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[2024] ZAMPMBHC 1
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Mohle N.O and Others v R.L.N and Another (A43/2023) [2024] ZAMPMBHC 1 (9 January 2024)
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THE
HIGH COURT OF SOUTH AFRICA
MPUMALANGA
DIVISION, MBOMBELA MAIN SEAT
CASE
NO: A43/2023
(1)
REPORTABLE: NO
(2)
OF INTEREST TO OTHER JUDGES: NO
(3)
REVISED.
DATE:
09 January 2024
SIGNATURE
In
the matter between:
NICOLA
GIULIA KATHLEEN MOHLE N.O.
FIRST APPELLANT
MARK
DARYL MCLEAN MASON N.O.
SECOND
APPELLANT
ZELDA
SHEIN N.O.
THIRD APPELLANT
WEINRICH
GERBER DE RUITER N.O.
FOURTH
APPELLANT
JASON
RYAN MOHLE N.O.
FIFTH
APPELLANT
and
R[...]
L[...]N[...]
FIRST
RESPONDENT
R[...]
L[...]N[...] N.O.
SECOND
RESPONDENT
JUDGMENT
RATSHIBVUMO ADJP:
Delivered:
This judgment was handed down
electronically by circulation to the parties' representatives by
email. The date and time for hand-down
is deemed to be 10H00 on 09
January 2024.
[1]
It
is not enough for agent to say: “here are my books and vouchers
- you are free to use them to make up your own accounts.”
In
addition he is obliged to allow inspection by the principal of all
relevant vouchers and entries in the agent's books, this
duty being
in no way affected by an action pending between the principal and the
agent and by the fact that the principal could
obtain similar rights
under the Rules of Court.
[1]
Background
.
[2]
This appeal involves the duty of the
trustees towards the beneficiaries of a trust. In 2020, the First
Respondent, acting in her
representative capacity on behalf of her
minor child who is the capital beneficiary of the trust and in her
capacity as the income
beneficiary of the trust and also the
executrix of the deceased’s estate, launched an application in
this Division under
case no. 3278/2020, for an order directing the
trustees (the Appellants) to provide her with
inter
alia
, the financial statements of a
trust for the year ending 2019. An order to that effect was granted
by agreement between the parties
on 18 January 2021. On 17 March
2021, the Appellants furnished the First Respondent with the trust’s
financial statements.
Upon scrutinising the furnished statement, the
First Respondent realised that there was a loan amount reflecting the
amounts different
to what she knew. The loan was made in favour of
her deceased husband, M[...] N[...] and her minor child, N[...]
N[...].
[3]
According
to the First Respondent, she knew the loan amount of R4 200 000.00
whereas the amount reflected in the furnished
financial statement was
R3 400 000.00, about R800 000.00 less than what she
knew. When she asked for supporting
documents making up the amount in
the financial statements, the Appellants refused to provide the same.
The Respondents then approached
the court seeking an order in which
the Appellants are directed to furnish them with “
any
and all supporting documents in respect of all loan accounts on
behalf of and against the N[...] Trust for the year ended 29
February
2020, including but not limited to all ledgers, journals and
explanatory notes,”
[2]
which order was granted by the court
a
quo
on 26 May 2022. It also refused leave to appeal but appeal to the
full court was allowed by the Supreme Court of Appeal (the SCA).
Grounds of appeal.
[4]
Grounds on which the application for leave
to appeal was launched and granted by the SCA can be summarised as
follows. It was submitted
that the order of the court
a
quo
, in terms of which the Appellants
were ordered to deliver “
any and
all supporting documents in respect of all loan accounts on behalf of
and against the N[...] Trust”
is
unenforceable for reason that the description of the documents sought
to be delivered is broad, wide and vague. It was argued
in this
regard that the Appellants run the risk of being in contempt of court
as they are incapable of complying with the court
order.
[5]
The Appellants further challenged the
Respondents’
locus standi
to apply for the delivery of the said documents. They argue that the
court
a quo
should not have found that the Respondents had the necessary
locus
standi
. It was further submitted that
the court
a quo
erred in ordering what amounts to discovery while there was no
pending action between the parties. According to the Appellants,
the
Respondents should rather have applied for an order compelling them
to account, which they did not do.
[6]
The
appeal is opposed by the Respondents who relied on
Doyle’s
[3]
judgment in arguing that the duty to account and to give detailed
statements arises from the fiduciary responsibilities the Appellants
have toward the Respondents being the executrix of the deceased’s
estate and the beneficiaries of the trust. The Respondents
further
argue that in agreeing to furnish the statement of account in the
earlier judgment, the Appellants conceded that the Respondents
were
entitled to it and therefore, had
locus
standi
not only to apply for it, but to also access the supporting documents
thereto.
[7]
It is common cause between the parties that
the order by the court
a quo
is equivalent to discovery order, which a party would ordinarily only
be entitled to, when there is a pending action. It is also
common
cause that
in casu
,
there is no pending action between the parties. According to the
Founding Affidavit, the Respondents required the supporting documents
in order to quantify and determine the amounts to claim from the
Appellants in an action yet to be launched. The correctness of
the
Doyle’s
decision was not challenged by the Appellants. The facts therein were
only distinguished from the facts
in
casu
with the Appellants arguing that
unlike in
Doyle
,
the application before the court
a quo
,
was not an application to compel them to account.
Discussion.
[8]
Contrary to the Appellants’
submission, this case appears to have a lot in common with
Doyle
.
In
Doyle
,
the plaintiff's mother had created a trust making her (the plaintiff)
the income beneficiary. The defendant was appointed as co-trustee
in
1951 and as sole trustee in 1965. The trustees were entitled to
realise all of the assets and re-invest the proceeds whenever
and
however they deemed fit. The plaintiff's mother died in
1994, whereupon the plaintiff became entitled to the trust
capital.
The plaintiff brought an action, averring that the defendant
owed him a duty to account fully for what it had done as trustee
since
being appointed as such.
[9]
The plaintiff's main claims were thus for
(1) accounting from the defendant setting out,
inter
alia
, each and every asset the trust
owned at the time the defendant was appointed the trustee as well as
an accounting of every transaction
concluded or transacted on behalf
of the trust from the time the defendant was appointed the trustee
and (2) debatement of the
account and payment of the amount found to
be due to the plaintiff.
[10]
The defendant's answer to the claims was
that it was the income beneficiary alone, and not the plaintiff, who
had been entitled
to any account of the administration of the
trust prior to her death. The defendant averred further that, that
right ceased
on her death, and that the plaintiff was entitled to an
accounting beginning from the date of her death. The defendant thus
contended
that its account need only begin with no more than a
description of the trust assets in its trust at the date of the
income beneficiary's
death. After summons, but prior to the trial,
the defendant made discovery of documents reflecting its
administration of the trust
assets, but persisted in its refusal to
account 4beyond the production of the statements.
[11]
Slomowitz held,
“
At
this stage of the case I am concerned only with the first prayer. It
involves the delivery of an appropriate account. The proper
practice,
with remedies of this kind, was adverted to in detail by the H
highest Court in
Doyle
and Another v Fleet Motors PE (Pty) Ltd
1971
(3) SA 760
(A)
.
Holmes JA pointed out (at 763) that, if it appears that the plaintiff
has already received an account, which he avers is insufficient,
the
Court may enquire into and determine the issue of sufficiency, so to
decide whether to direct an account which is in fact sufficient.
In
addition, the learned Judge drew attention to the possibility of
supererogation in this aspect of the matter and the element
of
debate. Where they are correlated, a court might, in an appropriate
case, find it convenient to undertake both enquiries in
one hearing.
There is no hard and fast rule. I enjoy a discretion to deal with
this matter with such flexibility as practical justice
requires.
Instances in which accounts rendered were held to be insufficient are
to be found in the various judgments given in
Krige
v Van Dijk's Executors (supra)
,
as well as that of the same Court in
Mia
v Cachalia (supra)
.
In the present case no proper account has been delivered. What has
been given instead is discovery. If an account is due at all,
then
that is wholly inadequate.”
[12]
It appears from the Appellants’
submission that the duty to account is not questioned, hence they
agreed to a judgment by
agreement when the application was made
initially. The Appellants further submit that instead of bringing a
new application, the
Respondent should have brought an application to
enforce compliance with the order in that case, if the furnishing of
supporting
documents is part of the accounting that was ordered by
agreement. This court has to decide if the application for the
provision
of the supporting documents is different from a request to
account.
[13]
The Appellants appear to bear a view that
the duty to account (or to furnish statements of account), which they
already agreed to
in the initial order, does not include fully
accounting for the transactions therein, hence the statement in the
opening paragraph,
“
here are my
books and vouchers - you are free to use them to make up your own
accounts
.”
[14]
As
for the argument that the Respondents should have applied for an
order to account instead, the Respondents submitted that the
suggested prayer in a claim for statement of account, according to
Amler’s,
[4]
is that
the
defendants be ordered to render a full account, supported by
vouchers, alternatively render a true and proper account with
substantiating documents.
They therefore submitted that the wording of the relief sought by the
Respondents in the Notice of Motion is similar to the suggested
prayer in Amler’s. The Appellants appear to be of a misguided
view that if the Respondents could have achieved their remedy
in a
particular way, the other avenues are therefore closed and
unavailable to them.
[15]
The court
a
quo
agreed with the Respondents’
assertion above and quoted from
Doyle
with approval where it was held,
“
And
so, at last, to matters of principle. The right to an account is at
once two distinct concepts. It is both substantive
and procedural. It
is a right as well as a remedy. The duties of good faith, which are
owed by an agent to his principal, are no
different in kind to those
which fall on a trustee. They are set out in De Villiers and
Macintosh
Agency
3rd ed at 322 ff…
Inextricably bound up
with this by no means exhaustive compendium of obligations is the
agent's duty to
give an accounting
to his principal of all
that he knows and has done in the execution of his mandate and with
his principal's property.
I have chosen to
emphasise the obligation to
give an accounting
because I in no
way read the authorities to contain this duty within generally
accepted bookkeeping principles. That is the least
of it. What is
owed is, as I have already said, a substantive legal duty. The agent
must explain himself. He must justify his actions
and conduct. If
this, by circumstance, falls to be done in Court, then, to put it in
evidential terms, he bears the
onus
of demonstrating the
proper discharge of his office. That, in turn, expresses the remedy
as opposed to the right.
It follows that one of
the substantive duties falling on an agent is, in
Silke's
words (at 331),
'to
maintain
accounts, i.e. he must at all times be ready with correct accounts of
all his dealings and transactions carried on during the currency
of
the mandate.
It is
not enough for him to say: ''Here are my books and vouchers -
you are free to use them to make up your own accounts.''
In addition,
he is obliged to allow inspection by the principal of all relevant
vouchers and entries in the agent's books, this
duty being in no way
affected by an action pending between the principal and the agent and
by the fact that the principal could
obtain similar rights under the
Rules of Court.
”
[5]
[16]
The court
a
quo
held that the Appellants tried
desperately to cling to every excuse possible to avoid having to
account to the Respondents, despite
the fiduciary duty they have
towards them as the trustees. It concluded as such, rightly so in my
view, that the fiduciary relationship
between the trustees and the
beneficiaries, placed a duty and responsibility on them to account.
[17]
As for the
locus
standi
, I can find no reason advanced
by the Appellants on why it is suggested that the court
a
quo
erred in finding that the
Respondents had the requisite
locus
standi
to bring the application. The
court
a quo
concluded that for the reason that the First Respondent acted in dual
capacity, being the representative of her minor child and
in her
capacity as the executrix of her deceased husband estate, she had the
locus standi
to bring the application. I find no fault in this reasoning.
[18]
The last ground of appeal deserving some
attention is the argument to the effect that the order by the court
a
quo
is unenforceable in that the
description of the documents sought to be delivered is broad, wide
and vague. In this regard, the
court
a
quo
ordered the Appellants to hand over
“any and all supporting documents in respect of all loan
accounts on behalf of and against
the N[...] Trust for the year ended
29 February 2020, including but not limited to all ledgers, journals
and explanatory notes.”
The court
a
quo
concluded, rightly so in my view,
that paragraph 1 of the Notice of Motion describes the specific items
of the financial statement
wherein the supporting documents were
required being “
items 4, 9 and 10
of the financial statements of the N[...] Trust for the year ended 29
February 2020
.”
[19]
It is also very clear from the founding
affidavit that all that the Respondents needed were all the documents
used to calculate
the amount of the loans reflected in the financial
statements, nothing more. I do not understand how it is suggested
that the documents
which were used to calculate these amounts can be
said to be broad, wide and vague for purposes of complying with the
court order,
whereas they were not this broad or vague for purpose of
calculating the financial statement. My understanding of the word
“any”
is that the Respondents did not know what
supporting documents were used and they allowed the Appellants to
provide any such documents,
provided they were used in the
calculations of the loan amounts reflected in the financial
statements. The word “all”
simply refers to every
document that was used in the calculations.
[20]
It is possible that the Appellants could be
concerned that the documents are huge or bulky just as the court
a
quo
concluded. However, that is not
what the Appellants averred. “Wide and vague” does not
mean it is bulky, and such cannot
be a reason for noncompliance with
a court order. The Appellants’ submission in this regard is
without merit and stands to
be dismissed.
[21]
There is equally no reason to interfere
with the order of the court
a quo
on costs
[22]
For the aforesaid reasons, I propose the
order in the following terms.
22.1
The appeal is dismissed with costs, such
costs to include the employment of two Counsel by the Respondents,
one being a Senior (where
so employed).
TV RATSHIBVUMO
ACTING DEPUTY JUDGE
PRESIDENT
MPUMALANGA DIVISION
I agree.
Z GUMEDE
ACTING
JUDGE OF THE HIGH COURT
MPUMALANGA DIVISION
I agree and it is so
ordered.
J ROELOFSE
ACTING JUDGE OF THE
HIGH COURT
MPUMALANGA DIVISION
FOR
THE APPELLANTS:
ADV
R RAUBENHEIMER
INSTRUCTED
BY:
SEYMORE
DU TOIT & BASSON ATTORNEYS
NELSPRUIT
FOR
THE FIRST RESPONDENT:
ADV
AF ARNOLDI SC
ADV
C DE VILLIERS
INTRUSCTED
BY:
DELBERG
ATTORNEYS
C/O
VAN ZYL LE ROUX ATTORNEYS
NELSPRUIT
DATE
HEARD:
13
OCTOBER 2023
JUDGMENT
DELIVERED:
09
JANUARY 2024
[1]
Slomowitz
AJ in
Doyle
v Board of Executors
1999 (2) SA 805
(C) at 814A-B.
[2]
See
Notice of Motion on p. 1-2 of Vol I of the paginated bundle.
[3]
See
Doyle
v Board of Executors supra
[4]
Amler’s
Precedents of Pleadings, 7
th
Edition, p.2-3. See the following authorities referred to in
Amler’s:
Doyle
v Fleet Motors PE (Pty)
Ltd
[1971]
3 All SA 550
(
A),
1971 (3) SA 760 (A),
Narayanasamy
v Venkatrathnam
1979 (3) SA 1360
(D) and
Field
NNO v Compuserve (Pvt) Ltd
1991 (4) SA 490
(Z)
[5]
See
para 11 of the judgment of the court a quo on p. 174 of the
paginated bundle – Vol III, where the court quoted from
Doyle
(supra)
,
from p. 813D.