Soekoe N.O and Others v Le Roux (898/2007) [2007] ZAFSHC 135 (29 November 2007)

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[2007] ZAFSHC 135
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Soekoe N.O and Others v Le Roux (898/2007) [2007] ZAFSHC 135 (29 November 2007)

IN THE HIGH COURT
OF SOUTH AFRICA
(ORANGE FREE STATE
PROVINCIAL DIVISION)
Case
No.: 898/2007
In
the case between:
W. M. SOEKOE
N.O.
1
st
Applicant
A.
J. SOEKOE N.O.
2
nd
Applicant
Q.
HUGO N.O.
3
rd
Applicant
and
WERNER LE ROUX
Respondent
_____________________________________________________
HEARD ON:
31 MAY 2007
JUDGEMENT:
RAMPAI, J
_____________________________________________________
DELIVERED ON:
29 NOVEMBER 2007
_____________________________________________________
[1] The matter became by
way of an ordinary application. The motion proceedings were
initiated on the 2
nd
March 2007. The relief sought by the applicants is threefold.
Firstly they seek a detailed account of all the money the respondent
received and paid out on behalf of Enrique Soekoe Trust during the
specified period. Secondly they also seek a debate of such an
account. Thirdly they seek the cost from the respondents. The
application is opposed.
[2] The 1
st
applicant and the 2
nd
applicant are husband and wife. Their son, Werner Soekoe, was
married to Leandra Soekoe. Out of the marriage of the young couple
one child was born, namely Enrique Mathew Soekoe, a boy born on the
3
rd
May 2000. The young couple and their little son were involved in a
road accident on the 18
th
December 2003. Enrique’s mother, Leandra, died instantly and his
father, Werner, the next day as a result of the fatal bodily
injuries
they sustained in the road accident. Enrique survived but he was
tragically orphaned at a tender of 3.5 years.
[3] At the time of the
road accident which claimed the lives of Enrique’s parents, his
aforesaid paternal grandparents were living
in Kimberley in the
Northern Cape. The 1
st
applicant was a police captain and the 2
nd
applicant a teacher by profession. Subsequent to the death of their
aforesaid children, the 1
st
applicant and 2
nd
applicant relocated to Bloemfontein where they are currently living.
Their move was chiefly prompted by their common wish to see
to the
general welfare of their grandchild, Enrique. The parents legally
adopted the parentless Enrique on the 2
nd
June 2006 as their adoptive child.
[4] The 1
st
applicant and the 2
nd
applicant consulted the respondent for legal advices in respect of
the following matters, among others: third party claim for Enrique;
administration of the deceased estate of the late Werner Soekoe;
custody care and control of Enrique and financial management
pertaining
to all these matters. The respondent is an attorney. He
practises law under the name and style of Goodrick & Franklin
Incorporated
here in Bloemfontein.
[5] Following the said
consultation, a trust was created and registered through
collaboration between the respondent on the one hand
and the 1
st
applicant and the 2
nd
applicant on the other. Enrique was the beneficiary. His grand
parents together with the respondent were duly appointed by the
Master of the High Court on the 13
th
August 2004 as the trustees of Enrique Soekoe Trust. The trust deed
was signed here in Bloemfontein on the 5
th
August 2004.
[6] The
respondent also caused the 1
st
applicant to be appointed by the Master of the High Court in terms of
section 18(3) Administration of Deceased Estate as an executor
of the
deceased estate of the late Werner Soekoe. The 1
st
applicant left the administration of this estate in the hands of the
respondent. The value of the assets exceeded the minimum threshold
of R125 000,00 necessary for the issue of letters of executorships.
[7] With the passage of
time the professional relationship between the respondent and the
first two applicants gradually deteriorated.
By the end of the year
2006 it has completely broken down. On the 14
th
June 2006 the first two applicants in their capacities as the
co-trustees of the Enrique Soekoe Trust addressed a letter to the
respondent
in his capacity as their fellow trustee informing him that
they no longer required his services as their co-trustee on account
of
the perceived breach of trust. They also copied, among others,
the Master of the High Court. The first and the second applicants
then decided to entrust the affairs of Enrique Trust to Messrs Hill
McHardy & Herbst attorneys of Bloemfontein. They averred
that
they did not actively participate in the management of the affairs of
Enrique because they had entrusted such management to
the respondent.
They also alleged that the respondent ran such affairs almost
singlehandedly but in a poor manner. However, the
respondent denied
that he was mismanaging the affairs of Enrique Trust as alleged. He
admitted that he ran such affairs alone but
averred that it was so
because the minor beneficiary’s grandparents had abdicated their
responsibilities as his co-trustees.
[8] The respondent’s
mandate in respect of the deceased estate was also terminated. As a
result of the final breakdown of the relationship
between the first
applicant as the executor and the respondent as an attorney Mrs. S.
M. van Coppenhagen of Honey Attorneys was appointed
to take over the
matter and to administer the deceased estate further on behalf of the
executor.
[9] Reacting to the
respondent’s query, the Master informed the respondent that the
Master of the High Court had the powers in terms
of section 20 to
remove a trustee from office. In the same letter dated the 7
th
July 2006 the Master of the High Court requested the respondent to
submit financial statements pertaining to the trust. On behalf
of
the 1
st
and 2
nd
applicant Messrs. Hill McHardy Herbst Incorporated also addressed a
similar request to the respondent via his law firm Messrs Goodrick
&
Franklik Incorporated. At the instance of the 1
st
applicant and the 2
nd
applicant the Master of the High Court removed the respondent from
office as a co-trustee on the 8
th
November 2006. In his place the Master of the High Court appointed
the 3
rd
applicant.
[10] The important
documents pertaining to the trust were under the control of the
respondent. Among them were bank statements.
It is undisputed that
the respondent received and expended trust money on behalf of the
trust.
[11] It is the case of
the applicants that the 1
st
applicants and the 2
nd
applicants were entitled to entrust the administrative management of
the affairs of the trust to the respondent; that they did not
thereby
abdicate their ultimate responsibility of control towards the trust;
that they are still committed to ensuring that such
control
obligations were properly carried out; that the respondent was
obliged to account to them accurately as his co-trustees;
that he was
bound to furnish them with a satisfactory and acceptable written
financial account and to openly debate such account
with them. All
this, they say, the respondent has failed to do to their
satisfaction. They claim that a substantial deficit exists.
[12] The respondent puts
up a defence that strictly speaking he is not legally obliged to
account to the applicants, or to provide
them with any detailed trust
account of his administrative management of the affairs of the trust
or for that matter to debate such
account with them. He also denies
that the first two applicants ever entrusted the management of the
affairs of the trust to him.
He maintains that notwithstanding his
stance that he cannot be lawfully compelled to do all these, he, at
any rate, had already
delivered a proper account as regards all the
trust money he once held in trust on behalf of the trust. He also
asserts that whatever
obligations he had towards the trust ceased
from the day he was released from office as a co-trustee on the 8
th
November 2006.
[13] In brief that is the
dispute I am called upon to adjudicate. An overview of caselaw
appears necessary. A trustee who is a lay-person
is entitled to
place the day-to-day running of the affairs of a trust in the capable
and competent hands of a fellow trustee with
the necessary expertise
–
AFRICAN
GUARANTEE AND INDEMNITY COMPANY LIMITED v THROPE
1932 NPD 559.
It is a practice not uncommon in the legal sphere of
administration of trusts for a trustee to delegate the daily
administration
of a trust to another – Honorés: S A Law of
Trusts, 5
th
Edition, par 201 by Cammeron
et
ali.
[14] As
regards the question of delegation the respondent expressed his
stance as follows:
¡°
Ek
het as trustee gedien kragtens en uit hoofde van die Trustakte (Sien
WMS2). Daarvolgens is die trustees gesamentlik in hulle amp
as
sodanig, by wyse van vergadering en kworum, verantwoordelik vir die
uitoefening van bovermelde bevoegdhede ten opsigte van die
trustbates, gelde ingesluit.”
What the respondent is
really saying here is that the 1
st
and 2
nd
applicants abdicated their obligations as trustees and left him with
no choice but to run the affairs of the trust all by himself.
He did
his best but they did virtually nothing. Now, they blame him for
what they neglected to do. They were not entitled to place
the
administrative burden exclusively on his shoulders.
[15] The argument is
unsound. First, because the deed of trust expressly recognises the
trustee’s right to delegate and it sanctions
delegation in respect
of the control and administration of the trust – vide page 40, para
11.1.3. However, such delegation of
one trustee’s responsibilities
to other trustees does not relieve the delegating trustee of his core
responsibility towards the
trust.
[16] Second, the first
two applicants were lay-persons in law. Their averment that they
placed the day tot day administration of
the trust affairs in the
hands of the respondent, whom they regarded as an expert is
understandable. He was, and still is, after
all, a qualify
professional, an attorney. He possessed certain legal expertise none
of them possessed,
AFRICAN
GUARANTEE AND INDEMNITY COMPANY LIMITED v THORPE
supra.
The 1
st
applicant was a police captain, the 2
nd
applicant a teacher. They contented that they were entitled to
exercise their office through their co-trustee who was an attorney
–
see
HARRIS
v FISHER NO
1960 (4) SA 855
(AD) at 857 e – f, where second delegate was an
accountant.
[17] Third, there is no
averment or even a mere suggestion in the respondent’s answering
affidavit that he ever complained to the
1
st
applicant or to the 2
nd
applicant that he was unable to run the day to day affairs of the
trust alone without their participation. The respondent cannot
now
be heard to say the 1
st
applicant and the 2
nd
applicant had neglected the affairs of the trust and that therefore
they cannot look up to him for their neglect to carry out their
obligations in collaboration with him.
[18] In my view the 1
st
and the 2
nd
applicants were entitled, through delegation, to entrust the daily
running of the trust affairs to the respondent by virtue of his
expertise. I find that they did and that through him they
participated in the administrative management of the trust. They did
not abdicate their ultimate responsibility as the respondent claims
they did. The respondent’s contention must therefore fail.
[19] As regards the duty
to account, the legal position of a trustee was set out as follows in
MIA v
CACHALIA
1934 AD 102
on page 107 per Beyers AJ:
¡°
Dit
was sonder twyfel die plig van die administrateurs om 'n juiste
rekening van die bate aan hulle toevertrou, te hou en sodanige
rekening aan respondent, desversoek, te lewer. Verder om aan hom op
versoek die nodige informasie te verskaf omtrent die wyse waarop
die
toevertroude bate, of sy aandeel daarin, beleg, of andersins mee
gehandel is, en waar die bate is en om hom volledige rekeninge
daaromtrent te oorhandig.”
[20] At common law a
trustee must maintain a correct account of the fund he or she
administers. In an appropriate case a co-trustee
is entitled to
demand from a trustee information about the state of the investment
of the trust or other dealings pertaining to it
- Honoré –
paragraph 206:
¡°
206. At
common law a trustee must maintain a correct account of the fund
administered. Though at common law a creditor – apart
from special
relationships such as principal and agent – has no right to an
account from a debtor, both a trust beneficiary and,
in an
appropriate case, a co-trustee, are entitled to demand from a trustee
information about the state of investment of and other
dealings with
the trust property and in particular information regarding the
claimant’s share of it.
It
is usual, subject to specific provisions in the trust instrument, for
accounts to be rendered annually. Provided this is done
in a
satisfactory manner, a beneficiary is not entitled to demand further
or intermediate accounts.
The
account rendered should give an accurate picture both of income and
expenditure during the period covered and of the state of
investment
of the trust fund during and at the end of the period. Entries
should be precise and detailed and dates should be given.
Unless
this is done, the trustee may be ordered to furnish a proper account
and to pay the costs of the relevant application out
of his or her
own pocket.
[21] Primarily the trust
beneficiary is the person with the strongest entitlement, if not the
right, to demand an account from a trustee.
Honoré: paragraph 207:
¡°
A
fellow trustee is also entitled to demand accounts, because he or she
has the duty of supervising the administration of the trust
as a
whole and is jointly and severally liable for the other trustee’s
defaults.”
In
SPIROS
v SPIROS
1932 WLD 207
on 210 De Wet J stressed the principle as follows:
¡°
I
think it requires no authority that his co-administrator is entitled
to receive from him a proper account of his administration.
It is
true that the co-administrator would be responsible to third parties,
but he is entitled to look to his co-administrator for
proper
accounts.”
[22] The applicants
contend on the one hand that they are entitled to demand an account
from the respondent. But the respondent contends
on the other hand
that they are not entitled to demand an account from him but from an
outsider, a third party who is not a trustee.
[23] The
entire edifice of the respondent’s stance is embodied in the
following passage:
“
Ek wys verder daarop dat die
Applikante die huidige trustee is en ek ‘n voormalige trustee wat
op 10 Oktober 2006 as trustee bedank
het. Ten einde aanspraak te kan
maak vir debatering van rekening, moet die Applikante ‘n gepaste
vertrouensverhouding, onderling
daartoe of ‘n statutêre
verpligting bewys. Ek het as trustee gedien kragtens en uit hoofed
van die Trustakte (Sien WMS 2). Daarvolgens
is die trustees
gesamentlik in hulle amp as sodanig, by wyse van vergadering en
kworum, verantwoordelik vir die uitoefening van bovermelde
bevoegdhede ten opsigte van die trustbates, gelde ingesluit. Daarin
word nêrens die bevoegdheid geskep vir een trustee om debatering
van
rekening van ‘n ander te eis, of vir die trust om daarop teenoor
huidige of vorige trustee aanspraak te maak nie.”
[24] Still
at the same paragraph he elaborates his stance further. He states:
“
Inteendeel ooreenkomstig klousule
8.4 van die Trust Akte is PKF Accountants and Business Advisors as
rekenmeesters aangestel. Ooreenkomstig
daardie klousule sal die
rekenmeesters jaarliks ‘n finansiële staat van die administrasie
van die trust opstel, en uiteensit alle
inkomste en uitgawes
onderskeidelik ontvang en aangegaan. Die trust is gevolglik regtens
nie op hierdie regshulp teenoor my geregtig
nie. Insovere die
Applikante ‘n verslag benodig van die hantering van die Trust se
finansiële aangeleenthede is die trust op
sy rekenmeesters
aangewese. Die blote feit dat die Eerste en Tweede Applikante hulle
pligte en verantwoordelikhede versuim het en
nou beweer hulle dit
betyds op my afgeskuif het (par. 5.1 van die Funderende verklaring
het betrekking) maak die Applikante regtens
nie geregtig op
gemeenregtelike debatering van rekening ten aansien van hulle
versuimde verantwoordelikhede met my nie.”
[25] The aforegoing
standpoint is legally untenable. In terms of clause 8.4 of the
trust instrument, the appointment of external
accountant was a matter
which required the collective decisions of all the three trustees,
namely the 1
st
applicant, 2
nd
applicant and the respondent. It reads:
“
Die TRUSTEES mag, indien hulle so
besluit, van tyd tot tyd ‘n Rekenmeester aanstel om as die
Rekenmeester van die Trust op te tree
en om die funksies wat hierna
in hierdie paragraaf omskryf is, uit te voer..”
[26] The respondent’s
averment in connection with PKF Accountants and Business Advisors are
somewhat vague. For instance, he does
not say where, when and at
what meeting of the trustees such decision was taken. On the
contrary the 1
st
applicant specifically states that he and the 2
nd
applicant knew nothing about the appointment of such accountants;
that they met those accountants for the first time at meeting
held at
their attorney’s offices in Bloemfontein on the 17
th
October 2006 and that the appointment of those accountants was a
unilateral decision of the respondent. I am of the opinion that
the
version of the applicants is more satisfactory than that of the
respondents. Therefore I find that the appointment of PKF
Accountants
and Business Advisors was the unilateral decision of the
respondent. Such a decision violated clause 8.4. It follows
therefore
that the respondent cannot pass the bug to the accountants
whose appointment was not properly validated by the requisite joint
decision
of the trustees.
[27] Seeing
that the accountant was appointed by the respondent alone, it stands
to reason that the accounting statements he prepared
in the name of
the trust could only have been prepared on the strength of the
particulars and details the respondent himself had
provided. Such
accounting statement would in a way constitute hearsay in respect of
what the respondent alone conveyed to the accountant
in the absence
of his co-trustees and without their prior knowledge.
[28] It is crystally
clear from the authorities already cited that all the stakeholders
such as the trust beneficiary, the former
co-trustees, the 3
rd
applicant as well as the substitute new trustee and of course, the
Master are entitled to demand an account directly from the respondent
and not from the thirds. The respondent’s contention to the
contrary is, on the facts, not a sound proposition in law. His
responsibility
to account did not evaporate when he resigned but when
he was removed from office. His contention to the contrary is also
untenable.
[29] The respondent’s
main ground of resistance to this application has been that he is not
legally bound to account to the current
trustees. But in what
resembles an alternative ground of defence, the respondent contends
that, at any rate, he volunteered to account
to the applicants in
respect of the trust funds and that he has, in fact, done so. The
respondent relies on a written document which
he sent to the attorney
for the applicants on the 18
th
April 2005. Such a document appears on page 208 – 212 of the
record. It is described as “geskrewe uiteensetting” and it
marked
annexure wms 34(a).
[30] The following
aspects of the respondent’s written account were seriously attacked
and criticized by counsel for the appellants.
As regards paragraph 1
on page 208 it does not appear to which financial institution the
banking account of the trust was held from
the 19
th
April 2005 until the 8
th
November 2006 when the respondent was released from office.
The respondent’s
account indicates that the trust bank account held at the First
National Bank earned interest in the sum of R727,17.
The precise
period over which the trust bank account earned such interest is not
reflected. Similarly, the rate of interest is
also not indicated.
The respondent’s written account is silent as to further investment
details of the interest, assuming such
interest was earned before the
19
th
April 2005.
[31] As regards paragraph
3, page 208 the respondent’s written account shows that only two
amounts were received in favour of the
trust in the amount of R722
353,00 from Wetgewer Provident Fund plus R28 000 from an undisclosed
source. The total credits is shown
as R750 353,00. However, the
affidavit of Ms. Van Coppenhagen of Messrs Honey Attorneys suggests
that there should be yet another
credit entry besides the two. The
omitted credit entry should be and amount of R205 000,00 which money
had originated from the deceased
estate of “The Late Werner Soekoe”
which funds were also initially entrusted to the respondent as the
first executor. The funds
are nowhere accounted for in the
respondent’s written account. The money was deducted from the
deceased estate account to repay
a loan which the 1
st
applicant and the 2
nd
applicant owed to the trust.
[32] On the debit side of
the respondent’s written account a number of entries appear. The
identities of the payees are regrettably
not shown - let alone the
purpose for which such funds were expended. Against one payment (R13
878,19) the letters “G & F”
appear. The payment was made on
8
th
November 2004. It baffles one to figure out what these letters
really symbolise. But the most disturbing debit is one of 30
November
2004 in the amount of R28 000,00 against which the word
“Fout” is written. This would mean that the debit entry was an
error.
The problem is compounded by the absence of any subsequent
entry whereby the erroneous debit entry was reversed. If the money
was
inadvertently paid out it should be added back to increase the
credit balance. Such an amount does appear under the receipts. But
the problem is that it was shifted around without any sensible
explanation.
[33] The respondent’s
written account suggests that there existed another account at the
First National Bank in the name of the
trust. It appears that such
an account was closed on 18 April 2004 (R453 411,15) and the funds
transferred to a certain money market
investment merely described as
“Geldmarkbelegging” account number 620801191564. Precisely at
which bank such an investment was
held does not appear. No essential
details of such an investment are spelt out. It is unclear for
instance, at what rate of interest
the funds were invested and what
the maturity date of the investment was.
[34] The trust appears to
have had another current account at Absa Bank. The respondent’s
notes pertaining to such a current account
are so cryptic that they
make incomprehensible reading – Vide paragraph 1, page 209. The
total sum of the three receipts was R276
364,41.
[35] Certain funds were
placed per internet. The reason for such internet dealings is
obscure – vide paragraph 2, page 209.
Certain
amounts of money were indicated as money received in favour of the
trust. But two essential details are lacking. In the
first place
the respondent did not specify the purpose for which the receipts
were made. In the second place he neglected to specify
the trust
account which he credited with such funds – vide paragraph 4, page
209.
Again
there were funds paid out and the trust account debited. But there
were no explanatory notes made indicating the underlying
purpose for
the payments so made.
[36] Apparently the trust
account had a credit balance of R188 857,54 at the time it was
closed. The amount of R159 500,00 was apparently
transferred to a
money market account at Nedbank Limited but there are huge
discrepancies in respect of both bank accounts. Sadly
no further
details of the closed account are indicated. The explanatory notes
relating to a number of entries of the “afrekeningstaat”
are
difficult to understand. In addition to all this, the accounting
statement in question contains explanatory notes of bank charges,
interests and debit entries. All of these are not sufficient
explained – vide page 210. Worse still the respondent’s
accounting
statement is not verified by any supporting vouchers –
vide page 211 - page 212.
[37] Mr. Van Rooyen,
counsel council for the applicants, argued that the respondent’s
written account was inadequate and defective
in many respects as
outlined herein. Therefore he submitted that it could not at all be
contended, as the respondent contended,
that the respondent had
delivered a proper account of his management which was sufficiently
supported by appropriated vouchers.
In my opinion the submission has
substance. The respondent’s written account contains several
entries, debits as well as credits
– which were not explained in a
reasonably adequate and satisfactory manner. In the circumstances I
find that the respondent has
indeed failed to render a proper account
to the applicants.
[38] The learned authors
of Honore’s
supra
at paragraph 206 outline the basic requirements of a trustee’s
account as follows:
¡°
The
account rendered should give an accurate picture both of income and
expenditure during the period covered and of the state of
investment
of the trust fund during and at the end of the period. Entries
should be precise and detailed and dates should be given.
Unless
this is done, the trustee may be ordered to furnish a proper account
and to pay the costs of the relevant application out
of his or her
own pocket.”
I cannot agree more.
See in general also an instructive article –
Authorisation
of Trustees in terms of The Trust Property Control Act
– by M J de Waal:
2000 THRHR 472.
[39] In
MIA
v CACHALIA
supra
on page 107, Beyer JA after analysing a document purportedly
delivered as an accounting statement said:
¡°
Dit
is onnodig om te beslis of “A” wel ‘n rekening is, of nie. Dis
genoeg om te sê dat
ex
facie
dit total onvoldoende
en onbevredigend is, en geensind ‘n juiste en behoorlike rekening,
en die rekening waartoe respondent onder
die omstanighede geregtig
is, is nie.
Die administrateurs moes aan
respondent rekening en verantwoording oor die periode van Junie 1923,
tot datum van rekenskap, doen.
“A” gee voor tot 26 Maart 1932, te
wees, maar daar is geen enkele datum vir enige pos nie, en dit nogal
oor poste en transaksies
wat tot 26 Maart, 1932, ‘n tydperk wat
byna nege jaar beslaan het, loop.
Nagenoeg al die poste is vaag, duister
en onduidelik en tasbaar vereis byna almal aanvulling en uitlegging.
So te sê geeneen is
enigsins redelik gespesifiseer nie. Blykbaar
word geen inkomste van bate aangetoon nie, alleen uitgawe; en dit
word ook nie aangetoon
uit watter bron die uitgawe gedek is….”
[40] The respondent
contented that he has made the bank statements relating to the trust
available to the attorneys of the applicants.
The allegation is
denied by the applicants through their attorney. He, attorney Herbst
averred that the bank statements which he
received from the
respondents were in fact copies of the current account of the
deceased estate: The Late Werner Soekoe and not Enrique
Soekoe’s
Trust. This averment is persuasive. If it is accepted as true, and
I think it should, then it necessarily follows that
the respondent
has in his possession the original bank statements relating to the
trust. Notwithstanding demand the respondent has
so far failed to
place the applicant’s in possession thereof. He is obliged to hand
such bank statements over to the attorneys
of the applicants, Hill
McHardy Herbst Incorporated.
[41] In his answering
affidavit (vide page 122: 2.9) the respondent referred to “annexure
l” and “annexure m” which were attached
thereto. The two
annexures were financial statements prepared by Messrs PKF
Accountants and Business Advisors. These statements
appear on page
172 – 187. On behalf of the respondent Mr. Benade submitted that,
through such financial reports, the respondent
had rendered a proper
trustee’s account to the applicants. He made the submission
without conceding that the respondent was legally
obliged to account
to the applicants.
[42] Mr. Van Rooyen
differed. He submitted that the respondent’s answering affidavit
together with its aforesaid two annexures
were not all satisfactory
and that it did not comply with the respondent’s responsibility
towards the trust.
The
critique revolved around the following aspects: Administrative costs
were paid; advances were made to the beneficiaries and
funds were
loaned to the Soekoe couple – vide page 177 in respect of costs,
page 187 and 185 in respect of the advances and page
178 and 186 in
respect of loans. It is uncertain why such costs, advances and loans
were paid. The financial statements relied
upon were not validated
by any supporting vouchers. It was indicated that the loans were
unsecured and interest free. But no usual
conditions of repayment
were spelt out.
[43] The two financial
statements by the accountants only covered the period 28 February
2005 to 28 Februarie 2006. It must be borne
in mind that the
respondent continued to function as a trustee until the 8
th
November 2006. The period between 28 February 2006 and 9 November
2006 was ignored by the said accountants. Therefore there is
no
account for a period of 8 months, 1 week, 1 day. Herein lies a
serious defect in the financial statements the respondent equates
to
a proper trustee’s account. It cannot be.
[44] I turn now to the
issue of debating the trustee’s account. There is no need to dwell
on this issue anymore. The authorities
are in favour of the
contention of the applicants that one trustee is entitled to call
upon a fellow trustee to have a trustee account
debated – vide
Honore’s
supra
at 207 and the authorities there cited.
[45] It was contended on
behalf of the applicants that even if the financial statements
prepared by the said accountants were regarded
as adequate account
which showed income and expenses, the respondent had not acceded to
the request of the applicants to have such
an account debated.
Indeed the applicants are entitled to know why every entry was made
and if they are not satisfied with the answers
given during the
course of the debate or at any other time they are also entitled to
make further enquiries in connection with the
entry concerned.
Moreover, the applicants are also entitled to debate the supporting
vouchers to verify any income or expense.
[46] In the replying
affidavit the 1
st
applicant demonstrated, by means of a simple calculation made on the
strength of the information provided by the respondent, that
there
appears to be a shortfall of R147 475,53 which the respondent cannot
explain.
[47] In the circumstances
I find that the applicants have made out a case for the relief
sought. They are entitled to demand a trustee
account from the
respondent; the respondent is obliged to render such a trustee
account to the applicants; the respondent has failed
to render such
an account notwithstanding the request of the applicants; the
respondent refuses to have the required account debated
and that
there is no good cause shown why the respondent should not be
directed to pay the costs of this applicants.
[48] The respondent was
allowed to duplicate and the applicant to triplicate. The
respondent’s formal application to duplicate
was filed under case
number 2227/07. The real purpose of such an application appears to
be twofold. I deal with the two aspects
below.
[49] In the first
instance the respondent attempted to show that he was not accountable
for the entire period from the date he was
appointed a trustee on 13
August 2004 until the date he was removed from such office on 8
November 2006. He avers the following
in paragraph 6 of his
duplicating affidavit:
¡°
Ten
opsigte van die tydperk
10
Oktober 2006
tot
8
November 2006
is Eerste en
Tweede Applikante in die aansoek self verantwoordelik as enigste
Trustees en kan ek nie vir rekenskap van versoek word
nie.”
[50] I deem it
unnecessary to comment any further on this contention. I have
already found that the respondent’s resignation on
10 October 2006
did not legally relieve him of his duties as a trustee. He remained
legally accountable to his fellow trustees for
the entire period
until the Master of the High Court officially removed him from the
office as a trustee. The Master has the power
to call upon a trustee
to account – section 16(1). The respondent’s duties did not fall
away when he resigned, but when he was
replaced with the third
applicant.
[51] Implicit in the
averments the respondent makes in par. 6 of his duplicating
affidavit, is a tacit admission that he did not render
a proper and
adequate account at least in respect of the period dating from 29
June 2006 until 8 November 2006 both dates inclusive.
A trust
reconciliation marked annexure “n” together with the vouchers
marked annexures “p”, “r”, “t”, “s” were
attached to
the duplicating affidavit. The most glaring shortcomings of the
respondent’s alleged final account are that:
The respondent does not
explain why the account together with the additional annexures was
not rendered before his answering affidavit
was filed;
The respondent does not
explain why the account did not form part and parcel of his
answering affidavit;
The respondent does not
explain why only now he renders the account by way of a duplicating
affidavit.
[52] To the extent that
the respondent’s final account, annexure “n”, does not take
into account the period between 10 October
2006 until 8 November
2006, it remains incomplete and accordingly cannot be regarded as a
final account as the respondent would have
it –
MIA
v CACHALIA
,
supra
on p. 107.
[53] In the second
instance, the respondent contrives, through this process of
duplication, to make a new case. He now contends that
the applicants
wrongly followed the civil litigation process whereas clause 9 of the
deed of trust requires disputes to be resolved
by way of a private
arbitration process.
[54] The respondent is
belated. This is a perfectly valid point he should have raised by
way of a special plea at the first available
opportunity he had to
resist the application by the fellow trustees. He did not. There
was no reference to arbitration in his answering
affidavit. He
cannot now raise it by way of duplication. It is impermissible to do
so now because duplication is allowed with the
leave of the court
only to answer new matters emerging from the replying affidavit.
There was no mention of the word arbitration
in the replying
affidavit filed on behalf of the applicants. The respondents must
fall or stand by the averments contained in his
answering affidavit.
He cannot plead a new defence in his duplicating affidavit since the
door has already been closed.
[55] It follows from the
above that where, as in the instant case, a respondent does not
properly object to motion procedure and well
in an answering
affidavit, it can be readily accepted that such respondent does not
insist on arbitration procedure and that respondent
is quite happy to
follow the dispute resolution procedure chosen by his or her opponent
as if there existed no option of arbitration
procedure. The point
was illustrated by way of an analogy in the case of
PAREKH
v SHAH JEHAN CINEMAS (PTY) LTD AND OTHERS
1980 (1) SA 301
(D) at 304 e – g per Didcott J.
[56] In the instant case,
there is really no arbitration dispute in terms of the trust
instrument. On his own version as now embodied
in the duplicating
affidavit, the respondent clearly shows that he did not render the
required account to the applicants. See Butler
& Finsen,
Arbitration
in South Africa – Law and Practice
,
1
st
edition at par. 4.1.1. In my view, the respondent’s belated
request to stay the motion proceedings so that the applicants can
initiate arbitration proceedings
de
novo
will not be compatible with the exercise of a true judicial
discretion. There exists a reasonable and probable cause to fear
that
the trust will suffer untold harm if the respondent’s request
is granted.
[57] In the light of the
reasons given herein the court application proceedings initiated by
the applicants cannot be brought to a
sudden standstill now. It is
too late to halt the process. I cannot fairly send the parties to
the drawing board at this juncture.
The respondent willingly walked
down this avenue of dispute resolution. Now there is no turning
back. This is the last mile of
the journey.
[58] In the notice of
motion the applicants prayed that the debate relating to the
trustees’ account be held at the offices of their
attorneys. I
consider it unfair to the respondent to direct him to attend the
debate at such a proposed venue. The playing field
must be seen to
be level. Levelling the playing field, demands that the trustees’
account be debated at a neutral venue. Certainly
the office of the
applicants’ attorney does not qualify as a conducive and neutral
arena for the proposed debate of the account.
I am certain that Ms
Molapo, the registrar of this court, will be able to accommodate the
parties to hold such debate, if not in
the advocates’ dressing
room, then in one of the court halls.
[59] In the circumstances
the following order:
59.1 The respondent must
render to the applicant a detailed and specified account of all the
funds he received or expended on behalf
of Enrique Soekoe Trust No.
IT1326/04 for the period commencing on the 13
th
August 2004 and ending on the 8
th
November 2006, which account must be properly and adequately vouched
by means of supporting documentary invoices as far as it may
be
necessary and possible, and well within 28 days of this order.
59.2 The respondent must
thereafter make himself available with all his records, accounts,
personnel and
precarii
to debate the account of his trust administrative management together
with all the annexures thereto as well as the supporting vouchers
rendered in terms of paragraph 60.1
supra
with the applicant, their advisors and precarii at the advocates
dressing room of the Free State High Court in Bloemfontein on a
suitable date to be arranged and agreed upon between the attorney in
collaboration with the registrar of the applicants and the
respondent’s
attorney which date of debate must be agreed upon
within 30 days after the rendering of the trustee’s account in
terms of paragraph
60.1
supra.
59.3 The costs of this
application as incurred by the applicants shall be borne and paid by
the respondent on the scale as between
party and party. Such costs
shall include the costs pertaining to the application filed under
case number 2227/2007.
59.4 The applicants are
hereby authorised, should it become necessary in the future, to
approach this court on the same papers duly
amplified for further
relief in case the respondent fails to comply with this court order.
_______________
M.
H. RAMPAI, J
On
behalf of the applicants: Adv. P. C. F. Jordaan SC
Instructed
by:
Hill,
McHardy & Herbst
BLOEMFONTEIN
On
behalf of the respondents: Adv. H. J. Benade
Instructed
by:
Goodrick
& Franklin Inc.
BLOEMFONTEIN
/em