About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Kwazulu-Natal High Court, Durban
SAFLII
>>
Databases
>>
South Africa: Kwazulu-Natal High Court, Durban
>>
2013
>>
[2013] ZAKZDHC 59
|
|
Smart NO v Burne No and Others (10194/2011) [2013] ZAKZDHC 59 (19 July 2013)
IN THE
KWAZULU-NATAL HIGH COURT
REPUBLIC OF
SOUTH AFRICA
Case no:
10194/2011
in the matter
between
CHERYL SMART
N.O. APPLICANT
AND
GERALD GRAHAM
BURNE N.O.
.........................................................................
FIRST
RESPONDENT
MARIO JORGE
RIBEiRO N.O.
........................................................................
SECOND
RESPONDENT
(RiNIOULLA
BENTO N.O.
....................................................................................
THIRD
RESPONDENT
GERT JOHANNES
FRANCOIS JANSEN
.......................................................
.FOURTH
RESPONDENT
VAN VUUREN
N.O.
THE MASTER OF
THE HIGH COURT, DURBAN
................................................
FIFTH
RESPONDENT
THE REGISRTAR
OF DEEDS. KWAZULU - NATAL
...........................................
SIXTH
RESPONDENT
THE
SOUTH AFRICAN REVENUE SERVICES
............................................
SEVENTH RESPONDENT
JUDGMENT
19
JULY 2013
INTRODUCTION
[1]
The applicant is seeking the following Order:
“
That
it be and is hereby ordered that:
(a) the deed
of amendment dated 16 September 2008 in respect of the Mia Lab Trust
(IT 155/03). purporting to remove Mia as the sole
beneficiary of the
said Trust and replaced her with the Private Interest Foundation
known as Lumiato foundation (Registered at
the Private Foundations
Section of the Public Registry of Panama at Microjacket F.i. P.
27546, Document 1282563 as from 25 January
2008) be declared to be
null and void and of no force and effect, and accordingly be and is
hereby set aside.
(b) Any
disposition and / or alienation and / or distribution of assets from
the Mia Lab Trust to the Lumiata Foundation be and
are hereby set
aside.
(c) The Third
and Fourth Respondents be and are hereby directed to restore to the
Mia Lab Trust any assets so disposed of to the
Lumiato trust. •
(d) That the
costs of this application, including the costs of the First Order
Prayed and the costs of the Curator-acf-Litem, be
paid by the Second,
Third and Fourth Respondents in their representative capacities. Such
costs to include the costs of the ernp!oyment
of two c o u n s el.
[2] The
application is opposed by the second, third and fourth respondents.
FACTUAL
BACKGROUND
[3] On 6
February 2003 Antonio Rodrigues Martins Bento ('Tony'1' the Donor)
formed the Mia Lab Trust (“the Trust’—
Annexure
TV’ to the Founding Affidavit) for the benefit of the minor
child, M A B (“M"), his granddaughter born
of L F A Bento
(“Luis”) his son and any other lawful issue of L equally
and failing any such lawful issue, L himseif
as beneficiaries
thereof. Tony and his wife (the third respondent) were appointed as
Trustees of the Trust, Luis died intestate,
on 14 July 2008, leaving
Mia as his oniy child and the sole heir of his estate.
[4] During
the period 2005 up to 2008, prior to the death of Luis, payments
were made either by the Trust or Luar Investments,
the donor’s
company into the bank account of Dimitra Kantranzis, Mia’s
mother and guardian to be used for the support
of Mia (Annexures “
DM!” to “DM19” to the Replying Affidavit of
Dimitra Kantranzis). Additional amounts
were at some stage during
the same period paid by the trust to St Henry’s Marist
Brother's College in respect of Mia’s
school fees. These
payments are reflected in the trust ledgers (Annexures “DM 20”
to “DM 22,! of the Replying
Affidavit).
[5] On 25
January 2008 the donor had registered the Lumiato Foundation at the
Private Foundations Section of the Public Registry
of Panama at
Microjacket F. L P. 27546, Document 1282563, Protccoiised by means
of Public Deed Number 643 of the 22nd day of
January 2008 at the
office of the Third Notary Pubiic (Annexure "N” and "S,!
of the Foundation Affidavit).
[6]
Subsequent to Luis's demise severs! e-maits were exchange between
the donor and Gert Johannes Francois Janse Van Vuuren (the
fourth
respondent) in his persona! capacity as friend and business partner
of Luis regarding Mia’s financial interest in
the estate of
Luis and the donor’s role in the estate (Annexures “F1\
T2”
“F3" and “G" at paragraph 31 to 38 of the
Founding Affidavit). This was followed at a later stage by
litigation and counter litigation between the estate of Luis, the
donor and the fourth respondent.
[7]
On 16 September 2008, the donor and trustees of the Trust effected
amendments to the Trust Deed by the deletion of clause
27 in its
entirety and clause 18.1 and substituted new clauses therefor (
Annexure “N” to the Founding Affidavit
at page 137 of
the indexed papers). The amendment substituted Lumiato Foundation
for Mia as the capital and income beneficiary
of the trust. This had
been preceded by the amendment of Tony’s Testamentary Will in
August 2008 to bequeath the residue
of his (Tony’s) estate to
the Lumiato Foundation. On 14 February 2009 Tony died.
ISSUES
[8] The main
issue for determination is whether the variation of the Mia Lab
Trust Deed on 16 September 2008 is valid. In this
regard, two
preliminary issues need to be determined, namely:
(a)
whether the benefits of the
stipulaiio
alien
had vested and whether fvlia
had accepted it; and
(b) whether
the donor and the trustees were entitled, even if she had accepted,
to effect the amendment without her consent by
virtue of the powers
and authority conferred upon them by the Trust Deed itself,
ACCEPTANCE OF
BENEFIT
[9]
Clause 19.4 of the Trust Deed,
inter
alia,
reads:
There shall
be no vesting of any income or capita! in any beneficiary unless
and until any such beneficiary has actually received
and or been
paid any sum by the TRUSTEES or such sum has been allocated by the
TRUSTEES to the beneficiary as herein before
provided."
it
is by now trite in our law that a trust deed executed by a founder
and trustees for the benefit of others is akin to a contract
for the
benefit of a third party (
stiputio
afteri).
Therefore, the founder and
trustee can vary, amend and even cancel the agreement between them
before the third party has accepted
the benefits conferred on the
beneficiary, but once the beneficiary has accepted those benefits
the trust deed cannot be varied
without the beneficiary’s
consent. (See,
Potgieter and Another
v Potgieter NO And Others
2012 (1) SA 637al
645 F-G).
[10]
Beneficiaries acquire rights under
trust deed only on acceptance of benefits. In the case of Mia it
cannot and has not been contested
that Mia’s mother and
guardian would have been entitled to accept and receive such
benefits on Mia’s behalf, (See,
Crookes,
N.O And Another v Watson And Others
1956 (1) SA 277
A.D. at 289
B-C).
It is the applicant’s
contention that, by virtue of certain substantial payments made to
her mother by Luar investments
and occasionaily by the Trust, Mia
had accepted the benefits bestowed upon her by the trust deed and
was accordingly a party
to the contract, i have to agree with the
submission. 1 am not induced by arguments raised on behalf of the
respondents that
such payments were largely made by the donor's
company and not by the trust and that for her mother to have
accepted the benefits
on Mia’s behalf there had to be
"something more than a mental. attitude of approbation on her
part".
[11]
it is evident that such payments were made either by the trust or by
the donors company on behalf of the trust. These payments
are
reflected in the trust ledgers. A perusal of the payment records
show that the two entities never made payments to Mis:s
mother
during one and the same period. On the dates when Luar Investments
made payments, no payments were made by the trust and
vice
versa.
The trust income was
intended to benefit Mia and his father in the absence of any lawful
issue of her father. M's mother was
aware of this benefit which she
duly used for the support of M. M’s mother through Mia was
like family with the trustees.
The trustees could only have been
aware that the money they were depositing into the bank account of
Mia’s mother was being
accepted and used for M’s benefit
as was intended. No amount was ever returned to the donor’s
company or the trust.
In my view, the relationship shared and the
conduct displayed sufficed to convey acceptance of the benefits on
Mia’s behalf.
I accept it as an “outward act of
signification and communication of such acceptance". In any
event I do not believe
the provisions of the clause required a
formal conveyance of acceptance.
AMENDMENT TO
THE TRUST DEED
[12] The next
provisions of the deed to be considered is ciause 27 and clause 18
which provide as follows:
27. Amendment
to the Trust Deed
27.1. With
the written consent of:
27.1.1.
Trustees of the Trust for the time being;
27.1.2. The
Donor, if the Donor be alive,
the
provisions of this Trust Deed may be amended, added to or varied,
subject to the provisions of Ciause. 27.2, save that there
shall be
no variation of clause 27.3 after the Donors death.
27.2. No
amendment, addition or variation contemplated in Clause
27.1. above
shall made if it would have the effect:-
27.2.1.
conferring any right on the Donor to receive any pail of the Trust
Fund for his benefit or the benefit of his estate;
27.2.2
conferring any right on the Donor to dispose of any part of the
Trust Fund or the income for his benefit or the benefit
ot
his estate.
27.3.
Notwithstanding anything to the contrary contained herein, there
shall be no change in the identity of the beneficiaries
after the
death of the Donor.”
[13] Clause
18 reads thus:
18.
Beneficiaries
18.1. The
capital and income BENEFICIARIES of the Trust are:
M AN B
Identity
Number
AND
ANY OTHER
LAWFUL ISSUE OF
LUIS FILIPE
ARGYROU BENTO
Identity
Number
Equally
Or
the survivor of them, and
failing
any such lawful issue.
L F A B
Identity number
And any Trust
or Trusts formed or to be formed by or for the benefit of any of the
above stated BENEFICIARIES
[14] The
Trust Deed was amended by the donor and trustees by the deletion of
clause 27 in its entirely and clause 18.1, substituting
for them
with the following:
27. AMENDMENT
TO THE TRUST DEED
The Trustees
shall be empowered to alter, amend or vary any or ail of the terms
of this Trust Deed."
“
18.1.
The capital and income beneficiaries of the Trust shall be the
LUMIATO FOUNDATION, Protocoled by means of Public Deed Number
643 of
the 22nd day of January 2008, at the office of the Third Notary
Public and registered at Microjacket F. L P. 27546, Document
1282563
as from 25th January 2008/’ These amendments are impugned. As
can be seen, the changes are substantial.
[15] On
behalf of the second, third and fourth respondents it has been
argued that if Mia had validly accepted the benefits of
the trust
and had thereby become a party to the .“contract" she was
bound by the terms thereof, which include the
power to amend in
clause 27 thereof. Their counsel accordingly submitted that the
donor and the trustees had the power and authority
to amend the
provisions thereof without the specific assent of the beneficiaries
to do so, as long as their (trustees) consent
thereto was recorded
in writing and the amendment did not offend the provisions of clause
27.2.
[16]
i cannot accept the correctness of the legal proposition made above.
Even though the donor and trustee had not divested himself
of the
right to revoke, vary or amend the Trust Deed: albeit with consent
of the other trustee(s) once a beneficiary had accepted
the benefit,
he could not, as a matter of law, do so without assent of such
beneficiary or legal guardian acting on his or her
behalf. (See,
Potgieter v Potgieter
,
supra
,
paragraph 18, 27 to 28 and the authorities referred to therein), it
is common cause that such consent was never sought from
or given by
M’s mother on Mia’s behalf before the amendment was
effected. !n fact Mia’s mother became aware
of the amendment
by chance. M had acquired rights under the trust worthy of
protection. The donor should be sternly held to his
original
intention as expressed in the unamended Trust Deed.
[17] I
conclude that the amendments to the Trust Deed were unlawfully
executed.
ORDER
[18] i,
therefore, make the following order:
Order prayed
in paragraphs 5 (a), (b), (c) and 6 (a) and (b) of the Notice of
Motion at pages 4 to 5 of the indexed papers.
NKOSI J