Rule 18.1.6. If that was the fear, then the Scheme was
obliged to
resist the litigation.
[37] The Scheme
implores the Court to view the payment as a “settlement”
or “compromise” arising from the
dispute with Mkhize in
relation to his resignation from the Board. But this implies that
there was a dispute to settle. There was,
by all accounts, no such
dispute. There was Mkhize’s insistence that his tenure would go
beyond June 2011, on the one hand,
and there was the Scheme’s
entitlement to terminate his tenure upon a vote, on the other. It
could not have been Mkhize’s
position that, in the event of the
exercise of that vote, he would have been able to sue the Scheme.
What would he. sue for? It
cannot be “lost opportunity”
because, as already pointed out, there was no “lost
opportunity” in this case.
Since, Mkhize clearly took into the
bargain the fact that his tenure was terminable at the instance of
the Scheme, there was no
realistic prospect of “damaging
litigation” - because there was simply nothing for which Mkhize
could sue. Accordingly,
having regard to counsels’ opinion that
Mkhize’s tenure would terminate in June 2011, the most prudent
thing to do
was to await the termination of his tenure instead of
signing, a month earlier, a contract by which the Board purported to
settles
a non-existent dispute, and thereby disable it from removing
Mkhize from office.
[38] There was, in
my view, nothing to settle or compromise between Mkhize and the
Scheme. The Scheme was contractually bound to
remove Mkhize once the
Board had identified him as one of the trustees to be removed
pursuant to the amalgamation. I, therefore,
agree with the contention
of the Applicants that far from being a compromise, the payment has
all the hallmarks of the conduct
of a supine board succumbing to the
demands of a trustee who self-confessedly would have resigned only on
the terms of the agreement,
or on better terms, despite the fact that
he could simply have been voted out by the Board in terms of Rule
18.1.7 of the Rules
of the Scheme. For his part, Mkhize seemed
blissfully unaware of his fiduciary obligations to the Scheme and its
beneficiaries.
Mkhize’s insistence that he would never have
resigned on terms more disadvantageous than those contained in the
agreement
sadly reveals his misunderstanding of his fiduciary duties
to the Scheme and its beneficiaries.
[39]
Surprisingly, it emerged during argument that although Jacques had
also resigned from the Board, the Board did not see fit
to enter into
a termination and restraint agreement with him. Nor was he paid a
restraint or "lost opportunity” payment
by the Scheme.
Jacques recalcitrance, much like Mkhize’s, was fundamental to
the acrimony amongst Board members, yet quite
remarkably, the Board
saw no need to pay him a “compromise” or “lost
opportunity” payment, on resigning.
At best, the Court would
have to speculate as to the reasons for the Scheme not doing so,
since the Scheme has failed, on its papers,
to be candid in relation
to its differential treatment of Mkhize, on the one hand, and Jacques
on the other. Accordingly, I find
that by entering into the
termination and restraint agreement with Mkhize, and by paying him
the amount of R 962 500, 00 as a “compromise”
or “lost
opportunity” payment, the Board’s conduct was
ultra
vires
the
Rules of the Scheme.
Restraint
of Trade Payment
ultra vires
the
Rules of the Scheme
[40] The Scheme
seeks to justify the restraint of trade payment to Mkhize on the
basis that, in view of the competitive nature of
the medical schemes
industry, it is necessary to protect the disclosure of confidential
information by outgoing trustees. This
argument is manifestly
unfounded. Rule 18.17 is exhaustive of the nature of payments which
may be made to trustees. Those payments
do not include payments for
restraints of trade. As indicated, the one uniform thing about
permissible payments under the Rules
of the Scheme is that they are
either reimbursements or professional fees for work done. A restraint
payment is neither a reimbursement
nor payment for work performed. On
the contrary, the payment of the restraint fee was made, by the
Scheme, in order to keep Mkhize,
a trustee, loyal to his statutory
and fiduciary obligations which he owed to the Scheme and its
beneficiaries. Significantly, the
Board did not see the need to keep
Jacques loyal to his statutory and fiduciary obligation to the Scheme
and its beneficiaries,
by paying him a restraint fee on resignation
from the Board. Also notable, is that counsels’ opinion on the
question of the
legality of a restraint payment to a trustee, on
resignation, was sought in respect of both Jacques and Mkhize - yet
Jacques, the
then Chairman of the Board, who too would have had
exposure to highly confidential and commercially lucrative
information concerning
the Scheme’s affairs - was allowed to
walk away without a restraint of trade in place. This begs the
question: was there
need for a restraint payment to Mkhize at all?
[41]
It is thus irrelevant to the question of whether the Board acted
ultra vires
the
Rules of the Scheme that a restraint payment may, to some, be an
attractive way of keeping outgoing trustees honest. It is either
permitted by the Rules or it is not. In any case, it is highly
undesirable, from a policy perspective, that trustees be induced
by
attractive restraint payments to be loyal and honest. That would
require them to heed two masters: their self-interest in the
restraint fee and acting in the best interest of the scheme,
regardless of whether a restraint fee is paid. There can furthermore,
as a matter of law, be no justification for the payment of a
restraint fee to a trustee, as a trustee’s fiduciary duty must
necessarily include the duty, after her term of office comes to an
end, not to disclose confidential information and not to make
use of
confidential information in competition with the scheme in which she
served as a trustee.
[42]
In my view, Mkhize’s fiduciary obligation not to disclose the
Scheme’s confidential information survived the termination
of
his office as trustee, and there was, therefore, no rational reason
for the Scheme to pay him the restraint fee. As is apparent
from the
termination and restraint agreement, the Scheme’s avowed
justification for the fee was to incentivise Mkhize to
protect its
confidential information. But any such incentive would be unlawful
since, in any event, Mkhize has a continuing obligation
to protect
the Scheme’s confidential information beyond the termination of
his office as trustee. It is established law that
if a director of a
company discloses confidential information to compete with the
company or to advance her personal interests,
she will be liable to
an action in unlawful competition because her fiduciary obligations
to the company prevents her from disclosing
such information
14
.
The general rule was stated as follows in
Easyfind
International (SA) (Pty) Ltd tnstaplan Holdings
15
"What is
clearly established in our law is that it is unlawful for a servant
to take his master’s confidential information
or documents and
use them to compete with the master. ”
A
trustee is, in principle, in the same position by virtue of his or
her fiduciary duties to the trust. When in
Robinson
v Randfontein Est. G.M Co. Ltd
16
Innes
CJ expounded this principle, he drew no distinction between employees
and trustees. Indeed, he based the duty on the fact
that a trustee or
director is in a position of confidence
vis-a-vis
the
trust or company. He stated thus:
“
Where
one man stands to another in a position of confidence involving a
duty to protect the interest of that other, he is not allowed
to make
secret profit at the other’s expense or place himself in a
position where his interest conflict with his duty. The
principle
underlies an extensive field of legal relationship. A guardian to his
ward, a solicitor to his client, an agent to his
principal, afford
examples of persons occupying such a position"
[43]
Our courts have consistently held that the common law fiduciary duty
of directors owed to the company subsist even after the
appointment
has ceased.
17
I am of the view that no principled distinction can, in this context,
be maintained between a trustee and a director. Certain fiduciary
duties of a trustee also subsist ’ after termination of office,
and any breech thereof may constitute a wrongful act in the
context
of an action for unlawful competition. Thus, if an ex-director owes a
duty of confidence to the company, after her directorship
has
terminated, by virtue of a fiduciary relationship with the company,
then an ex- trustee who equally stands in a fiduciary relationship
to
her trust will owe to the trust the same fiduciary duty of
confidence. This is not unique to the law of unlawful completion
imposing as it does these duties on ex-directors or ex-employees. It
also finds resonance in the law of trusts, where it has been
held
that in certain circumstances the trustee’s fiduciary
obligations survive the termination of her vacation of her position
as trustee. This is how
Honore’s
South African Law of Trusts
puts:
18
"However,
duties attaching to the trustee’s office may continue to exist.
If for instance the trustee still retains trust
property, it must be
returned or disposed of to the person properly entitled it. In this
sense the former trustee’s fiduciary
duties continue..”
[44] This principle
will apply equally to a trustee’s fiduciary duty to maintain
confidences. I am of the view, in this regard,
that the duty of a
trustee not to disclose confidential information would necessarily
survive termination of office until no confidentiality
can be said to
attach to the relevant information or ideas. The duty not to disclose
confidential information survives termination
because of its nature,
since it is just as easy to breach confidences once a trustee has
vacated the office of trustee, as was
when she still occupied it. A
trustee does not, in my view, divest herself of the duty not to
disclose confidential information
by simply resigning. Similarly,
whilst there would be no obligation, on resignation, for a trustee to
join a rival scheme, her
fiduciary duty not to disclose confidential
information, to which she had access whilst in office, will continue
to exist until
no confidentiality is said to attach to the
information. If any such information is disclosed, in breach of the
duty of confidentiality,
it would likely found a claim for unlawful
competition. It follows, that even in the absence of a restraint
arrangement, a medical
scheme will have a remedy, in law, should an
ex-trustee breach its confidences.
[45]
Another instance where the fiduciary duties of a trustee will survive
the termination of her office is the “no opportunity
rule”.
Take a case of a trustee who espies an opportunity, and then resigns
from a scheme for the sole purpose of taking
advantage of the
opportunity. Or take a trustee who resigns in order to use
confidential information of the scheme. In neither
case could it be
seriously maintained that the trustee is not in breach of her
fiduciary duties. It would be wholly irrelevant
that she is no longer
a trustee because certain duties are capable of breach even after the
trustee has vacated her position. Anything
else would be subversive
of the fiduciary duty of loyalty and confidentiality, as well as the
duty of care, that a trustee owes
to a trust. In the circumstances, I
am of the view that there was no rational purpose for the restraint
agreement, which the Scheme
entered into with Mkhize, and the related
payment. The termination and restraint payment was therefore
ultra
vires
the
Rules of the Scheme.
Conclusion
[46]
The Rules of the Scheme do not provide for resignation, “loss
opportunity” or restraint payments because these
payments are
not in the general scheme of a trustee’s relationship and
duties to the Scheme. Simply put, any such payments
would be
ultra
vires
the
Scheme’s Rules. The payments, which the Board made to Mkhize
pursuant to the termination and restraint agreement, were
not
expressly provided for in the Scheme’s Rules. The payments were
clearly impermissible, as they were contrary to the provisions
of
Rule 18.17 of the Rules of the Scheme. Accordingly, the termination
and restraint agreement, and the payments made pursuant
thereto,
patently offend against the principle of legality as the Board
exceeded the scope of its powers under the Rules of the
Scheme. For
these reasons, the termination and restraint agreement is null and
void, and falls to be set aside.
19
[47] In the result,
I make the following order:
(1) The termination
and restraint agreement, which was concluded between the First and
Second Respondents, on 20 May 2011, is set
aside.
(2) The Second
Respondent is liable to the First Respondent for disgorgement of
profit in the sum of R1 622 500, 00.
(3) The Second
Respondent is to pay to the First Respondent the amount of R1 622
500, 00.
(4) The Second
Respondent is ordered to pay the costs of the application including
those costs consequent upon the employment of
two counsels.
F.
KATHREE-SETILOANE
JUDGE OF THE
SOUTH AND
NORTH GAUTENG
HIGH COURTS
Counsel for the
Applicants: MC Maritz SC with L Sisilana
Attorneys for the
Applicants: Savage, Jooste & Adams
Counsel for the
First Respondent: H Epstein SC with D R Van Zyl
Attorneys for the
First Respondent: Gildenhuys Malatji Inc
Counsel for the
Second Respondent: K Tsatsawane
Attorneys for the
Second Respondent: Damons Magardie Richardson Attorneys
Date of Hearing: 16
April 2013
Date of Judgment: 28
May 2013
1
Eskom v Soweto City Council
1992 (2) SA 703(W)
, Ganes and Another v
Telecom Namibia Ltd
2004 (3) SA 615
(SCA) at 624I-625A; Unlawful
Occupiers, School Site v City of Johannesburg
2005 (4) SA 199
(SCA)
at para 14-16
2
Meaker
NO v Roup. Wacks, Kaminer, Kriger and Another
1987 (2) SA 54
©
at 61G-62C; Pennington v Friedgood and Others
2002
(1) SA 251
(C) at para 36
3
Cameron,
De Waal, and Wunsch,
Honore’s
South
African Law of Trusts (5
th
Edition) at 345
4
Ex
Parte Executor Testamentary Estate Late Arthur Storm
1943
NPD 279
at 284.
5
186
CLR 71
(HCA) at 108
6
2012 (1) All SA 121
(SCA) at para 33
7
1965
(3) SA 150 (A) 175C
8
Circular
45 of 2011: Medical Scheme's Board of Trustee Renumeration.
Discussion Document. 18 November 2011
9
Discussion
Document at para 5.4, page 11, and para
10
Discussion
Document at para 7.2.2, p 19
11
Discussion
Document at para 7.2.6 and 7.2.7, page 19
12
Discussion
Document at para 7.1, p 18
13
Msimang
NO v Katuliiba
March
(1)
2013 All SA 599
(GSJ) at para 67
14
Sibex
Construction (SA) (Pty) Ltd v Injectaseal CC
1988
(2) SA 54
(T) at 63I - 64
15
1983
(3) SA 917
(W) at 927
16
1921
SA (AD) 168 at 177
17
Phillips
v Fieldstone Africa (Pty) Ltd and Another
2004
(3) SA 465
(SCA) at 480C;
Cyberscene
Ltd v i-Kiosk Internet and Information (Pty) Ltd
2000(3)
SA 806 at 820H-J;
Multi
Tube Systems (Pty) Ltd v Ponting and Others
1984
(3) SA 182
(D),
Sibex
Construction (SA) (Pty) Ltd and Another v Injectaseal CC and Others
1988
(2) SA 54
(T); and Joubert (ed)
The
Law of South Africa
1
st
issue, volume 4, part 2, para 137
18
Honore's
South African Law of Trusts
at
227
19
Grundling
v Beyer and Others
1967
(2) SA 131
(W) at 139H-140B;
Absa
Bank v SACCAWU National Provident Fund
2012
(1) ALL SA 121
(SCA) at para 37