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2013
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[2013] ZAKZDHC 54
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Dales NO and Others v Herd (8598/11) [2013] ZAKZDHC 54 (5 September 2013)
IN THE KWAZULU-NATAL HIGH COURT,
DURBAN
REPUBLIC OF SOUTH AFRICA
CASE NO.: 8598/11
In the matter between:
MAXWELL BARRINGTON DALES NO
..................................................
First
Plaintiff
ANDREW MARK DUNSDON NO
.......................................................
Second
Plaintiff
FAY
MARY PICKUP NO UDO
................................................................
Third
Plaintiff
HERBERT
GOEDEKE NO
....................................................................
Fourth
Plaintiff
and
DAVID ALLEN JAMES HERD
....................................................................
Defendant
JUDGMENT
Delivered: 5 September 2013
JEFFREY AJ
:
[1] This is an action for provisional
sentence.
[2] The plaintiffs have been cited in
their capacities as the trustees of the MBD FAMILY TRUST (‘the
trust').
[3] The plaintiffs in their said
capacities sued the defendant for payment of R649 474.00, interest
and costs in terms of an acknowledgment
of debt.
[4] The defendant has admitted in his
opposing affidavit that he signed the acknowledgment of debt.
[5] The
defendant did not, however, advance any defence on the merits
contending he had been advised that, although he had a
bona
fide
defence to the plaintiffs'
ciaim, he was not required to set out any defence because the
proceedings brought against him by the
applicants were fatally
defective,
[6] The proceedings were fatally
defective, so the defendant contended, because:
(a) A notice contemplated in
s 129
of
the
National Credit Act, No. 34 of 2005
, was sent to his previous
business address by the plaintiffs. They knew, so he said, that this
business had been sold and that
he had moved from that address during
or about June 2001. He denied furthermore that this notice had been
received by him. He contended
that the
s 129
notice had not been
given to him by the plaintiffs before these proceedings were
instituted and this failure constituted an irregularity
that could
not be cured on the papers.
(b) At the time
when the proceedings in this matter were instituted, there were in
fact
five
and not four trustees as cited in the provisional sentence summons.
The defendant annexed a copy of the Letters of Authority issued
by
the Master on 20 July 2011 indicating that, as at the material date,
there were
five
trustees of the MBD Family Trust In essence this second point taken
by the defendant is that the provisional sentence action against
him
is a nullity because ail the trustees were not joined in suing him.
[7] Had the
defendant raised the first point only, I would have been inclined to
grant an order in terms of an amended order prayed
handed to me by
the plaintiffs’ counsel at the commencement of his argument.
The terms of this amended order were based on
an order granted by
this court in
Absa Bank Ltd v Mkhize
& Two Similar Cases
2012 (5) SA
574
(KZD).
[8] I, however, do not agree with the
submission by the plaintiffs’ counsel that the second point is
merely a technical one
that can be brushed aside as ‘grasping
at straws’ by the defendant. On the contrary, it is an issue
that goes to the
very heart of the juristic nature of trusts and it
must be closely examined in the light of the facts before the court.
[9] The plaintiffs admit in their
replying affidavit that there were five trustees of the trust when
the provisional sentence action
was instituted. The replying
affidavit was deposed to by the first plaintiff and confirmatory
affidavits were delivered by the
remaining plaintiffs and the trustee
who was not joined, Mr Brian Vernon Dales. A confirmatory affidavit
was also delivered by
the plaintiffs’ attorney.
[10] The first
plaintiff explained that at the time when the plaintiffs’
attorney was first instructed to represent the trust
in some
unrelated legal matters, there were only
four
trustees and the plaintiffs’ attorney was told this. But
towards the end of August 2011 when the defendant allegedly did
not
pay the amount due in terms of the Acknowledgment of Debt, there were
five
trustees - the ‘missing’ trustee, Mr Brian Vernon Dales,
having been appointed in the interim - and all five, according
to the
first plaintiff, “collectively agreed to instruct (the
plaintiffs' attorney) to take legal action against the defendantHe
said that both he and Mr Brian Vernon Dales, acting in terms of this
collective agreement and “duly authorized by all the
trustees”
consulted with the plaintiffs’ attorney. But, he continued:
“Unfortunately, during the consultation
it was not brought to
(the plaintiffs' attorney’s) attention that Brian was in fact
now a trustee of the trust.” That
was the only reason, he said,
that the ‘missing’ fifth trustee was not cited in the
action. He added that the plaintiffs
attorney had simply relied on
the information previously given to her about who the trustees were.
In passing, I do not think that
the plaintiffs’ attorney acted
improperly in this regard. The plaintiffs on their own showing only
have themselves to blame
for this mis-instruction to their attorney.
[11] The first plaintiff denied in
these circumstances that the plaintiffs were not acting jointly in
instituting the provisional
sentence action against the defendant,
contending that it was “certainly not a situation where Brian
had not authorised the
action against the defendant”
[12] As I have mentioned, the first
plaintiff specifically averred that Mr Brian Vernon Dales and he were
“duly” authorised
by all the trustees to instruct that
plaintiffs’ attorney to institute action again the defendant.
[13] Such “due”
authorisation was not established. The trust deed attached by the
defendant to his opposing affidavit
- and not denied by the
plaintiffs - provided in clause 20 with regard to trustees meetings
that; “The trustees shall keep
a minute book wherein shall be
recorded all decisions come to by them in connection with any matter
affecting the trust fund.,.”.
[14] In the absence of a meeting of
the trustees, clause 21 provided for round robin resolutions as
follows: “A resolution
in writing, signed by the trustees then
in office, shall have the same force and effect and be valid and
effectual as if it had
been passed at a meeting of trustees duly
called and constituted and shall be entered into the minute book as a
resolution of the
trustees.”
[15] No resolution authorizing the
action to be instituted against the defendant was relied upon by the
plaintiffs. And the plaintiffs’
replying affidavit makes no
mention of such a document. Nor was an extract from the trustees’
minute book referred to by
the plaintiffs. If the first plaintiff and
Mr Brian Vernon Dales were “duly” authorized to represent
all the trustees
in instructing their attorney to institute action
against the defendant, then these documents should have been placed
before the
court particularly once the issue of the non-joinder of
ail the trustees had been raised by the defendant.
[16] The general
principle with regard to the joinder of all the trustees was restated
by Cameron
et at
in
Honore’s South African Law
of Trusts
5ed § 256 page 419,
as follows: “(u)nless one or more of the trustees are
authorised by the others, all trustees must
be joined in suing and
all must be joined when action is instituted against a trust."
[17] This
general principle was confirmed and explained in
Bonugli
i/
Standard Bank of SA Ltd
2012 (5) SA 202
(SCA) 207F-G at para [15] where Wallis and Petse JJA
said: “It is of course trite that a trust does not have legal
personality.
A trust is in truth an accumulation of assets and
liabilities, which constitute the trust estate vesting in the
trustee. The trust
can only act through its trustees. Trustees must
therefore act jointly unless the trust deed provides otherwise. It
follows that
in legal proceedings the trustees must all be cited in
their representative capacity as such, as the trust itself cannot be
either
a plaintiff or defendant as an entity in its own right.”
(footnotes omitted) matter arising out of the trust The defendant’s
counsel submitted that the reference to “the trustees” in
this clause must mean all the trustees. I agree.
[20] Clause 27 does, however, provide
that any trustee is entitled under a power of attorney to delegate
his powers as trustee to
any person approved of by his co-trustees.
But it is not alleged that the ‘missing’ trustee, Mr
Brian Vernon Dales,
had in fact done this. In any event, such an
allegation would be contrary to the first plaintiff’s version
of events that
I have set out above; namely, that the non-joinder of
aii the trustees of the trust was the result of a mis-instruction to
the
plaintiffs’ attorney. This is completely different from Mr
Brian Vernon Dales authorising his remaining co-trustees to sue
in
his name. The latter was not established by the plaintiffs.
[21] The provisional sentence summons
is fatally defective. I find that the result of the non-joinder of
all the trustees of the
trust is that this action is a nullity.
[22] The plaintiffs’ action for
provisional sentence is accordingly dismissed with costs.
JEFFREY AJ
Counsel
for the plaintiffs: Mr S Hoar
Plaintiffs’
attorneys: Morris Fuller Walden
Williams
Inc
Ref.
Mrs de Oliveria
M133
031
267 7700
Counsel
for the defendant: Mr A J Boulle
Defendant’s
attorneys: Geyser du Toit Louw & Kitching Inc
Ref.
ATK/GVDH/H146T
andre@gdlkptn.co.za
031
702 0331