Lupacchini and Others v Minister of Safety and Security (2896/2004) [2008] ZAFSHC 7 (15 February 2008)

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[2008] ZAFSHC 7
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Lupacchini and Others v Minister of Safety and Security (2896/2004) [2008] ZAFSHC 7 (15 February 2008)

IN THE HIGH COURT
OF SOUTH AFRICA
(ORANGE
FREE STATE PROVINCIAL DIVISION)
Case
No. : 2896/2004
In
the matter between:-
GABRIELLE
LUPACCHINI
First
Plaintiff
ROCHELLE
CONRADIE
Second
Plaintiff
LUIGI
DAVIDE GABRIELLE LUPACCHINI
Third
Plaintiff
and
MINISTER
OF SAFETY & SECURITY
Defendant
______________________________________________________________
HEARD
ON:
17
August 2007
_____________________________________________________
JUDGMENT
BY:
RAMPAI
J
_____________________________________________________
DELIVERED
ON:
15
FEBRUARY 2008
_____________________________________________________
[1] The
matter came by way of an action. The summons was issued on 24 August
2004. The plaintiffs, who are acting on behalf of the
Lupacchini
Family Trust, are suing the defendant for a payment of the sum of R2
994 756,71 plus ancillary relief. The action is
defended. The
defendant’s plea was filed on 22 February 2005 and its special plea
on 9 July 2007. Not so long afterwards and
on 26 July 2007 the
plaintiffs filed their amended particulars of claim.
[2] The
matter was then enrolled for hearing on 8 August 2007. Four days
before the hearing was due to commence, the defendants delivered
notice of an application, which application was to be heard on 14
August 2007. The main purpose of the interlocutory application
was
to have the defendant’s special plea argued prior to and separate
from the main action –
vide
case
number 3642 of 2007.
[3] On 14 August 2007 the
special plea could not be argued and the main action could not
commence. The bickering carried on for three
days. On the third day
the parties agreed to file a special stated case in terms of rule
33(1). The record of the stated case consists
of 107 pages which
include 23 annexures. It was filed on Thursday 16 August 2007. The
written heads of argument were also filed.
At long last the special
plea was argued on Friday 17 August 2007.
[4] I
am, accordingly, called upon in accordance with the stated case to
decide, firstly, whether the action for damages allegedly
suffered by
the Lupacchini Family Trust could validly have been instituted as it
was on 24 August 2004 or at any other date prior
to 15 December 2004;
secondly, whether the action of the first two plaintiffs can still be
entertained in view of the belated public
appointment of the second
plaintiff as a trustee of the Lupacchini Family Trust. The whole
thing is about the issue of
locus
standi in iudicio
.
[5] The historical
background of the dispute will be helpful. There were four
individuals involved in the creation of the Lupacchini
Family Trust,
namely, Mr. Lambertus R. Preller as the founder, Ms Gabrielle
Lupacchini as the one founding trustee, Ms Melinda Lupacchini
also as
the other founding trustee and Mr. Luigi D.G. Lupacchini as the
patron or protector. These four individuals signed the trust
deed in
Bloemfontein on 29 September 1994. The trust deed is an agreement
that binds the founder, the trustees and the patron.
The date of
inception of the trust was 1 October 1999.
[6] The
primary objectives of the trust are expressed as follows:
“
DIE
HOOFDOELSTELLINGS VAN DIE TRUST IS OM:
Tot
voordeel van die begunstigdes in die Trust bates, beleggings en
inkomste te bekom en dit te bestuur, administreer en uit te keer
tot
voordeel van die begunstigdes onderworpe aan die voorwaardes en
bepalings hierin vervat en uiteengesit.”
[7] The
capital beneficiaries and the income beneficiaries of the Lupacchini
Family Trust are the children of the patron, Luigi Davide
Gabriele
Lupacchini, living or still to be born. At the time of inception
there were two living beneficiaries, namely, Lucio Antonio
Gabrielle
Lupacchini aged about 17 years and Massimiliano Francesco Lupacchini
aged about 12 years –
vide
par. 1 annexure “Q3”. Ms Melinda Lupacchini and Mr. Luigi D.G.
Lupacchini were at all times relevant to this matter, the natural
guardians of those beneficiaries. The two minor children were born
of their marriage.
[8] The
following are some of the provisions of the trust deed – annexure
“A” – pertinent to the trustees. According to the
trust deed
there shall be no less than two and no more than six trustees. The
board of trustees consisted of only two trustees at
the time of
inception, namely, Ms Gabrielle Lupacchini and Ms Melinda Lupacchini.
It was envisaged that the board of trustees would
have a chief
executive trustee and that only such trustee may contractually bind
the trust. A trustee may resign by written notice
to the board of
trustees –
vide
annexure
“A”.
[9] The
aforesaid two original trustees were empowered to nominate additional
trustees or subsequent trustees. Such an additional
or subsequent
trustee would have all the authority as any other trustee already in
office, taking into consideration the directives
of clause 5.4
annexure “A”. In the event of failure of the aforesaid trustees
to nominate an additional or subsequent trustee,
the trust deed
authorises the patron or the president of “The Law Society” to do
so –
vide
clause 7.2.5 p. 24 (part 2) annexure “A”; clause 7.3.1 p. 24
(part 2) annexure “A”.
[10] The
trustees have authority to institute legal proceedings on behalf of
the trust in connection with any claim the trust may
have –
vide
clause 5.3.1 p. 9 (part 2) annexure “A”. They are also
authorised to appoint other persons to institute legal action in any
court of law –
vide
clause 5.3.5 p. 11 (part 2) annexure “A”.
[11] Gabrielle
Lupacchini and Melinda Lupacchini were in terms of the provisions of
section 6(1) of the Trust Property Control Act,
No. 57 of 1988, duly
authorised to act as trustees of the trust. The written
authorisation was signed by the Master of the High
Court,
Bloemfontein on 4 October 1994 –
vide
annexure “B”.
[12] At
a meeting of the trustees, held on 19 October 1998, they resolved
that the trust would enter into business and open a pub,
a bar or a
knight club at a suitable venue. At another meeting of the trustees,
held on 9 November 1998, they resolved that a pub
or a club would be
conducted from leased premises situated at 142A Voortrekker Street,
Bloemfontein –
vide­
annexure “D”. At yet another meeting of the trustees, held on 20
September 1999, they decided that the Lupacchini Family Trust
would
register with the South African Revenue Services as a vendor for the
purposes of value added tax –
vide
annexure “E” - an extract of the minutes of the particular
meeting.
[13] The
trustees held the meeting on 3 July 2000 where they resolved that the
trust had to open a second business called “Reds
Night Club” at
the venue situated at 132 Voortrekker Street, Bloemfontein –
vide
annexure “F” – an extract of the minutes of that meeting.
[14] At
a meeting held on 3 June 2003, the trustees resolved,
inter
alia
,
that Melinda Lupacchini should resign as a trustee and that Luigi
Davide Gabrielle Lupacchini should act as a temporary trustee.
In
addition it was also decided that a certain Leon van Niekerk would
deliver the necessary documentations pertaining to such resignation
to the Master –
vide
annexure ”G” – an extract of the minutes of the meeting in
question.
[15] Three
weeks later, on 24 June 2003, Ms Melinda Lupacchini wrote a letter of
resignation to the Master. The Master received the
letter in
question approximately nine weeks later on 2 September 2003 to be
precise –
vide
annexure “H” - an official rubberstamp endorsement by the Master
on the same letter.
[16] The
Master replied Melinda Lupacchini’s letter by means of two letters
on 3 September 2003. The one letter was addressed to
Me G.
Lupacchini, 49 Ryk Tulbach Street, Bayswater, 9301. At that time Ms
Melinda Lupacchini and not Ms G. Lupacchini was resident
at this
particular address –
vide
annexure “H1” – a copy of the first letter. The other letter
was addressed to the same person, namely, Me G. Lupacchini of
229
Andries Pretorius Street, Bloemfontein, 9301 –
vide
annexure “H2” – a copy of the second letter in question. The
address of the second letter was and still is the address of
the
trust as was supplied to the Master upon registration of the trust
approximately nine years earlier. It was also the address
where Ms
Melinda Lupacchini and her husband, Luigi Lupacchini, resided until
1997. On 3 September 2003 the couple was resident elsewhere.
The
second letter was returned to the Master as “unclaimed” almost
six weeks later.
[17] The trustee who
notified the Master of her intention to resign, was Ms Melinda
Lupacchini. However, the Master did not respond
directly to her.
Instead, the Master replied to her letter but addressed the replies
to Me G. Lupacchini, supposedly Ms Gabrielle
Lupacchini. She was the
executive trustee which was why the Master wrote the letters to her.
Ms Gabrielle Lupacchini did not reside
at any of the two addresses.
As on 3 September 2003 Ms Melinda Lupacchini was staying at the first
address, but as already pointed
out, no letter was addressed to her.
None of the three plaintiffs received any of the two letters,
annexures “H1” and “H2”
and none of the two letters ever came
to the knowledge of Ms Melinda Lupacchini.
[18] On 8 September 2003
a meeting was held between Ms Gabrielle Lupacchini, and the first
plaintiff and Mr. Luigi Lupacchini, the
third plaintiff. They were
the remaining original trustee and the acting trustee respectively.
They resolved that:
“The
trustees of the Lupacchini Family Trust hereby agree to the pursuit
of a civil legal action against the State and the police
for the
disruption of business.”
See annexure “I” –
a copy of the relevant resolution.
[19] On
13 November 2003 Ms Gabrielle Lupacchini and Mr. Luigi Lupacchini
held a meeting where they decided that Ms Rochelle Conradie,
then the
secretary to the trust, now the second plaintiff, be appointed as a
trustee with immediate effect. The appointment was
made in terms of
clause 7.2 of annexure “A”. As a result of the aforesaid
decision the third plaintiff addressed a letter to
the Master on the
same day advising the Master of the said decision –
vide
annexure “K” – a copy of the relevant letter.
[20] On 20 November 2003
Ms Gabrielle Lupacchini, the first plaintiff, Mr. Luigi Lupacchini,
the third plaintiff and Ms Rochelle Conradie,
the second plaintiff,
held a meeting where it was resolved that Ms Rochelle Conradie
“will
be appointed as a trustee and all documentations and communications
with the Master of the Court will be done by Leon van
Niekerk.”
Vide
annexure
“J” – a copy of the relevant resolution. The second plaintiff
declared her willingness to be so appointed.
[21] Although Mr. Leon
van Niekerk, the financial advisor to the trust, sent a copy of the
resolution of 13 November 2003 – annexure
“K” – together with
a copy of the resolution of 20 November 2003 – annexure “J” –
to the Master by post, the Master
did not receive the relevant
letter. However, the trust was not aware of this fact.
[22] At all relevant
times thereto the plaintiffs, especially the first and the second
plaintiffs, were of the opinion that the necessary
steps had been
taken by the aforesaid Mr. van Niekerk, on the one hand and the
Master on the other, to give effect to annexure “K”
and annexure
“J”. They thought that the Master had duly executed whatever was
necessary to have the second plaintiff appointed
and registered as a
trustee of the Lupacchini Family Trust.
[23] Subsequent
to her private appointment as a trustee, as set out above, the second
plaintiff, Ms Rochelle Conradie, attended,
inter
alia
,
the following meetings during which meetings certain resolutions were
taken concerning the business of the trust:
On 5
January 2005, where it was resolved that the trust “will give
away” a motorcar during a three months marketing campaign
–
vide
annexure “L” – a copy of the relevant resolution;
On 14
June 2004, where the trustees resolved that the business enterprise
of the trust known as “Reds” be closed –
vide
annexure “M” – a copy of the relevant resolution;
On 12
July 2004, where the trustees resolved that the trust would open
another business enterprise to be called “LuRock” –
vide
annexure
“N” – copy of the extract of the resolution;
[24] As I have already
indicated, the summons was issued on 24 August 2004. Two days later
it was served upon the defendant. It
was issued on the instructions
given to the lawyers by the first and the second plaintiffs, acting
as trustees of the Lupacchini
Family Trust. They supplied their
attorneys of record with a copy of the trust deed. According to the
trust deed, as it stood at
that stage, the trustees were Ms Gabrielle
Lupacchini and Ms Melinda Lupacchini. The attorney concerned assumed
that they were still
acting as such at the time the summons and the
particulars of claim were drafted. The summons was therefore issued
in the names
of Ms Gabrielle Lupacchini, Ms Melinda Lupacchini and
Mr. Luigi Lupacchini. It was not brought to the attorney’s
attention that
Ms Melinda Lupacchini had since resigned and replaced
by Ms Rochelle Conradie.
[25] Subsequent to her
private appointment as trustee, Ms Rochelle Conradie attended and
actively participated in consultations with
the legal practitioners
who represented the trust. She provided documentation, facts and
figures requested by counsel in order to
advise on the prospects of
success in claiming damages from the defendant. The opinion of
counsel was only finalised subsequent
to the decision to have the
business enterprise “Reds” closed down on account of loss of
income. After legal opinion was obtained
from counsel, Ms Rochelle
Conradie, together with the other trustee and patron, decided to
continue with legal steps and that action
should be instituted
against the defendant.
[25] Ms Rochelle Conradie
has been associated with the Lupacchini Family Trust for a long time
since 1988 up until 20 November 2003.
She attended almost all the
meetings of the trustees as a secretary in order to take notes and to
type all the resolutions. She
is willing to formally ratify in
writing the decision to institute legal proceedings against the
defendant which was taken before
13 November 2003 when the Master was
informed of her private appointment to serve as a trustee. At all
relevant times Melinda Lupacchini
was aware of the resolution to
institute legal proceedings against the defendant and she was in
favour thereof.
[26] Before the defendant
pleaded, the defendant’s attorney mentioned to the plaintiffs’
attorney that Melinda Lupacchini, cited
as the second plaintiff, had
resigned as a trustee of the Lupacchini Family Trust before the
action was initiated. The discussion
between the two attorneys
prompted the plaintiffs’ attorney to visit the offices of the
Master where he perused the file held by
the Master in respect of the
Lupacchini Family Trust. He discovered that the Master had received
no replies to the letters marked
annexure “H1” and “H2”.
Moreover, he also discovered that as a result thereof the Master had
not issued an amended letter
of authority to Rochelle Conradie to act
as a trustee of Lupacchini Family Trust.
[27] The plaintiffs’
attorneys then took the matter up with his clients in order to
respond to the aforesaid two letters from the
Master – annexure
“H1” and “H2”. The required original letter of authority,
which the Master had issued on 4 October 1994,
was missing. But a
copy thereof was at all relevant times still kept in the file of the
Master. The attorney obtained a copy thereof
from the Master.
[28] On
13 December 2004 Ms Rochelle Conradie deposed to an affidavit -
annexure “P” - in which she stated that the original
letter of
authority had gone missing and that it could not be found. This was
done in response to the Master’s requirement that
the original
letter of authority be returned to that office so that an amended
letter of authority could be issued –
vide
annexure “H1” and “H2”. On behalf of the chief executive
trustee, Ms Gabrielle Luppacchini, Ms Rochelle Conradie sent annexure
“P” together with annexures “Q1” to “Q5” to the Master.
[29] Two
days later, on 15 December 2004, the Master issued an amended letter
of authority in terms of which Ms Melinda Lupacchini
was subsequently
replaced by Ms Rochelle Conradie as a trustee of the Lupacchini
Family Trust –
vide
annexure
“R”. Over 18 months later, on 26 May 2006 to be precise, the
plaintiffs’ attorneys delivered notice in terms of rule
15, whereby
Ms Melinda Lupacchini was substituted by Ms Rochelle Conradie, as the
second plaintiff in this action.
[30] The defendant
contends that seeing that the second plaintiff was only authorised by
the Master of the High Court on 14 December
2004, which date should
in fact be 15 December 2004, some 15 weeks subsequent to the issue of
the summons, to act as a trustee of
the Lupacchini Family Trust, no
valid resolution by the trustee could, alternatively, had been taken
to institute such an action
on 24 August 2004 and that no valid
action has or could have been instituted on behalf of the trust prior
to the official appointment
of the second plaintiff on 15 December
2004.
[31] The
plaintiff contends that, although a letter of authority in terms of
which the second plaintiff was publically appointed as
a trustee of
the Lupacchini Family Trust, had not been issued by the Master of the
High Court prior to 24 August 2004, when the second
plaintiff and
others called for the summons to be issued, the second plaintiff had
prior to 24 August 2004, been duly appointed in
terms of the
provisions of the trust deed and in pursuance of its objectives. At
all times material to the action, the Lupacchini
Family Trust had the
necessary
locus
standi in iudicio
.
[32] Sec 6(1) TPC Act No.
57/1988 which provides that any person appointed as a trustee after
the 31 March 1989 shall act in that
capacity only if authorised
thereto in writing by the Master. The section applies to any person
whose appointment was made in terms
of the trust instrument, or the
current legislation itself or a court order.
[33] The dispute in the
case is about the legal competence of the second plaintiff to sue on
behalf of the trust before she was officially
authorised to act as
the trustee by the Master. The general principle of litigation is
that any person who has a direct and substantial
interest in a matter
that has to be resolved through a process of court adjudication has
the necessary legal standing –
locus
standi in iudicio
[34] The crisp question
in the case is the scope of the prohibition contained in the section.
The language of the section is quite
emphatic: anyone, however
appointed as a trustee shall act in that representative capacity only
if, in addition to such appointment,
has been granted written public
authority by the Master. Is the prohibition absolute?
[35] Mr. Wessels, on
behalf of the defendant, contended that the section does not exempt
any act performed by a trustee. Therefore
he submitted that the
provisions of the section were absolutely peremptory. *Since the
second plaintiff was not yet authorized by
the Master to act as a
trustee, at the time the summons was issued, he contended that there
was only one instead of two trustees.
That being the case, he
submitted further, that the trust was incapable to function.
[36] Mr Van Rhyn, on
behalf of the plaintiff disagreed. He contended that the section did
not affect every single act performed by
a tree. He submitted that
although the provisions of the section were peremptory, the
prohibition was not absolute in respect of
all acts performed by a
trustee. He submitted that, whether the prohibition was absolute or
relative depends on the nature of the
act under the spotlight.
[37] In the case of
SIMPLEX
(PTY) LTD v VAN DER MERWE & OTHERS NNO
1996
(1) SA 111
(WLD) at 112 H – I Goldblatt J said the language of the
prohibition was clearly of a peremptory nature, indicating an
unambiguous
prohibition on anyone acting as a trustee until
authorised to do so in writing by the Master. In that case the
trustee’s act which
was under judicial scrutiny pertained to a
written agreement the trustees had concluded before they were
authorised by the Master
to act as such.
[38] Dismissing the
submission that such an originally unauthorised and dead contractual
act by the trustee was resuscitated by the
subsequent ratification by
the later granting of the necessary authority, Goldblatt J held that
there could be no subsequent resuscitation
of a stillborn contractual
deal which was nullified
ab
initio
by a statutory prohibition since such an unauthorised agreement is
regarded by law as never having been concluded.
[39] It follows from the
aforegoing that a trustee’s act of concluding a contract prior to
the grant of written authority by the
Master, is not only
unauthorised but absolutely prohibited by the section.
“
It
is a fundamental principle of our law that a thing done contrary to
the direct prohibition of the law is void and of no effect.”
Vide
SCHIERHOUT
v MINISTER OF JUSTICE
1926 AD
99
on 109
per
Innes CJ.
[40] In
VAN
DER MERWE v VAN DER MERWE & ANDERE
2000
(2) SA 519
(CPD)
the
court was called upon to grapple with the construction of section
6(1) Trust Property Control Act No. 57/1988. The facts were
not
identical to the facts in the instant case. There a trust was
created on 5 March 1997. Its founder was the defendant’s father.

The defendant and his father were appointed as the co-trustees in
terms of the trust instrument. Both of them accepted their
instrumental
appointment. At the time the defendant was still
married to the plaintiff out of community of property. Five days
after the creation
of the trust, the defendant entered into an
agreement with the trust, whereby he sold the farm to the trust. In
his personal capacity,
as the farm owner, he signed the agreement as
the seller. In his representative capacity as the trustee, he signed
the agreement
on behalf of the trust as the buyer. The Master issued
the requisite written authority sixteen days later, on 26 March 1997.
[41] As can be seen the
facts in
VAN
DER MERWE v VAN DER MERWE & ANDERE
,
supra
,
raised the same question which arose in the case of
SIMPLEX
(PTY) LTD v VAN DER MERWE & OTHERS NNO
,
supra
.
In both of those cases the courts were called upon to decide whether
a trustee had legal authority to bind a trust in contract
without the
written authority from the Master first being sought and granted in
terms of section 6(1).
[42] The courts in both
matters found that a trustee who acted without the Master’s written
authority lacked legal capacity to
bind a trust contractually. Such
a contract, the courts found, amounted to an unauthorised act on the
part of the trustee. Griesel
J came to the conclusion that such an
unauthorised contract could not be ratified by the subsequent issue
of the Master’s written
authority. The judge expressly agreed with
the conclusion of Goldblatt J in the care of
SIMPLEX
–
vide par. 21
VAN
DER MERWE v VAN DER MERWE & OTHERS
at par. 21.
[43] A distinction has to
be drawn between a trustee’s acts in connection with litigation on
the one hand and a trustee’s acts
in connection with contract.
[44] In
SIMPLEX
(PTY) LTD v VAN DER MERWE & OTHERS NNO
,
supra
at 114 E-G Goldblatt J said the following about the distinction:
The respondents further attempted to
draw an analogy between their position and that of a liquidator or
trustee in insolvency who
litigates without the consent of creditors
(for example
Patel v Paruk's
Trustee
1944 AD 469
;
Waisbrod v Potgieter and
Others
1953 (4) SA 502
(W);
Sifris & Miller NNO v
Vermeulen Bros
1973 (1) SA
729
(T)). This analogy at first seemed appropriate but on due
consideration is not apposite. The cases cited deal with
locus
standi in judicio
and are
not of application to a contractual situation.”
[45] The import of the
three decisions mentioned in the aforegoing quotation was summarised
by Conradie J as follows in
WATT
v SEA PLANT PRODUCTS BPK & OTHERS
1998 (4) ALL SA 109
at 112 C-F:
“In
Patel v Paruk’s Trustee
1944 AD 469
the question was whether proceedings commenced by a
trustee in an insolvent estate without the consent of the Master or
the creditors,
were invalid. The prohibition, contained in
section
73
of the
Insolvency Act 24 of 1936
, was directed at preventing a
trustee from obtaining legal advice or employing an attorney for the
institution or defence of legal
proceedings on behalf of or against
an estate. The important phrase in the prohibition was ‘... the
trustee shall not act as aforesaid
unless he has been authorised
thereto by the creditors or by the Master’.
The
court held that the proceedings were not necessarily a nullity if
authorisation had not been obtained: the prohibition operated
only
between the trustee and the creditors to prevent the estate from
being dissipated in fruitless litigation.
In
Waisbrod v Potgieter and
others
1953 (4) SA 502
(W)
Ramsbottom J, finding support in
Patel
v Paruk’s Trustee
(
supra
),
held that
sections 130(2)(
a
)
and 142(4) of the Companies Act 46 of 1926 were intended to prevent
the assets of a company from being squandered in useless litigation
and that this did not give
the person with whom the liquidator was litigating the right to
object that the latter had not been authorised
to institute the
proceedings.
Waisbrod
v Potgieter
(
supra
)
as well as an earlier case followed by it,
Tannenbaum’s
Executors and Tannenbaum v Quakley and the Liquidator of Varachia
Store (Pty) Ltd
1940 WLD
209
,
were both referred to
with approval and applied by a full bench of the Transvaal Provincial
Division in
Sifris
and Miller NNO v Vermeulen Bros
1973
(1) SA 729
(T).
”
[46] Turning to the
distinction Conradie J in
WATT
v SEA PLANT PRODUCTS
,
supra
,
at 113 F-J
put it
as follows:
“
Locus
standi in iudicio
or
standing (‘verskyningsbevoegdheid’) and contractual power
(‘kontrakeerbevoegdheid’) are not identical concepts. Goldblatt
J saw this, with respect correctly, in
Simplex
(Pty) Ltd v Van der Merwe and others NNO
1996 (1) SA 111
(W), a case dealing with a contract which had
purportedly been concluded with trustees before the authority
required by section 6(1)
of the Act had been given to them by the
Master. He held that the contract was invalid.
Locus standi in iudicio
is an access mechanism controlled by the court
itself. The
standing of a person does not depend on authority to act. It depends
on whether the litigant is regarded by the court
as having a
sufficiently close interest in the litigation.
In
Jacobs en ‘n Ander v
Waks en andere
[1991] ZASCA 152
;
1992 (1) SA
521
(A) at 533J-534A Botha JA described the requirements for
locus
standi
as ‘’n voldoende
belang... by die onderwerp van die geding om die hof te laat oordeel
dat sy eis in behandeling geneem behoort
te word.’ In
Jacobs’s
case the question was what interest the applicants had in the
invalidation of a resolution of a local authority. The court
commented
–
‘
Aldus
beskou, spreek die feite sterk ten gunste daarvan dat die Hof
toeganklik behoort te wees vir hierdie applikante, en gevolglik
moet
die bevinding wees dat hulle wel
locus
standi
het om die
nietigverklaring van die besluit aan te vra’ 536C-D).”
[47] At par 114 a-e
Conradie J went on to say the following about a trustee’s acts in
litigating as apposed to contracting:
“
The
question, then, to be posed
in
casu
is whether at the time
summons was issued the trustees’ interest in the trust was too
remote. The answer to this question depends
upon the nature of a
trustee’s appointment. Where a trustee has been appointed – in a
trust deed or otherwise – the appointment
is not void pending
authorization by the Master in terms of section 6(1) of the Act (cf.
Metequity Limited and
another v NWN Properties Limited and others
[1997] 4 ALL SA 607
(T) at 611a-d). Although a trustee’s power to
act in that capacity is suspended by section 6(1) of the Act, he or
she would, in
my view, have a sufficiently well defined and close
interest in the administration of the trust to have
locus
standi in iudicio
. Any
conclusion that the second and third defendants were by section 6(1)
of the Act deprived of
locus
standi in iudicio
(which
would mean not only that they could not be sued but also that they
could not approach the court to protect the interests of
the trust)
would not give effect to the intention of the legislature. Whilst
recognising the desire of the legislature to regulate
the rights and
duties of trustees in the Act, one should, I think, be slow to
conclude that it would have desired to accomplish this
by controlling
their access to, or accountability in, a court of law.
The
focus of the legislation, after all, is on what trustees should or
should not do; it is not on whether they may or may not sue
or be
sued.”
[48] I am in respectful
agreement, with the views expressed by Conradie J and the
authorities he cited in the passages I have quoted
above. What
emerges from the caselaw is the firm view that, as regards legal
proceedings, the statutory prohibition contained in
section 6(1) is
relative and not absolute, as is the case as regards contracts.
Where a trustee litigates without the prior requisite
authority from
the Master his act to get involved in a litigious situation on behalf
of a trust is not automatically null and void.
If it is shown to the
court, and not to the Master, that the alleged interest of a trust in
the matter before a court for adjudication
is too remote, a trustee
concerned would be denied access primary by a court using its
inherent access control mechanism rather than
by the statutory
prohibition of the section. It does not mean that invoking the
section as well would be wrong. However, if the
alleged interest of
a trust in the matter is sufficiently close, a trustee would be
allowed access to court and given an audience
notwithstanding the
fact that he was, at the time legal proceedings were initiated, still
unauthorised by the Master to act on behalf
of the trust concerned.
[49] As I see it, section
6(1) prohibits unauthorised contracts by a trustee who purports to be
acting on behalf of a trust. Similarly
it prohibits unauthorised
litigation by a trustee who purports to be acting on behalf of a
trust. Now here comes a fundamental difference
in the scope of the
statutory prohibition. As regards the first category, in other
words, the sphere of contracts, the prohibition
is absolute. The
unauthorised act is void right from the outset. It cannot be
ratified afterwards. The subsequent grant of written
authority from
the Master does not have any redeeming legal effect. A court has
virtually no discretion to condone such and unauthorised
contract.
[50] However, the legal
position is different as regards the second category, in other words,
the actions of a trustee in the sphere
of litigation. Here the
statutory prohibition is relative. The unauthorised is not void from
the onset. It may be ratified afterwards.
The subsequent grant of
written authority by the Master has some relatively positive
purifying effect. Here a court has discretion
to validate or not to
validate such unauthorised litigation retrospectively. Provided the
trust has sufficiently well defined and
close interest in the legal
proceedings, the court would be inclined to grant access.
[51] Harms JA has pointed
out that the question of legal standing is in a sense a procedural
matter. Cameron JA concurred but added
that it is also a substantive
matter. He commented that:
“It
concerns the sufficiency and directness of interest in litigation in
order to be accepted as a litigating party.”
Vide
LAND
& AGRICULTURE BANK OF SA V PARKER AND OTHERS
2005
(2) SA 77
(SCA) at 92F.
[52] The right of access
to court is so fundamental to the rule of law itself that our courts
should be slow to give any statutory
provision a construction which
unnecessarily limits it. The participation of trustees in legal
proceedings is a matter which pre-eminently
resides within the
province of the judicial and not legislative sphere. Upon digestive
reading of the section we are here concerned
with, I could find
nothing to suggest that the converse was intended when this
particular statutory provision was enacted.
[53] The defended heavily
relied on the decision in
LAND
& AGRICULTURE BANK OF SA v PARKER AND OTHERS
2005
(2) SA 77
(SCA) Parker’s case. The case was concerned with the
trustee’s actions in legal proceedings just as in the instant case.
The
trust instrument there provided that there should be a minimum
of three trustees in order that the trust could legally function.

The three collectively resolved to litigate on behalf of the trust.
The judgment went against the trust. The number of the trustees
dropped to two. Therefore a vacancy arose in the board of trustees.
The vacancy was not immediately filled. The two remaining
trustees
resolved to appeal. They, purporting to act on behalf of the trust,
instructed attorneys to lodge an appeal. It was done.
The capacity
of the trust was questioned. Upholding the objection Cameron JA
said:
The Parkers in other words could not
bind the trust because no one could. This does not mean that their
duties as trustees ceased.
On the contrary, their obligation to
fulfil the trust objects and to observe the provisions of the trust
deed continued. These required
that they appoint a third trustee when
a vacancy occurred... “
[54] The rationale of the
decision was that, because there were only two instead of three
trustees in office, at the time the appeal
was lodged, the trust as a
unit lacked legal capacity to function although the two trustees were
duly appointed and duly authorised
as individuals.
In
casu
the situation is different. The trust instrument provides for the
minimum of two trustees to render the trust lawfully operational.

The facts reveal that before the summons was issued two persons had
already been appointed to serve as trustees. The first plaintiff,
Ms
Gabrielle Lupacchini, was already appointed and authorised in terms
of the relevant section by the Master. The second plaintiff,
Ms
Rochelle Conradie was already privately appointed in terms of clause
7.2.1.1 p23 (Part 2) trust deed. However, she was not yet
publicly
authorised by the Master to act on behalf of the trust in terms of
section 6(1).
[55] The authorisation of
a trustee has two dimensions. The one dimension is the trust
instrument. The other is the Master. But
the primary foundation is
undoubtedly the trust instrument.
“Dit
is doenlik om uit die staanspoor daarop te wys dat mnr
Jordaan
se benadering dat die Meester ‘n trustee ingevolge artikel 6(1)
‘aanstel’ nie korrek is nie. ‘n Trustee word ingevolge die
trustdokument aangestel. Die Meester magtig hom slegs om aldus op te
tree. In Honorè:
SA Law of
Trusts
5uitg. word dit as
volg op 256 (paragraaf [158] gestel:
‘
A trustee acquires the office of
trustee by appointment and acceptance and not ... by the Master’s
written authorisation ... This
is because the statute recognises the
distinction between the appointment of a trustee (which takes place
in terms of the trust instrument)
and written authorisation to act as
a trustee (which he derives from the Master by virtue of the
statute).’
Vergelyk
ook aangehaalde werk op 179 (paragraaf [110]):
‘
Despite
the statutory formulation it is clear that a trustee’s appointment
derives from the trust instrument itself and not from
the Master’s
authorisation and that the authority of the trustees derives from the
term of the trust deed. This is because the
office of trustee is
created by the trust instrument and not by the Master or even the
Court in filling it.’”
Per Cillie J
in
ERWEE
NO AND ANOTHER v ERWEE NO AND OTHERS
(2006)
1 ALL SA 620
(OPD) at 629e – g.
[56] I am in respectful
agreement. The propositions that a trustee’s appointment
originates from a trust instrument itself and
not from the Master’s
letter of authorisation and that the fountain of a trustee’s
authority is to be found in the terms of such
trust instrument –
are shared by many authorities. This is so precisely because the
office of a trustee is created by the trust
instrument and not by any
Master or even any court. An appointment of a trustee in terms of a
trust instrument is in itself a legal
act which must be effected
primarily by a body of trustees and not the Master.
Vide
par. 626g – h
ERWEE’s
case,
supra
.
See also
VAN
DER MERWE v VAN DER MERWE & OTHERS
2002
(2) SA 519
(CPD) at 522H.
The
reasoning in
SIMPLEX
(PTY) LTD
was
followed.
[57] By virtue of her
appointment in terms of the aforesaid clause of the trust instrument,
the second plaintiff obtained the primary
authorisation to act on
behalf of the rust in legal proceedings. From that moment on until
the summons was issued she acted jointly
with the first plaintiff.
At all times relevant to this case there were two appointed trustees
in office. On 3 September 2003,
the time it was resolved, on behalf
of the trust, to sue the defendant, the second plaintiff had not been
appointed to act as a trustee.
She was appointed as such on 13
November 2003, nine months before the summons was issued. From then
on until the summons was issued
on 24 August 2004 she took
collaborative steps not only to enable the trust to function but also
to implement the resolution of September
3, 2003 whereby the civil
action against the defendant was authorised.
[58] In the instant case,
unlike in the case of
LAND
& AGRICULTURAL BANK OF SA v PARKER AND OTHERS
,
supra
the
trust did not suffer from any legal disability as a result of
deficient numerical strength. The vacancy that occurred following
the resignation of Ms Melinda Lupacchini was timeously filled up
before the summons was issued. On 15 December 2004, when the Master
granted written authority to the second plaintiff, her initial
appointment before the summons was issued was subsequently ratified.
In
PARKER’s
case
the
joint action of two instead of three trustees could not be
retrospectively validated because there was nothing to validate. The
trust entity was simply dysfunctional at the time the two remaining
trustees purported to appeal.
[59] In
PATEL
v PARUK’S TRUSTEE
1984 (AD) 469
the
dispute was about a trustee who litigated on behalf of an insolvent
estate without the consent of the creditors in contravention
of the
express statutory prohibition in terms of section 73 (1)
Insolvency
Act No. 24 of 1936
: The preliminary objection taken against the
trustee’s unauthorised action was that the application on behalf of
the trust was
void
ab
initio
because the trust had not been authorised by the creditors or the
Master.
On p. 475 Tindall JA in
dismissing the objection said the following:
“
The
original proviso, prohibiting the trustee from instituting or
defending any legal proceedings without the prescribed consent,
was
enacted, as between the trustee and the creditors, in order to
protect the estate from being dissipated in litigation. The
Legislature
could not have intended that steps taken by a trustee to
institute or defend proceedings must necessarily be a nullity because
the
prescribed consent had not been obtained.”
[60] In pretty much a
similar vein, Ramsbottom J remarked in
WAISBROD
v POTGIETER AND OTHERS
1953 (4) SA 502
(WLD) at 507 F – H:
“I
do not find it necessary to decide whether or not the resolution
authorised the applicant to institute these proceedings; I shall
assume in the respondents' favour that it did not and that the
applicant has not been authorised by a resolution of creditors and
contributories to make this application. Assuming that to be the
case, the question is whether it is open to the respondents to raise
the objection that the applicant is not so authorised. In my opinion
it is not. I think that the provisions of secs. 130 (2) (a)
and 142
(4) were enacted for the protection of creditors and contributories
and to prevent the assets of the company from being squandered
in
useless litigation. As between himself and the company the liquidator
requires to be authorised before he embarks on litigation,
and if he
does so without the prescribed authority the Court may refuse to
allow him his costs out of the assets of the company and
he may have
to pay them himself.
But
that does not give a person with whom the liquidator is litigating
the right to object that the liquidator has not been authorised
to
institute the proceeding.
”
[61] To this day that
remains the law
in
casu
initially the summons cited Ms Melinda Lupacchini instead of Ms
Rochell Conradie as the second plaintiff. The citation was wrong
because Ms Melinda Lupacchini had already resigned at the time the
summons was issued. By then Ms Rochelle Conradie was the
de
facto
subsequent trustee. The summons has since been amended. I am of the
view that the initial wrong citation of the second plaintiff
does not
alter the conclusion I have reached. Practically speaking the
statutory prohibition we are here concerned with really has
very, if
any, restrictive impact or effect on a trustee’s
locus
standi in iudicio
–
vide
2000 (63) THRHR 472
on p. 476 at par. 6.1 and p. 478 at par. 7 per M
J de Waal;
Honoré’s
: South African Law of Trusts
,
5ed 2000 p. 221, 270 and 419;
per
Cameron, De Waal, Wunsh.
[62] In the circumstances
I make the following findings. At the time the action was instituted
the number of the trustees in office
formed the quorum as stipulated
in clause 7.2.5 p. 24
(Part 2).
The trustee in office could lawfully
act for and on behalf of the trust. Together the two could properly
institute the action.
It was perfectly permissible for the first and
second plaintiffs to instruct attorneys, as they did, to have the
action instituted
against the defendant. Consequently I have come to
the conclusion that defendant’s special plea cannot be upheld. The
defendant’s
contentions fail. The plaintiff’s contention
succeeds. The action can be entertained.
[63] The plaintiff’s
including the former trustee, Ms Melinda Lupacchini, were not
diligent at all in conducting the business affairs
of the trust. The
third plaintiff as the patron, together with the first trustees
resolved that Ms Melinda Lupacchini resign. On
24 June 2003 Ms
Melinda Lupacchini wrote a letter to the Master notifying the Master
of her resignation. The letter took ages to
reach the Master’s
office. It was mailed on 3 September 2003, nine long weeks later.
It was not mailed in good time. The executive
trustee probably did
not ensure it was. Similarly, the resolutions and correspondence
concerning the subsequent appointment of Ms
Rochelle Conradie were
plagued by delays and series of acts of omissions. Important
addresses were changed without notifying the
Master. It seems that
the executive trustee did not efficiently serve the trust. She
clearly relied on others. She did not follow
things up. All these
exacerbated communication with the office of the Master.
[64] The matter was then
left in the hands of a certain financial advisor, Mr. Leon van
Niekerk, an employee of the trust. He was
poorly supervised. One
would have expected that the first plaintiff, as the chief executive
trustee, would have vigilantly ensured
that all the necessary
practical steps were taken to bring the resolution relating to the
change of trustees to the attention of
the Master without delay.
Time went by. Days became weeks and weeks became months. They
received no response or a mere acknowledge
from the Master. They
were not bothered. The matter was not speedily followed up. Their
alleged belief that the Master had, already
authorised the second
plaintiff to act as a trustee, is not based on any sound and
reasonable grounds.
[65] Their attorneys were
not informed about the resignation and substitution of Ms Lupacchini.
As if all these acts of negligence
were not enough, their attorneys
took a considerable time to substitute Ms Rochelle Conradie for Ms
Melinda Lupacchini. It has to
be mentioned that they were made aware
by the defendant’s attorney that Ms Melinda Lupacchini could no
longer act on behalf of
the trust as the second plaintiff since she
had resigned some 14 months before the summons was issued. It is
quite clear that had
it not been for the reckless actions,
particularly of the first and the third plaintiffs, the defendant
would in all likelihood not
have file the special plea. Ordinarily
this sort of negligence would be visited with an adverse order of
costs. In this case, however,
I am precluded from doing so by the
prior pact between the parties.
[66] Accordingly I make
the following order
The special plea is
dismissed.
The defendant is
directed to pay the costs including the costs occasioned by the
employment of two counsels.
______________
M.H.
RAMPAI, J
On behalf of the
defendant: Adv. M.H. Wessels SC
with
him
Adv.
S.E. Motloung
Instructed by
The
State Attorney
BLOEMFONTEIN
On behalf of the
plaintiffs Adv. A.J.R. van Rhyn SC
with
him
Adv.
M.D.J. Steenkamp
Instructed
by:
Kramer
Weimann Joubert Inc
BLOEMFONTEIN
/sp