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[2013] ZAGPPHC 354
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Mofokeng and Others v Master of the North Gauteng High Court and Others (50881/2012) [2013] ZAGPPHC 354 (21 November 2013)
IN
THE NORTH GAUTENG HIGH COURT, PRETORIA
(REPUBLIC
OF SOUTH AFRICA)
CASE
NO: 50881/2012
DATE:
21 NOVEMBER 2013
NOT
REPORTABLE
NOT
OF INTEREST TO OTHER JUDGES
In
the matter between:
MPU
DANIEL
MOFOKENG
.........................................................................
1ST
APPLICANT
NEOMOFOKENG
.......................................................................................
2ND
APPLICANT
KHAMA
MOFOKENG
.................................................................................
3RD
APPLICANT
And
THE
MASTER OF THE NORTH GAUTENG HIGH COURT
........................
1
RESPONDENT
JACQUELINE
MOTLAGOMANG MOFOKENG
....................................
2ND
RESPONDENT
MPU
DANIEL MOFOKEN
N.O.
.............................................................
3RD
RESPONDENT
JUDGMENT
MAKGOBA,
J
[1]
The applicants have launched an application in terms of section 23 of
the Trust Property Control Act 57 of 1988 for the review
and setting
aside of the decision of the first respondent to re-appoint the
second respondent as a trustee of the Phoka Trust ("the
trust").
The
second respondent has opposed same on the ground that her
reappointment was valid and within the discretion of the first
respondent
who was initially misled by the first applicant in the
removal of the second respondent as the trustee in the first
instance.
[2]
The first respondent does not oppose the application and has given a
notice to abide the decision of the court.
[3]
The first applicant and the second respondent are erstwhile husband
and wife who divorced on 7 March 2012. They are currently
co-trustees
of the Trust. The only property owned by the trust is a house, the
former matrimonial home. The second respondent resides
and has always
resided in the trust property being the house. The first applicant
also used to reside in the trust property until
the parties' marriage
became acrimonious and the first applicant vacated the matrimonial
home.the trust property.
[4]
It is common cause that:
4.1
Both parties are beneficiaries of the Trust;
4.2
At all material times the second respondent was paying the bond,
utilities and upkeep of the house (i.e. the trust property)
4.3
The second respondent has a financial interest in the trust property
and is owed monies by the Trust.
[5]
The second respondent has been a trustee of the trust since the
trust's inception in 1999 until 12 August 2011 when she was
removed
as trustee at the behest of the first applicant. The second
respondent was reappointed as trustee by the Master on 31 July
2012.
It is the reappointment of the second respondent that is the subject
of this application.
[6]
As a result of the deadlock between the trustees the first applicant
on 12 August 2011 applied to the first respondent to have
the second
respondent removed as a trustee in order for the trust to become
functional again. The Master subsequently removed the
second
respondent. Following some representations by the second respondent's
attorneys the Master reappointed the second respondent
as a trustee
on 31 July 2012.
[7]
It is common cause that during June 2011 the second respondent
instituted action against the trust and that the second respondent
applied and obtained default judgment against the trust in the sum of
R3 128 856.98. The second respondent embarked on this course
of
action whilst she was a trustee of the trust and did not give prior
notice to the first applicant as a co-trustee.
The
evidence on papers illustrate that the second respondent contrived
the situation in which default judgment was obtained against
the
trust by ensuring that the first applicant was not served with the
summons in the action.
[8]
Of importance the following allegations which have not been seriously
challenged by the second respondent, appear in the first
applicant's
founding affidavit:
"The
relationship become strained to such an extent that the Trust was
unable to function since the two Trustees could not
agree on any
issues."
[9]
It is common cause that the default judgment has since been rescinded
and the litigation between the second respondent and the
trust is
proceeding. The first applicant states that if the second respondent
is reinstated as trustee she will frustrate the Trust
from pursuing
the litigation against her. Furthermore the first applicant states
that as a result of the breakdown of the marriage
relationship
between the parties and the resultant litigation there currently
exist a deteriorated and acrimonious relationship
between the first
applicant and second respondent.
[10]
It is evident on the common cause or undisputed facts before me that
the second respondent, whilst still a trustee of the trust,
placed
her own interests above those of the trust beneficiaries.
[11]
The issue to be determined is whether the reappointment of the second
respondent as trustee subsequent to the alleged blatant
breach by the
second respondent of her duties as trustee and a deadlock between the
trustees can be justified. The first applicant
contends that the
decision of the Master falls to be set aside in the light of serious
and fundamental breaches by the second respondent
of her duties as
trustee as well as the fact that the reappointment of the second
respondent has lead to the recurrence of the
deadlock situation
prevailing prior to the second respondent's initial removal as
trustee.
[12]
Section 23 of the Trust Property Control Act 57 of 1988 ("the
Act") provides as follows:
"Any
person who feels aggrieved by any authorization, appointment or
removal of a trustee by the Master or by any decision,
order or
direction of the Master made or issued under this Act, may apply to
the Court for relief, and the court shall have the
power to consider
the merits of any such matter to take evidence and to make any order
it deems fir."
[13]
By virtue of section 23 of the Act, the court is empowered to
"consider the merits of any such matter to take evidence
and to
make any order it deems fit".
Prior
to the enactment of the Act, an ordinary right of appeal or review
against an appointment by the Master did not entitle the
Court to
enquire into and retry the substantive merits of the matter.
See:
Shenker v The Master
1936 AD 136
and Ex Parte Mandell
1961 4 SA 332
(W).
The
terminology employed in section 23 of the Act makes it plain that the
court may consider the disputed issues anew and the legislature
appears to envisage a complete rehearing of and fresh determination
on the merits of the Master's appointment with or without additional
evidence or information and not an enquiry constrained by either the
narrow limits of the court's common law review jurisdiction.
See
Honore's South African Law of Trusts 5th Edition at para 119 at page
199.
[14]
In the light of the legal principles outlined above I shall then
consider and decide the issues in this matter on the basis
of the
evidence on record. I need not and shall not approach the matter on
basis that the Master has not given proper attention
to the matters
to which he should have given attention, or that he was motivated by
an improper consideration or that his decision
is so unreasonable as
to lead inevitably to the inference that he was either mola fide or
did not consider the matter properly.
[15]
In short, the matter will be decided on the basis whether the
applicant has adduced evidence to establish good grounds or reasons
for the review and setting aside of the Master's decision.
[16]
Section 19(1) of the Act provides that:
“
A
trustee shall in the performance of his duties and the exercise of
his powers act with the care, diligence and skill which can
reasonably be expected of a person who manages the affairs of
another."
The
trustee is in general under a duty to conserve the trust property.
One who deals with the property of another has to exercise
due care
in doing so. The office of trustee carries with it a duty to
safeguard the personal rights of beneficiaries.
[17]
In Sackville West v Nourse
1925 AD 516
at 533-4 the Appellate
Division held that a trustee must use greater care in handling trust
property than he might in dealing with
his own property and that the
"rule of our law is that a person in a fiduciary position, like
a trustee, is obliged, in dealing
with and investing the money of the
beneficiary to observe due care and diligence and not to expose it in
any way to any business
risks".
See:
Honore, supra at page 263.
[19]
It is trite that a trustee must so far as possible avoid a position
where his/her private interests conflict with his or her
duty as a
trustee. See: Hoppen and Others v Shub and Others
1987 3 SA 201
(C)
210. A person appointed as trustee is not entitled to benefit
personally from the use of the trust property or to consume its
fruits -
Estate
Kemp v MacDonald's Trustee
1915 AD 491
at 499.
[20]
The second respondent, as a trustee, has at the minimum a duty to
keep the trust property administered separate from personal
property
and to avoid a conflict of interest with the beneficiary or the trust
object. A conflict between interest and duty, whether
arising from an
act of the trustee such as a claim made against the trust estate or
from independent causes is a ground for removal
of a trustee.
See:
Grobelaar v Grobelaar
1959 4 SA 719
(A); Die Meester v Meyer en
Andere
1975 2 SA 1
(T).
[21]
In my view, the second respondent's conduct in not only claiming
against the trust, but obtaining default judgment against
the trust
is self-evidently a breach of her duties as trustee. Taking into
account the breach of her duties as trustee coupled
with the ensuing
deadlock resulting from her reappointment, the Master erred in
reappointing the second respondent and the reappointment
of the
second respondent is evidently not in the interest of the trust
beneficiaries.
[22]
In the circumstances the first applicant has made out a case for the
review and setting aside the first respondent's decision
to reappoint
the second respondent as a trustee of the trust.
[23]
In the result I grant the following order:
1.
The decision of the first respondent dated 31 July 2012 to appoint
the second respondent as joint trustee of the Phoka Trust
is hereby
reviewed and set aside.
2.
The costs of the application shall be paid by the Trust.
E
M M^KGOBA
JUDGE
OF THE NORTH GAUTENG HIGH COURT
50881/2012/sg
Heard
on: 13 November 2013
For
the Applicants: Adv M Mostert
Instructed
by: Wertheim Becker Inc c/o Friedland Hart
Solomon and Nicholson
For
the Second Respondent: Adv B Stevens
Instructed
by: Shapiro & Shapiro Inc
Date
of Judgment: 21 November 2013