About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Free State High Court, Bloemfontein
SAFLII
>>
Databases
>>
South Africa: Free State High Court, Bloemfontein
>>
2011
>>
[2011] ZAFSHC 180
|
|
Moroka NO and Others v Maura NO and Others (1352/2011) [2011] ZAFSHC 180 (25 October 2011)
FREE STATE HIGH COURT,
BLOEMFONTEIN
REPUBLIC OF SOUTH
AFRICA
Case No. : 1352/2011
In matter between:
KENOSI McDONALD MOROKA N.O
…...........................................
1
st
APPLICANT
MBUSELLWA ERIC RENS N.O
…...................................................
2
nd
APPLICANT
MBUSELLWA ERIC RENS
…...........................................................
3
rd
APPLICANT
JAMES CALVERT
….........................................................................
4
th
APPLICANT
GEORGE CALVERT
….....................................................................
5
th
APPLICANT
PATRICK THEMBA MATLHAPE
…..................................................
6
th
APPLICANT
MATSHELISO FRANS MAHURA
….................................................
7
th
APPLICANT
And
JOHN TSEDISO MAURA N.O.
….................................................
1
st
RESPONDENT
MBUSELLWA ERIC RENS N.O.
…..............................................
2
nd
RESPONDENT
BOITUMELO PHILLIP MAHURA N.O.
….....................................
3
rd
RESPONDENT
JOHN TSEDISO MAURA
…..........................................................
4
th
RESPONDENT
BOITUMELO PHILLIP MAHURA
….............................................
5
th
RESPONDENT
THOMAS HENDRIK MOLELEKOA
…..........................................
6
th
RESPONDENT
BONAKELE FLIP ENKELD
…......................................................
7
th
RESPONDENT
QWETH FLIP ENKELD
….............................................................
8
th
RESPONDENT
THE MEC: DEPARTMENT OF AGRICULTURE
…......................
9
th
RESPONDENT
FREE STATE PROVINCE
LETSEMENG LOCAL MUNICIPALITY
…..................................
10
th
RESPONDENT
FIRSTRAND LIMITED t/a
FIRST NATIONAL BANK
….......................................................
11
th
RESPONDENT
HEARD ON:
4
AUGUST 2011
JUDGMENT BY:
C.J
.
MUSI, J
_____________________________________________________
DELIVERED ON:
25 OCTOBER 2011
[1] On 23 March 2011 my
brother Hancke, J issued the following rule
nisi.
“
1. The
Respondents are called upon to give reasons, if any, on Friday, 15
th
April 2011 at 09H30, why the following order should not be made:
1.1 The business cheque account of the
VUKANI MA-AFRIKA TRUST, IT 704/02, business cheque account no.
62117331900, held at FIRST
NATIONAL BANK, KOFFIEFONTEIN, be frozen
and that only deposits be accepted into the account, and that no
monies be withdrawn out
of the said account and no cheques be drawn
against the said account, unless with the written authority of the
First Applicant;
1.2 The sheriff of the High Court,
Koffiefontein, be authorised and ordered to attach all the monies
currently held in the account
mentioned in prayer 1.1
supra
,
pending the re-organisation of the trust and the appointment of other
trustees and/or beneficiaries;
1.3 The sheriff of the of the High
Court, Koffiefontein, be authorised and ordered to attach all the
assets of the VUKANI MA-AFRIKA
TRUST, pending the re-organisation of
the trust and the appointment of other trustees and/or beneficiaries,
and to compile an inventory
in this regard;
1.4 The decision of the First
Applicant, to remove the First and Third Respondents as trustees of
the VUKANI MA-AFRIKA TRUST, be
confirmed;
1.5 The decision of the First
Applicant, to remove the Fourth to Eight Respondents as beneficiaries
of the VUKANI MA-AFRICA TRUST,
be confirmed;
1.6 The First Respondents are ordered,
jointly and severally, the one to pay the other to be absolved, to
pay the costs of this
application;”
[2] The applicants now
seek confirmation of the rule
nisi.
The application is opposed by the first and the third to
the eight respondents only. I will for the sake of convenience refer
to
them as the respondents. No relief is claimed against the ninth
and tenth respondents. They are cited because they may have an
interest in the subject matter of this application. The second
respondent is cited in his capacity as a trustee of the trust. He
is
also the second applicant, as trustee, and the third applicant in his
personal capacity. The eleventh respondent – First
National
Bank (the Bank) – is cited because prayers 1.1 and 1.2 of the
rule
nisi
relates to
it.
[3] During 1998 the
Member of the Executive Council responsible for agriculture in the
Free State Province (9
th
respondent) and the Letsemeng Local Municipality (10
th
respondent) established the Badira Mogo Project with the
aim of enabling previously disadvantaged individuals to acquire and
cultivate
land in order to become self-sufficient.
[4] The third to the 7
th
applicants and the fourth to the eighth respondents were
selected, after an interview and screening process, to participate in
the
project.
[5] On 18 February 2002
the Vukani Ma-Afrika trust (the trust) was established with the
parties mentioned in the preceding paragraph
as beneficiaries. The
first applicant is the donor and the first, second and third
respondents were trustees. The trustees were
chosen by the
beneficiaries.
[6] With the assistance
of the ninth and tenth respondents the trust acquired assets worth
approximately R2 173 000.00. All the
beneficiaries, except the fifth
applicant secured personal loans of R20 000.00 each from the Land
Bank in order to start with the
farming operations.
[7] There were disputes
between the parties. The fifth, seventh and eighth respondents
decided to run the affairs of the trust.
According to the respondents
the third to the seventh applicants were no longer actively involved
in the activities of the trust.
Meetings of the trust were not held
regularly.
[8] On 29 July 2004 all
the beneficiaries signed a beneficiaries’ constitution drafted
and presented to them by representatives
of the ninth respondent.
They elected a management committee, in terms of the said
constitution, consisting of the eight respondent
(chairperson), the
second respondent (vice-president), the seventh applicant
(treasurer), the third respondent (secretary), the
fourth applicant
(deputy secretary), the first respondent (co-ordinator) and the third
applicant (co-ordinator)
[9] On 29 March 2010 the
Acting Director: Legal Services of the ninth respondent, Mr Makoko,
wrote to the Bank informing it that
the trust held a meeting on 24
February 2010 whereat a committee of the trust was elected. The
members of the committee were as
follows:
1. Frans Mahura: Chairperson (7
th
applicant)
2. Themba Matlhape: Deputy
Chairperson (6
th
applicant)
3. Phillip Mahura: Secretary (5
th
respondent)
4. Rabie Rens: Deputy Secretary
(8
th
respondent)
5. James Calvert: Treasurer (4
th
applicant)
6. Eric Rens: Co coordinator (3
rd
applicant)
7. George Calvert: Co coordinator
(5
th
applicant)
[10] He also requested
that the signatories to the trust’s bank account should be
changed.
[11] I hasten to mention
that the drafting and signing of the beneficiaries’
constitution and the election of committee members
in terms thereof,
to run the affairs of the trust, were irregular and in conflict with
the trust deed. This served to deepen the
tension and disputes
between the parties. Some of the beneficiaries were of the view that
the trust was being mismanaged and its
funds misused. On the other
hand there was an allegation that only five of the beneficiaries were
actively participating in the
activities of the trust.
[12] On 7 September 2010
a meeting was held between the trustees, beneficiaries,
representatives of the Free State Department of
Agriculture and the
donor at the donor’s offices. During this meeting there was a
complaint that the signatories to the trust’s
bank account do
not want to relinquish their signing powers. The trustees and
beneficiaries decided, as an interim measure, to
appoint new
signatories
viz
Phillip Mahura (5
th
respondent),
Frans Mahura (7
th
applicant) and MK Motlhabane, who is
neither a trustee nor a beneficiary. It was also resolved that the
trust deed be amended so
that the 7
th
applicant and a
neutral person, Lenka Mholo, be appointed as trustees. This
resolution was not implemented.
[13] On 12 January 2011
Mr Makoko wrote to the Bank requesting it to freeze the trust’s
bank account. On 13 January 2011 the
Bank placed a temporary hold on
the account.
[14] On 4 February 2011
the first and third respondents, as two of the three trustees of the
trust, purportedly held a meeting of
the trust and resolved to give
the third respondent full power to sign any documents, agreements,
bank documentation including
signing of cheques on behalf of the
trust and that the trust should enter into a lease agreement with
Pieter Ferreira Trust and
Linsal Boerdery.
[15] On 1 March 2011 the
Bank confirmed that only the 4
th
, 7
th
and 8
th
respondents have signing authority on the trust’s bank account.
[16] On 16 March 2011 the
first applicant, in his capacity as donor, removed the 1
st
and 3
rd
respondents as trustees. He also removed the 4
th
to the 8
th
respondents as beneficiaries of the trust. He
purportedly acted in terms of clauses 5.5 and 6 of the trust deed
which reads as
follows:
“
5.5 The
Donor also reserves the right to appoint additional Trustees
including the right to remove any of the existing Trustees
as and
when a need arises and it is in the best interest of the trust…
6. The Donor reserves the right to
appoint Beneficiaries including the right to remove any of the
existing beneficiaries as and
when a need arises and if, it is in the
interest of the Trust.”
[17] The first applicant
informed the Bank about his decision to remove the respondents as
beneficiaries and/or trustees. He wanted
to amend the signatories to
the trust’s bank account. The Bank refused and intimated that
the removal of the respondents
as trustees and or beneficiaries does
not have any effect on the signing powers afforded to them. He then
approached this Court.
[18] Mr Reinders, on
behalf of the respondents, during argument, consistent with their
papers, indicated that the respondents do
not oppose the relief
sought in paragraphs 1.1 to 1.3 of the rule
nisi.
They are
only opposing the relief sought in paragraphs 1.4 to 1.6 thereof.
[19] They opposed the
granting of paragraph 1.4 and 1.5 on the basis that clauses 5.5 and 6
of the trust deed do not reflect the
common intention of the parties.
According to them the parties did not agree to include clauses 5.5
and 6 in the trust deed. They
requested that the trust deed be
rectified by expunging clauses 5.5 and 6. Their alternative argument
was that clauses 5.5 and
6 are contrary to public policy. Allied
thereto they argued that the applicants did not show that it was in
the interest of the
trust to remove them as trustees and or
beneficiaries of the trust.
[20] Mr Danzfuss SC on
the other hand argued that the parties agreed to all the terms of the
trust deed and should be held thereto.
He further argued that the
donor is entitled to appoint and remove trustees and beneficiaries as
per the trust deed.
[21] The issues that must
be considered are firstly whether the trust deed should be rectified,
if the answer thereto is in the
negative, whether clauses 5.5 and 6
are contrary to public policy and whether the decision of the first
applicant was in the (best)
interest of the trust.
[22] This trust is beset
by difficulties and challenges. Although some of the beneficiaries
and the trustees had a hand in the problems
that befell the trust;
their actions were facilitated by the vehicle that was created to
achieve a noble goal.
[23] The ninth respondent
with the assistance of the first applicant (an attorney of this
Court) designed a vehicle to travel on
urban tarred roads, without
potholes, while the terrain where it was going to be used, probably
unforeseen at the time of design,
turned out to be very ragged. The
problems of the trust were compounded by the fact that the driver of
the vehicle (ninth respondent)
and the navigators (the first
applicant, the trustees and the beneficiaries) had an idea of where
the destination is but they could
not agree on which road to take.
Unfortunately in the confusion the destination became a pipe dream.
[24] The respondents
alleged that there was never an agreement that the first applicant
would be entitled to remove them as trustees
and/or beneficiaries.
According to them the ninth respondent intended to create an entity
in terms of the Communal Property Association
Act 28 of 1996. They
allege that all disputes were to be resolved in terms of that Act.
They further alleged that the trust deed
does not reflect their oral
agreement. They contended that the first applicant wrongly included
the impunged clauses because of
a
bona fide
mistake alternatively that he deliberately added those
clauses and omitted to direct their attention thereto and thereby
misled
them into signing the trust deed containing those clauses.
[25] The first applicant
who was instructed by the ninth respondent, on the other hand
explained in detail, in his replying affidavit,
that he explained the
difference between a trust, close corporation and a company to the
prospective participants. They decided
on a trust. The first
applicant drafted the trust deed and explained the contents thereof
to all the role players. All the trustees
and beneficiaries signed
the trust deed. He specifically refers to clause 21 of the trust deed
which reads as follows:
“
21.
ACCEPTANCE OF THE TRUST
21.1 The trustees hereby accepts and
undertakes to carry out the terms and conditions and stipulations
contained in this deed.
21.2 The beneficiaries hereby accept
the benefits conferred upon them on the terms, conditions and
stipulations contained in this
deed.”
[26] A trust deed can be
rectified. See
Meyer v Merchants Trust Ltd
1942 A.D. 244
;
Van Der Bilj, N.O
v Barclays Bank
(D.C. & O)
N.O
.
1953 (2) SA 141
(T.P.D).
In
Kathmer Investments Ltd v Woolworths (Pty)
Ltd
1970 (2) SA 498
at 503 B – C Rumpff
JA said the following about rectification:
“
The doctrine
as to rectification of a written contract generally presupposes, of
course, the existence of a term of the real agreement,
antecedent to
the written contract, which has not been properly recorded.”
[27] Our courts
rigorously insist upon the party relying on rectification pleading
all the essentials thereof and proving them on
a substantial balance
of probabilities. See
Von Ziegler and Another
v Superior Furniture Manufacturer (Pty) Ltd
1962
(3) SA 399
(T) at 409 H-410 A.
[28] For a successful
reliance on rectification the respondents will have to show on a
substantial balance of probabilities that:
28.1 There was a oral agreement.
28.2 The oral agreement was reduced to
writing.
28.3 The written agreement does not
reflect the common intention of the parties correctly.
28.4 The parties intended reducing
what was orally agreed upon to writing.
28.5 The common intention was not
captured in the written agreement due to a
bona fide
common
mistake or due to the intentional act of one of parties.
[29] There is no evidence
of a real (oral) agreement antecedent to the trust deed. The
respondents did not plead any of the terms
of the oral agreement. The
respondents do not state why they did not object when they realised
that the impunged clauses are part
of the trust deed. The first
applicant expressly states that he read the contents of the trust
deed to all the trustees and beneficiaries.
There is no evidence to
the contrary. The respondents also declared that they accepted the
benefits conferred upon them on the
terms, conditions and
stipulations contained in the trust deed.
[30] The respondents do
not say why they did not object to the trust deed if the intention
was to form a Communal Property Association.
[31] I accept the first
applicant’s version that the provisions of the trust deed were
read and explained to the trustees
and or beneficiaries. The
respondents’ denial is totally untenable.
[32] In my view the trust
deed correctly reflects the intention of the parties thereto. Are
clauses 5.5 and 6 contrary to public
policy?
[33] In
Barkhuizen v
Napier
[2007] ZACC 5
;
2007 (5) SA 323
(CC) at paragraph 28 and 29 Ngcobo J, as
he then was, said the following:
“
Public
policy represents the legal convictions of the community; it
represents those values that are held most dear by the society.
Determining the content of public policy was once fraught with
difficulties. That is no longer the case. Since the advent of our
constitutional democracy, public policy is now deeply rooted in our
Constitution and the values that underlie it. Indeed, the founding
provisions of our Constitution make it plain: our constitutional
democracy is founded on, among other values, the values of human
dignity, the achievement of equality and the advancement of human
rights and freedoms, and rule of the law. And the Bill of Rights,
as
the Constitution proclaims, ‘is a cornerstone’ of that
democracy; it enshrines the rights of all people in our country
and
affirms the democratic [founding] values of human dignity, equality
and freedom.
[29] What public policy is and whether
a term in a contract is contrary to public policy must now be
determined by reference to
the values that underlie our
constitutional democracy as given expression by the provisions of the
Bill of Rights. Thus a term
in a contract that is inimical to the
values enshrined in our Constitution is contrary to public policy and
is, therefore, unenforceable.”
[34] The respondents do
not indicate why they say that the provisions of clauses 5.5 and 6
are contrary to public policy
safe to point out
that the powers given to the first applicant, regard being had to the
history of the trust, are too drastic and
draconian.
[35] Mr Danzfuss on the
other hand argued that the impunged clauses are unassailable because
a donor is entitled to appoint and
remove trustees and beneficiaries
in terms of the trust deed.
[36] I am in agreement
with Mr Danzfuss. A donor may reserve the right to remove trustees
and beneficiaries. See
Honore’s South
African Law of Trusts – Cameron
et al,
5
th
ed at 89-90.
All the beneficiaries are contingent or potential beneficiaries who
will only acquire a right to claim payment of the
trust benefits upon
the occurrence of an uncertain future event. They however have vested
interest in the proper administration
of the trust by the trustees.
See
F du Toit: The fiduciary office of
trustees and the protection of
contingent
trust beneficiaries 2007 Stell LR 469 AT 477 – 478.
[37] Clauses 5.5 and 6 of
this trust deed also enjoin the donor to look at other factors before
deciding to remove a trustee and/or
beneficiary. There must firstly
be a need and it must secondly be in the best interest of the trust
to remove trustees and in the
interest of the trust to remove
beneficiaries. I can not say that clauses 5.5 and 6 of the trust deed
are contrary to public policy
because that is not their clear effect.
See Sasfin (Pty) Ltd v Beukes
1989
(1) SA 1
(A).
[38] The next question to
consider is whether the provisions of clauses 5.5 and 6 are capable
and where indeed implemented in a
manner that is against public
policy.
[39] In
Juglal
N.O. v Shoprite Checkers t/a OK Franchise Division
2004
(5) SA 248
(SCA) at paragraphs 12 and 13 the following was said:
“
[12] Because
the courts will conclude that contractual provisions are contrary to
public policy only when that is their clear effect
(see authorities
cited in Sasfin (Pty) Ltd v Beukes
1989 (1) SA 1
(A) at 8C-9G) it
follows that the tendency of a proposed transaction towards such a
conflict (Eastwood v Shepstone
1902 TS 294
at 302) can only found to
exist if there is a probability that unconscionable, immoral or
illegal conduct will result from the
implementation of the provisions
according to their tenor. (It may be that the cumulative effect of
implementation of provisions
not individually objectionable may
disclose such a tendency.) If, however, a contractual provision is
capable of implementation
in a manner that is against public policy
but the tenor of the provision is neutral then the offending tendency
is absent. In such
event the creditor who implements the contract in
a manner which is unconscionable, illegal or immoral will find that a
court refuses
to give effect to his conduct but the contract itself
will stand. Much of the appellant’s reliance before us on
considerations
of public policy suffered between the contract and its
implementation and the unjustified assumption that, because its term
were
open to oppressive abuse by the creditor, they must, as a
necessary consequence, be against public policy.
[13] An attempt to identify the
tendency of contractual provisions may require consideration of the
purpose of the contract, discernible
from its terms and from the
objective circumstances of this conclusion. The present is such a
case.”
[40] The power to declare
a contract or terms thereof contrary to public policy should be
exercised sparingly and only in the clearest
of cases. See
Sasfin
(Pty) Ltd v Beukes
supra
at 9 B-E.
[41] This might be a case
where the contractual terms were implemented contrary to public
policy. Clauses 5.5 and 6 contain factors
that have to be present
before they are invoked, i.e. whether there is a need to remove and
whether it is in the (best) interest
of the trust to remove. These
factors are for the advantage of the trustees and beneficiaries. They
were obviously included to
protect them against arbitrary conduct by
the donor in order to prevent their willy nilly removal. Best
interest or in the interest
of the trust suggests an objective method
of decision making. The donor must therefore consider objectively
what is in the best
interest of the trust before deciding to remove a
trustee or trustees. The best interest can not be based on the
subjective view
of the donor. The donor must objectively consider all
the relevant facts, circumstances and available options before taking
the
decision to remove. The decision to remove trustees must be the
best course of action under the circumstances. The ultimate decision
should also be less restrictive of the trustees’ and the
beneficiaries’ rights to dignity, equality and freedom. The
question or test therefore is whether a notional reasonable person in
the position of the donor would conclude that there is a
need to
remove the trustees and beneficiaries and whether it is in the (best)
interest of the trust to do so. I propose to deal
with this matter
with reference to those factors. The conclusion that I reach by
following this route renders it unnecessary for
me to find whether
the implementation of the clauses was contrary to public policy.
[42] Having decided that
the donor is entitled to reserve the right to remove a trustee or
trustees and or beneficiaries the question
is whether this donor
acted in accordance with the provisions of clauses 5.5 and 6.
[43] The donor requested
this Court to confirm his acts. It is incumbent on him to show on a
balance of probabilities that he acted
in terms of the trust deed,
i.e. that he reasonably considered all the facts and circumstances
and took the best course of action
because there was a need to remove
the trustees in the best interest of the trust. He must also show
that there was a need to remove
the beneficiaries in the interest of
the trust. If I am satisfied that the answers to the two questions,
viz
whether there was a need and whether it was in the best
interest or interest of the trust to remove, are in the affirmative
then
the decision to remove ought to be confirmed. If the answer to
any one of the questions is in the negative then the removal ought
not to be confirmed. This is so because both factors must be present.
A refusal to confirm will, practically, have no effect because
the
act of removal has already been done. There is no counter-application
to declare it unlawful. The only effect would be the
absence of a
court order giving judicial imprimatur to the decision of the donor.
The applicants argued that it is in the interest
of all concerned
that the removal of the trustees and the beneficiaries be judicially
sanctioned. A confirmatory order, so they
argued, would give
certainty and enable the donor to continue with the restructuring
process. I agree. It is indeed desirable that
this Court pronounce on
this issue. It is practical and cost effective that certainty is
created so that the restructuring, if
there is still a need to do so,
should proceed uninhibited by the prospect of further litigation
whereas this issue can be pronounced
upon in these proceedings
together with the issues in paragraphs 1.1 and 1.2 of the rule
nisi.
There is also the danger that other persons may be appointed as
trustees and or beneficiaries and acquire certain rights. Uncertainty
will also not be in their interest. This judgment might also assist
the parties in charting the way forward because nothing prohibits
the
donor to reappoint the same trustees and or beneficiaries.
[44] It is a strange
truism that a group of like-minded individuals working towards the
same goal may harbour deep rooted differences.
In this case,
individuals from different backgrounds were selected to work together
without any rules of engagement or conflict
management skills. All
that they had to work on was the provisions of the trust deed. Other
than that Rafferty’s rules applied.
This was fertile ground for
conflict.
[45] When the conflict
escalated the ninth respondent responded by drafting the
beneficiaries’ constitution which was embraced
by all the
beneficiaries. They signed it on 29 July 2004. This document,
although at odds with the trust deed, contains an elaborate
dispute
resolution mechanism. It
inter alia
provides for all disputes
to be referred to a mediation committee. If the dispute is still
unresolved within 21 days it may be
referred to arbitration by any
party. It was clearly an attempt by the ninth respondent to resolve
some of the disputes between
the beneficiaries.
[46] The first applicant
states that on 14 April 2008 the third applicant, supported by the
fourth to seventh applicants, requested
him in a letter to appoint
additional trustees. As proof thereof he appends a copy of a letter
dated 14 April 2008 and signed by
the third to the seventh
applicants.
[47] This letter was
purportedly written on 14 April 2008. Under the heading “reasons
that led to this decision” the
following
inter alia
appears:
47.1 A meeting was held between all
the beneficiaries and the donor at the latter’s offices on
16
September 2008
. At this meeting it was resolved that the
beneficiaries and trustees “will hold both Trustees’ and
Executive meetings
to solve most of our challenges.”
47.2. On 11 November 2008 the
beneficiaries met with representatives of the ninth respondent and
took resolutions similar to those
taken at the meeting of 16
September 2008.
47.3. On 19 November 2008 a meeting
was held with a legal team that was appointed as mediators.
47.4. The 5
th
, 7
th
and 8
th
respondents who were former executive committee
members refused to relinquish power and their signing authority to
the trust’s
bank account. These respondents ran the affairs of
the trust for the entire 2009.
47.5. The mediators held meetings with
them during January 2010 and February 2010. The mediators or legal
team declared that all
ten original beneficiaries are still
beneficiaries and that “the Trust Deed and the Beneficiary
Constitution must both be
used in are (sic) best interest and that
there two documents don’t conflict on (sic) each other.”
47.6. On 24 February 2010 elections
were held and a new Executive Committee appointed.
47.7. On 5 March 2010 the newly
elected executive committee held its first meeting.
47.8. The signatories to the letter
mandated the third applicant to request that the 7
th
applicant and the 4
th
applicant be added as trustees.
[48] It is clear from the
contents of the letter that it could not have been written on 14
April 2008. Accepting that the date is
wrong, it is clear from it
that all the beneficiaries were told by the legal team or mediators
that the beneficiaries’ constitution
and the trust deed are not
in conflict with each other. They requested the first applicant to
appoint two additional trustees.
He did not. No reason is given as to
why he did not adhere to this request. It is also clear that the
first applicant was aware
that the beneficiaries’ constitution
was being used to govern the affairs of the trust. There is no
evidence whatsoever as
to what he did to remedy the situation by for
example pointing out, as he now loudly proclaims, that the
beneficiaries’ constitution
is illegal and in conflict with the
trust deed.
[49] In fact there is
sufficient evidence pointing to him being complicit in creating the
chaos he now wants to blame the respondents
and the ninth respondent
for. In his founding affidavit he states that:
“
On 7
September 2010 a further meeting was held by the trustees of the
trust and the beneficiaries in the presence of the representatives
of
the Department of Agriculture. At this meeting the presentees
appointed new signatories for the bank account of the trust including
seventh applicant and Mr M.K Motlhabane. Neither of them are trustees
and Mr Motlhabane is not even a beneficiary.
At the same meeting it was resolved
that the trust deed be amended to include the following people... as
the trust committee. They
were the present three trustees as appears
from annexure “A” as well as seventh applicant and a
certain Ms Cecilia
Mholo who is not a trustee and neither a
beneficiary. I append hereto as annexure “K” a copy of
the minutes of this
meeting.”
[50] Annexure A referred
to above is the letter of authority issued by the Master authorizing
the three trustees to act on behalf
of the trust.
[51] The minutes
(annexure K) however reveal that the meeting of 7 September 2009 was
held “between the trustees and the beneficiaries
of Vukani
Ma–Africa, the Department of Agriculture and the
donor
.”
My underlining.
[52] The minutes further
reads as follows:
“
The donor Mr
Moroka introduced himself and mentioned the powers vested in him as a
(sic) donor.”
[53]
After
each beneficiary was asked what he thinks should happen the following
interim resolutions were taken:
“
Interim
resolution
As an interim matter (sic) the
trustees and the beneficiaries appointed new signatories there (sic)
are as follows;
Phillip Mahura
Frans Mahura
M.K. Motlhabane
Asset creditors and debtors committee
was also appointed it included from the 1
st
group Phillip
Mahura and Rabie Rens, 2
nd
group Frans Mahura and Eric
Rens. The registration of the bakkie in the name of the Trust must be
done.
Amending of the Trust Deed and having
the following people as the trust committee
Phillip Mahura
John Mahura
Eric Rens
Frans Mahura
Cecila Mholo as a neutral person.”
[54] It is clear from
these minutes that the first applicant was an active participant and
condoned the interim resolution that
the 7
th
applicant who
is not a trustee should be made a signatory to its bank account and
that M K Motlhabane who is neither a trustee
nor a beneficiary should
also have signing powers on the trust’s bank account.
[55] The interim
resolution interestingly contains a solution, that is, that
additional trustees be appointed. This solution is
the same as the
one that was proffered in the letter dated 14 April 2008.
Significantly, when all the beneficiaries were asked
what their
respective views were they either indicated that they want out of the
project and that the assets should be shared or
that they want to
remain on the farm as part of the project. None of them suggested
that any of the trustees and or beneficiaries
should be removed.
[56] The first applicant
gives the following reasons for his decision to remove the relevant
beneficiaries and trustees;
56.1. The only duly elected trustees
of the trust are the first and the second respondents but several
other persons take part in
the running of the affairs of the trust in
conflict with the trust deed.
56.2. The signatories on the cheque
account have been irregularly authorised and in any case not at a
meeting of the trustees and
include at least two individuals who are
not trustees at all.
56. 3. The trust is supposed to
receive rental income from the Government of the Republic of South
Africa and tenants of six residential
units. He could not trace any
record that any of those amounts have been deposited into the trust’s
account.
56.4. There were allegations that the
affairs of the trust are run for personal gain “by those
responsible and that the income
find their (sic) way to the pockets
of those individuals and not to the bank account of the trust. Those
were also the reasons
for the attempt by the ninth respondent to
freeze the bank account.”
[57] I now deal with each
of these reasons. The first, second and third respondents were
trustees of the trust. The trustees were
faced with an unenviable
dilemma. Do they follow the terms of the trust deed and receive no
financial support or do they follow
the beneficiaries’
constitution as presented to them by the ninth respondent’s
representative and receive financial
support? In order to comply with
the prescripts of the trust deed on the one hand and with the
beneficiaries’ constitution
on the other they had to become
ditheist. Unfortunately, as we know, it is very difficult to serve
two gods. In the end everyone,
the trustee, donor and beneficiaries,
understandably decided to dance to the ninth respondent’s tune.
After all he paid the
piper. The donor only donated R50.00 to the
trust.
[58] In terms of section
9 (1) of the Trust Property Act No 57 of 1988 (the Act) all the
trustees where supposed to perform their
duties and exercise their
powers with the care, diligence and skill which can reasonably be
expected of a person who manages the
affairs of another. The trustees
have a duty not to expose trust property to business risks. See
Sackville West v Nourse and Another
1925 AD 516
at 535. The
standard of care required of a trustee is higher than that which an
ordinary person might generally observe in the
management of his or
her own affairs. A trustee must adopt the standard of the
bonus et
diligens paterfamilias
of Roman Law. See
Administrators,
Estate Richards v Nichol and Another
[1998] ZASCA 82
;
1999 (1) SA 551
(SCA) at 557
C-F.
Tijmstra N.O v Blunt – Mackenzie N.O and Others
2002 (1) SA 459
(TPD) at 472 – 473. Trustees can be held
jointly and severally liable. See
Ex parte Blaikie Trusts
1952 (3)
SA 200
(N); The Master v Deedat and Others
2000 (3) SA 1076
(N)
at
1086.
[59] At all the relevant
meetings the second respondent, who is also the second and third
applicant, was present. He also actively
allowed other persons to
take part in the running of the trust’s affair. In his letter
dated 14 April 2008 he states the
following:
“
This ex-self
impose (sic) three ex-executives and Trust fund (sic) signatories
namely Mr Rabie Rens, Phillip Mahura and Fillip Enkeld
refuse to hand
power over to the newly elected executive members and started to
isolate (sic) the other five beneficiaries again
by claiming they are
not part of the Trust…”
He further states that:
“
On the 5
th
of March 2010, the first meeting were (sic) held by the newly elected
executives. On that meeting six of the executives were present
except
Rabie Rens who haven’t even sent an apology. At that meeting
decisions were taken of which one of them was that the
previous bank
signatories must hand over the signing rights to the newly elected
committee. When they were requested to avail themselves
at the bank
on the appointed date, they refuse (sic) to hand over the signing
rights.”
Clause
5.7.4 of the trust deed stipulates that: “
The
office of trustee shall be vacated if, amongst others, he plays no
meaningful part in the development of the trust or is found
to be
acting in conflict with the interest of the trust”
[60] The insistence by
the second respondent that the executive committee should be in
charge of the trust property is in conflict
with the interest of the
trust. It is clear that the second respondent like the first and
third respondents abdicated his duties
as a trustee. He was not
removed as trustee or beneficiary. No reason is given why he was not
removed. There is also no reason
why the first applicant treated him
differently. All the
dramatis personae,
except the first
applicant, were
ad idem
that the best solution to solve the
problems is to appoint additional trustees. Not a single beneficiary
requested that the respondents
be removed as either trustees and or
beneficiaries. The first applicant does not give any reason why he
did not implement the suggestion
of the other applicants and the
unanimous interim resolution to appoint additional trustees. The
appointment of additional trustees
might have solved the problem.
[61] The first applicant
states that the signatories to the bank account were irregularly
authorised. That is so. The current signatories
were not authorised
by the trustees at a duly convened meeting of the trustees. This
points to the ineptitude of all the trustees,
including the second
respondent. What is very disconcerting is the fact that the first
applicant complains about this and gives
it as a reason for the
removal of the trustees and beneficiaries while he condoned the
irregular actions of the trustees and beneficiaries.
It was at a
meeting at his offices, in his presence, where it was resolved,
without any objection by him, that persons should be
appointed as
signatories to the trust’s bank account. This was not a
trustees’ meeting. He knew that the meeting could
not legally
take those decisions, yet he did nothing.
[62] The respondents
clearly showed, by way of bank statements, that the rental income
earned was deposited directly into the bank
account of the trust. The
allegation that the rental money due from the State is not deposited
into the trust’s account is
simply not true. In respect of the
residential units the respondents state that those units are rarely
occupied but when they are
then that money is utilised to cover
overhead costs. They don’t deny that they did not pay the money
into the trust’s
bank account. This is a clear transgression of
section 10 of the Act, which reads:
“
When a
person receives money in his capacity as trustee, he shall deposit
such money in a separate trust account at a banking institution…”
[63] The allegations that
the affairs of the trust are run for personal gain are hearsay. This
accusation is also vague. It is not
clear which of the respondents
ran the affairs of the trust for personal gain. No confirmatory
affidavit by a representative of
the ninth respondent is attached.
[64] On the applicant’s
own version there is a need to appoint additional trustees. In my
view it is also clear that all the
trustees breached their fiduciary
duties. However, not every breach of trust justifies removal. See
Honorè
supra at page 234. On the other hand the
appointment of additional trustees might have obviated the need to
remove the two trustees.
See
Bonsma N.O v Meaker, N.O. and Others
1973 SA (4) 526 (R.,A.D.).
The first applicant does not state
whether he considered this option and if he did why he did not
implement it. It can however
not be said that it is in the best
interest of the trust to remove only two of the trustees while all
three fulfilled their duties
as trustees in a manner that is
inconsistent with the trust deed and their fiduciary duties. I am not
satisfied that the donor
could reasonably have concluded that the
removal of the trustees is the best course of action to take. His
decision to remove them
was therefore not in the best interest of the
trust. The arbitrary and discriminatory manner in which the first
applicant decided
to remove the first and third respondents should
not be confirmed. It is clear that they were removed as a punitive
measure.
[65] It is clear that
there were two groups or factions of beneficiaries. The first
applicant clearly aligned himself with the group
led by the third
applicant. He must have decided that if he gets rid of the one group
there would be peace amongst the remaining
beneficiaries. He does not
state what measures, if any, he took to resolve the disputes. Other
than the meetings held at his offices
he states that the ninth
respondent endeavoured to no avail to resolve the disputes. He did
not attach a confirmatory affidavit
by the ninth respondent. Getting
rid of some beneficiaries in the manner that the first applicant did
might just be a recipe for
strife and animosity which is something
that none of the parties want. All the beneficiaries contributed not
only their physical
labour but also by making personal loans in order
to start the farming operations.
[66] Although the fruits
of their labour and loans became trust property it can not be in the
interest of the trust to remove them
arbitrarily as beneficiaries
whereas the trust deed clearly states that there must be a need and
it must be in the interest of
the trust to do so. It is also clear
that they were removed as beneficiaries as a punitive measure and not
in the interest of the
trust.
[67] In any event the
applicants failed to show that there was a need or that it was in the
interest of the trust to remove the
beneficiaries. It is clear that
the conflict and differences were not of such a nature that removal
was a good, let alone best,
solution under the circumstances.
Nothing, at all, is said about the sixth respondent’s conduct
but he too was removed as
a beneficiary. No reason is given why he is
treated differently from the third to the seventh applicants. I am
not satisfied that
the donor could reasonably have concluded that
there is a need to remove the beneficiaries or that their removal was
in the interest
of the trust. The removal of the beneficiaries should
also not be confirmed.
[68] This matter was
postponed on 26 May 2011 because the applicants failed to file their
replying affidavit, as ordered, on or
before 19 May 2011. The costs
occasioned by the postponement stood over for later adjudication. Mr
Danzfuss made no submission
in this regard. Mr Reinders requested
that the applicants be ordered to pay the respondent’s costs
occasioned by the postponement.
I agree.
[69] The respondents,
from the beginning, indicated that they do not oppose the relief
sought in paragraphs 1.1 to 1.3 of the rule
nisi.
They opposed
the granting of paragraphs 1.4 and 1.5 (the confirmation of their
removal) thereof. They were successful in their
opposition.
[70] In my view the trust
should not be ordered to pay the costs of this application. The
applicants should pay the costs. Although
the first applicant is
cited as Kenosi McDonald Moroka N.O. he holds no office. It is the
trustees who hold office and not the
donor.
[71] Mr Reinders
requested me to order the applicants to pay the costs occasioned by
the employ of two counsel. The applicants did
not object. They also
employed two counsel. The employment of two counsel in this matter
was justified.
[71] I accordingly make
the following order:
Paragraphs 1.1 to 1.3 of
the rule
nisi
are confirmed.
Paragraphs 1.4 and 1.5
of the rule
nisi
are discharged.
The first and the third
to seventh applicants are ordered to pay the costs occasioned by the
postponement on 26 May 2011 jointly
and severally the one paying the
other to be absolved.
The first and third to
seventh applicants are ordered to pay the costs of this application,
jointly and severally the one paying
the other to be absolved, which
costs are to include the costs consequent upon the employment of two
counsel.
_______________
C.J. MUSI, J
On
behalf of the Plaintiff: Adv F.W.A. DANSFUSS SC
Assisted
by: Adv P.DU P.GREYLING
Instructed
by: MOROKA ATTORNEYS
74-80
PRESIDENT REITZ STREET SUITE 19 REITZ PARK
WESTDENE
BLOEMFONTEIN
On
behalf of the Defendant: Adv S.J. REINDERS
Assisted
by: Adv J.C.COETZER
Instructed
by: HONEY ATTORNEYS
NORTHRIDGE
MALL
EEUFEESROAD
BLOEMFONTEIN