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[2013] ZAGPPHC 291
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Van Greune NO ans Another v Van Greune In re: Van Greune v Van Greune and Others (57674/2012) [2013] ZAGPPHC 291 (14 October 2013)
NOT
REPORTABLE
IN
THE NORTH GAUTENG HIGH COURT, PRETORIA
(REPUBLIC
OF SOUTH AFRICA)
Case
Number: 57674/2012
DATE:14/10/2013
In
the matter between:
FREDERIK
WILHELMUS VAN GREUNE
N.O.
.....................................................
First Excipient
CHRISTOFFEL
LOUIS
OOSTHUIZEN
...............................................................
Second
Excipient
and
ANNA
SUSANNA VAN
GREUNE
................................................................................
Respondent
In
re:
In
the matter between:
ANNA
SUSANNE VAN
GREUNE
….................................................................................
Plaintiff
and
FREDERIK
WILHELMUS VAN
GREUNE
............................................................
First
Defendant
FREDERIK
WILHELMUS VAN GREUNE
N.O
...............................................
Second
Defendant
ANNA
SUSANNA VAN GREUNE
N.O.
................................................................
Third
Defendant
CHRISTOFFEL
LOUIS
OOSTHUIZEN
...............................................................
Fourth
Defendant
MASTER
OF THE HIGH COURT,
PRETORIA
......................................................
Fifth
Defendant
JUDGMENT
POTTERILL J
1.
The excipients, the second and fourth respondents, except against the
summons of the plaintiff. The plaintiff instituted a divorce
action
against the first defendant. The plaintiff has also cited herself as
the third defendant, her husband as the second defendant
and the
fourth defendant all of them being trustees of the Fremar Trust. In
the summons the averments are made that the trust was
formed with the
sole intension to act as the alter ego of the defendants i.e. the
trust was a vehicle whereby the first defendant
could hide assets.
The trust was accordingly not managed in terms of Act 57 of 19 98 and
various facts are set out to sustain this
averment. The orders prayed
against the second, third and fourth defendants are relevant to the
exception and are thus quoted as
follows:
“
Eiseres se vordering teen die
tweede, derde en vierde verweerder in hulle hoedanighede as trustees
van die Fremar Trust:
1)
Dat dit verklaar word dat die Fremar Trust die alter ego van die
eerste verweerder is.
2)
Dat dit verklaar word dat die bates en laste van die Fremar Trust die
bates en laste van die eerste verweerder is.
3)
Dat, as sulks, die bates en laste van die Fremar Trust vir doeleindes
hiervan, inaggeneem word as deel van die eerste verweerder
se boedel
en as sulks beskou word as deel van die gemeenskaplike boedel van die
eiseres en die eerste verweerder.”
2.
The excipients submit that the summons does not disclose a cause of
action against the trustees and that the prayers as quoted
above of
this claim should be struck out. It was argued on behalf of all the
excipients that the plaintiff as a trustee of the
trust cannot
institute an action effectively declaring the trust invalid. This is
so because the plaintiff signed the trust deed
and thus became a
party to the stipulation alteri. The trust deed is thus a contract. I
was referred to Crookes v Watson
1956 (1) SA 277
(A) on p30^+ as
authority for this submission. The averments pleaded in the summons
are accordingly in conflict with the trust
deed and there is no valid
cause of action. The plaintiff may not lead evidence contrary to the
trust deed as it offends the rule
against extrinsic evidence -
Potgieter v Potgieter NO and Others
2012 (1) SA 637
(SCA). The
plaintiff is acting contrary to her fiduciary duty as a trustee. A
court cannot declare a trust invalid under these
circumstances. In
all instances where the court "pierced the corporate veil”
of a trust it was when a court had a discretion
in terms of the
Divorce Act 70 of 1979
and specifically
section 7(3)
for the purposes
of a redistribution order.
On
behalf of the plaintiff/respondent it was argued that the trustee is
appointed and accepted office to exercise a fiduciary responsibility
over property on behalf of and in the interests of another. However
in Jordaan v Jordaan
2001 (3) SA 288
(C) the court in essence found
that the trustee of an inter vivos trust is always tempted to regard
the assets that have been put
into it as really still being his own:
if this happens there is a very real danger - for him - that the
courts will look through
the trust and regard the assets held by it
as being part of his personal estate and thus attachable by his
personal creditors and
in event of his death as being part of his
personal estate for estate duty purposes and in the event of a
divorce as being part
of his estate. On behalf of the
plaintiff/respondent I was also referred to Land and Agricultural
Bank of SA v Parker and Others
2005 (2) SA 77
(SCA) at paragraph
[37.3]:
“
It
may be necessary to go further and extend well-established principles
to trusts by holding in a suitable case that the trustees’
conduct invites the inference that the inference that the trust’s
form was a mere cover for the conduct of business ‘as
before’,
and that the assets allegedly vesting in trustees in fact belong to
one or more of the trustees and so may be used
in satisfaction of
debts to the repayment of which the trustees purported to bind the
trust. Where trustees of a family trust,
including the founder, act
in breach of the duties imposed by the trust deed, and purport on
their sole authority to enter into
contracts binding the trust, that
may provide evidence that the trust form is a veneer that injustice
should be pierced in the
interests of creditors.”
k.
It was argued that in exception proceedings I must accept the facts
as set out in the summons. The plaintiff is entitled to sue
the trust
in her personal capacity. The plaintiff has the right to follow the
same approach as when “piercing the corporate
veil” of a
company. If this was not a cause of action it would lead to all
trusts being utilised fraudulently and not to
be investigated and it
would lead to an absurdity.
5.
It is common cause that there is a trust with assets. It is also true
that in certain instances the assets of a trust can be
found to be
the assets of a person’s estate and not the assets of the
trust. The question arises whether such a finding can
be made by
means of a declaratory order of the court in divorce proceedings
where the parties are married in community of property.
The prayer of
Part B as quoted above has no other meaning as that the trust is
terminated or declared void or at the very
least
that the trust deed is amended. A court has limited common law
jurisdiction to vary or terminate trusts. This flows from the
principle that just as a court has no general power to alter wills or
contracts so it has no general power at common law to alter
trusts
set up by wills or contracts. (Honore’s South African Law of
Trusts 5th Edition p515 paragraph 31M- This is true apart
from
statute even if the proposed variation would clearly be to the
advantage of all the beneficiaries under a trust created by
a will or
a contract — Ex parte Dawoodji N.O.
1961 (2) SA 170
(SR). This
is the position even if the trust instrument did not expressly
prohibit a given course. The only common law power a
court has comes
into play when it is necessary for the court to vary the trust in
order to avoid frustrating the trust object or
prejudicing the
beneficiaries. The court’s statutory power is in terms of the
Trust Property Control Act 57 of 1988 and is
to be exercised when a
provision of the trust instrument brings about certain undesirable
consequences, such as hampering the achievement
of the trust object
or prejudicing the interests of the beneficiaries, which in the
opinion of the court the founder did not contemplate
or foresee
(section 13 of the Act).
6.
The court can thus not in divorce proceedings declare that the trust
assets and liabilities no longer belong to the trust. The
prayers are
thus bad in law and should be struck.
8. The plaintiff can thus claim that
as part of the division of the estate the trust assets must also be
divided, but cannot claim
that the court declare that the assets of
that trust no longer belong to the trust.
9.
The exception is accordingly upheld with costs. Prayer B of the
prayers are accordingly struck out as well as paragraph 9 and
its
subsections of the summons.
S. POTTE RILL
JUDGE
OF THE HIGH COURT
CASE NO: 5767U/12 HEARD ON: 10 October
2013
FOR
THE EXCIPIENTS/DEFENDANTS: ADV. N. VAN NIEKERK INSTRUCTED BY: STUART
VAN DER MERWE INC.
FOR
THE RESPONDENT/PLAINTIFF: ADV. A. VAN NIEKERK INSTRUCTED BY: SHAPIRO
& SHAPIRO Inc.
DATE
OF JUDGMENT: ]U October 2013