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2024
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[2024] ZAFSHC 225
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Hartmann and Others v Hacker N.O and Others (4720/2023) [2024] ZAFSHC 225 (30 July 2024)
IN
THE HIGH COURT OF SOUTH AFRICA
FREE
STATE DIVISION, BLOEMFONTEIN
Not
reportable
Case
no: 4720/2023
In
the matter between
TRISTAN
HARTMANN
FIRST
APPLICANT
JEAN-GABRIEL
HARTMANN
SECOND
APPLICANT
MARK
KEISER HARTMANN
THIRD
APPLICANT
And
INGE
JOANNE HACKER NO
FIRST
RESPONDENT
TIMOTHY
JAMES HACKERS NO
SECOND
RESPONDENT
WENDY
FIONA HAY NO
THIRD
RESPONDENT
THE
MASTER OF THE HIGH COURT BLOEMFONTEIN
FOURTH
RESPONDENT
Coram:
Mgudlwa AJ
Heard:
22
February 2024
Delivered:
This judgment was handed down electronically by
circulation to the parties’ representatives by email and
released to SAFLII.
The date and time for hand-down is deemed to be
15h30 on 30 July 2024.
Summary:
Redistribution of trust assets
– Trustees required to comply with clause 12(1) of the Trust
Deed of the Hartmann Family Trust
– issue is whether the first
and second respondents have
locus standi
in the context of the Distribution Event – whether the
confirmatory affidavit of the third applicant validates the founding
affidavits of the first applicant in respect of distribution of the
capital assets of the trust.
ORDER
Application
is dismissed with costs on a Rule 67A on scale B.
JUDGMENT
Mgudlwa
AJ:
INTRODUCTION
[1]
This is an application for an order to compel the first to third
respondents, the trustees of
the Hartmann Family Trust (the Trust),
to distribute Trust income and capital in accordance with the terms
of the Trust Deed. In
the alternative, the applicants seek an order
terminating the Trust in terms of s 13 of the Trust Property Control
Act 57 of 1988
(the Act), together with an order directing the first
to third respondents
to distribute the
Trust income and capital in accordance with the trust deed.
[2]
In 1983, Faith and Johan Hartmann established a Hartmann Family
Trust. Both founders are survived
by two children, Inge Hacker –
first respondent (Inge) and Mark Hartmann – third applicant
(Mark). Johan Hartmann passed
away on 12 January 2012, followed by
the passing of Faith Hartmann on 22 July 2021. They both established
a family trust which
was intended to hold assets and distribute the
income and capital of those assets, for the benefit of their family.
After the death
of Faith, six months lapsed with no distribution of
the trust capital taking place; this accordingly prompted the
applicants to
lodge this application.
[3]
The central issue for determination in this
application is whether the trustees have failed to comply
with the
provisions of clause 12.1 of the Trust Deed and whether the first and
second applicants have
locus standi
to institute this
application. Clause 12.1 of the Trust Deed provides as follows:
‘
12.1
The trust capital shall be distributable 6 months after the death of
the survivor of Johan and Faith
(the date on which the period of 6
months expires being “the distribution event”), provided
that if the trustees in
their absolute discretion consider that there
are good and sufficient reasons for an earlier or later date being
regarded as the
distribution event they may in their discretion
determine an earlier date or (before the expiry of the said period of
6 months)
a later date which is no later than 50 years after the date
of the death of the survivor of Johan and Faith and the date so
determined
shall then be deemed to be the distribution event.’
[4]
The provisions of clause 12.3 of the trust deed deals with the
occurrence of the distribution
event and must also be considered:
‘
12.3.1
. . .
12.3.2 the balance of the
trust capital shall be paid to the descendants of JOHAN and FAITH per
stirpes
but no descendants whose parent, being a descendant
of
JOHAN and FAITH, is alive shall receive any payment except to the
extent that parent declines or refuses to accept payment from
the
trust
, but a beneficiary to whom an amount falls to be paid in
terms of this clause 12.3 shall receive payment of his share of the
trust
capital on the basis only that he has reached or subsequently
reach the age of 25 years, he shall receive and be paid one half of
his share of the trust capital, and the remaining part of his share
of the trust capital shall continue to be held and administered
by
the trustees for his benefit, but subject to all the terms of this
trust deed until he reaches the age of 30 and if he has reached,
or
when he reaches the age of 30 years he shall receive his share of the
trust capital, or that part of it which has not previously
not been
paid to him as the case may be.’
PARTIES
[5]
The first (Tristan) and second (Jean-Gabriel) applicants are both
brothers and sons to the third
applicant (Mark). They are both per
stirpes descendants of the third applicant.
The first respondent is
Inge Hacker and she is a daughter to the founders of the Trust. The
second respondent is Timothy James Hacker,
a husband to the first
respondent. They are both trustees of the Trust and also
beneficiaries under the Trust. The third respondent
is Wendy Fiona
Hay and she is a trustee of the Trust. The fourth respondent is the
Master of the High Court.
Point
in Limine - Locus standi
[6]
In opposing the application, the respondents pleaded that the relief
sought by the applicants
in their notice of motion is germane to
their holding of a right that would qualify them to be considered as
Trust Capital Beneficiaries
at the time of the Distribution Event, in
terms of clause 12.3.2 of the Trust Deed. They further argued that on
proper grammatical
and contextual interpretation of clauses 2.4, 12.3
and 12.3.2, only the third applicant and the first respondent hold
vested rights
to receive Trust Capital upon the occurrence of the
Distribution Event. According to the respondents, the first and
second applicants
only hold discretional rights in relation to such.
[7]
Locus
standi
is an access mechanism controlled by the court itself.
[1]
Generally, the requirements for
locus
standi
are
the following:
‘
the
[party] must have an adequate interest in the subject matter of the
litigation, usually described as a direct interest in the
relief
sought; the interest must not be too remote; the interest must be
actual, not abstract or academic; and, it must be a current
interest
and not a hypothetical one.
’
[2]
Standing is thus not just a procedural question, it is also a
question of substance, concerning as it does the sufficiency of the
litigants’
interest
in the proceedings.
[3]
The
sufficiency of the interest in this matter depends on the first and
second applicants’ rights which are determined by
the Trust
Deed which should be regarded as a trust’s constitutive
charter. The first applicant bears the onus of establishing
in his
founding affidavit that he has a standing in the matter.
[8]
This brings me to a question of examining the founding affidavit as
to how the first applicant
established his
locus
standi
for the relief that is sought. In the founding affidavit the first
and second applicants are described as trust and capital
beneficiaries
under the Trust. The first applicant asserts that his
locus
standi
is predicated firstly, on the basis that he previously received and
accepted benefits from the trust. Secondly, the third applicant
has
repudiated his entitlement to a distribution and attached a letter
dated 1 March 2023
[4]
to the
founding affidavit.
[9]
Of importance, the clauses of the Trust Deed to be considered in this
regard are clause 2.4 which
describes a beneficiary as any person who
may benefit under the deed and clause 12.3.2. which records in
mandatory terms that upon
occurrence of the Distribution Event, the
balance of the Trust’s capital shall be paid to the descendants
of Johan and Faith
per stirpes
, but no descendants whose
parents, being a descendant of Johan and Faith, is alive shall
receive any payment except to the extent
that the parent declines or
refuses to accept payment from the trust. It is clear from the letter
of clause 12.3 of the Trust Deed,
that the argument raised by the
first applicant to the effect that he, having previously received and
accepted benefits from the
trust, does not qualify as a beneficiary
within the contextual meaning of the Distribution Event.
[10]
It is in my view that, on a plain reading of
clause 12.3.2 of the Trust Deed, it is readily apparent that
the
persons referred to as beneficiaries are the third applicant and the
first respondent, due to the fact that they are both surviving
biological children of Johan and Faith. Furthermore, both the first
and second applicant are
per
stirpes
descendants
of the third applicant. Accordingly, they can only qualify as
descendant per stirpes in the context of the Distribution
Event upon
death of the third applicant or once the third applicant renounces
his right as a beneficiary in accordance with clause
16 of the Trust
Deed.
[5]
[11]
I now turn to consider the question of whether the third applicant
ceded his rights to the first and second
applicants as envisaged by
clause 16 of the Trust Deed. The first applicant also deposed on the
founding affidavit that the third
applicant has ‘purported to
cede his rights as beneficiary to the first and second applicant’.
As required by clause
16 of the Trust Deed, he attached a repudiation
letter signed by the third applicant and dated 1 March 2023. This
letter is addressed
to Trustees of the Johan Hartmann Testamentary
Trust. The third applicant accordingly repudiate his rights, title
and interest
in any and all distributions, inheritance, bequest or
any property or assets from Johan Godfried Hartmann Testamentary
Trust (Trust
number: 1572/2012).
[12]
I deem it appropriate to mention that the first respondent’s
response in this regard is to the effect
that Johan Godfried Hartmann
Testamentary Trust is an entirely separate and distinct trust which
is not relevant in this matter.
In my view, this response is correct.
This is fortified by the fact that the first applicant, in his
replying affidavit, attempted
to rectify the error by acknowledging
that the attachment of annexure FA12 was made in error and another
renunciation letter signed
by the third applicant and dated 12
December 2023 was filed as annexure RA4. I interpose to mention that
the present application
was launched on 8 September 2023 and
axiomatically the latter renunciation letter postdates the date upon
which the present application
was launched. In my view this
renunciation letter is of no assistance in the context of compliance
with clause 16 of the Trust
Deed when this application was launched.
[13]
Pertinently, it is also important to mention that, the founding
affidavit of the applicants is
absent
of any confirmatory affidavit deposed to by the third applicant in
relation to any allegation made in relation to him or
on his behalf,
by the first applicant who deposed the founding affidavit. The third
applicant’s confirmatory affidavit was
only filed with the
first applicant’s replying affidavit. It is trite law that an
applicant must stand and fall by the averments
made in their founding
papers,
[6]
and as such it is
imperative that the applicants define the relevant issues, and set
out sufficient factual averments upon which
they rely to discharge
the onus of proof resting on them within the parameters of their
founding affidavit
[7]
which will
entitle them to the relief sought.
[8]
Daffue, J in
Mokoena
and Others v Lengoabala; In Re Lengoabala v Nhlapo and Others
[9]
(
Mokoena
),
said the following:
‘
.
. . the applicant in the application proceedings must make out
his/her case in the founding affidavit. A litigant should not be
allowed to try and make out a case in the replying affidavit. The
founding affidavit must contain sufficient facts in itself upon
which
a court may find in the applicant’s favour. An applicant must
stand and fall by his/her founding affidavit. Referring
with approval
to
Director
of Hospital Services v Mistry
1979 (1) SA 626
(AD) at 635H – 636D.’
[10]
In my view the
repudiation letter dated 12 December 2023 does not assist the first
and second applicants in discharging the onus
on a balance of
probabilities that they have
locus standi
in the context of
Distribution Event. Similarly, the belated confirmatory affidavit of
the third applicant does not salvage the
situation. The first
applicant has accordingly failed to discharge the onus on a balance
of probabilities that they, being the
first and second applicants,
have
locus standi
in respect of the main relief sought.
[14]
Notwithstanding the abovementioned finding, I deem it necessary to
deal with the applicant’s alternative
relief, which is mainly
based on maladministration by the trustees. The applicants’
founding affidavit is interspersed with
multiple factual allegations
of mal-administration by the trustees and discriminatory practices by
the Hacker family beneficiaries.
Further factual allegations, amongst
others are as follows:
15.1 that
the third applicant has been alienated from the administration of the
administration of the trust and the
property, and excluded from
benefitting fully from it;
15.2
the third respondent is the first respondent’s Psychologist and
that she has previously advised at
meetings of the trustees that she
will vote based on how the first respondent directs her to vote;
15.3
the trustee’s decision to postpone the Distribution Event only
took place in response to the correspondence
received from the
applicants dated 1 November 2022, and that all of the trustees took
part in a decision which could only be made
by the third respondent;
15.4 the
salary of the second respondent paid by the corporation John Micheal
(Pty) Ltd is excessive and intended to
dissipate trust income; and
15.5
that the first respondent has made use of the Trust’s assets to
fund her personal litigation against
the third applicant.
[15]
The respondents denied the allegations and argued further that the
fourth respondent issued a report dated
27 September 2023 in which it
is mentioned that he is ‘not aware of any information which
could be of assistance to the court’.
Furthermore, according to
the respondents the very nature of the allegations raised by the
applicants against the trustees in the
present matter would require
the fourth respondent to have considered the version put by the
trustees in their answering papers,
and thereafter to apply his mind
as to whether or not the provisions of s 16(2) of the Act would or
would not find appropriate
application.
[16]
In my view, the aforementioned respondents’
argument is on point. On the basis that the Master is
given extensive
powers in respect of the Trust matters, particularly regarding the
conduct of the trustees in the administration
of the Trust, the
Master, amongst others, has the power to do any of the following:
[11]
(a) call trustees to
account to him for the administration and disposal of the trust
property in terms of s 16(1) of the Act;
(b) require trustees to
produce certain documents in connection with the administration and
disposal of the trust assets (s 16(1)
of the Act);
(c) cause an
investigation to be carried out into how the affairs are administered
(s 16(2) of the Act);
(d) require a
trustee to provide security (s 6 of the Act);
(e) apply to court
for an order directing the trustees to comply with any request by the
Master in terms of s 16 (s 19 of
the Act);
(f) apply to court
for an order directing a trustee to perform any duty imposed upon him
by the trust instrument or by the
law (s 19 of the Act);
(g) remove a
trustee in certain circumstances (s 20(2) of the Act). Grounds
justifying removal of a trustee by the Master
(without having to
apply to a court) include (i) failure by the trustee to perform
satisfactorily any duty imposed upon him by
or under the Act or (ii)
failure by the trustee to comply with any lawful request of the
Master (for example failure to respondent
to the Master to account
for or produce documents in terms of s 16 of the Act).
It is therefore
interesting to note that the Master can apply to a court in terms of
s 19 (see (e) and (f) above) seeking compliance
by the trustees, but
in terms of s 20(2) the Master can remove a trustee without a court
order.
[17]
It is therefore my emphasis that the Master can play a key role in
ensuring that the trustees of the trust
conduct themselves in a
proper way, in accordance with both the law and the trust instrument.
The Master also has the power to
ensure that there is good and
transparent administration of the trust affairs by the trustees. As
said in
Simplex
(Pty) Ltd v Van der Merwe and Others
,
[12]
the whole scheme of the Act is to provide a manner in which the
Master can properly supervise trustees in the proper administration
of trusts. It is, therefore, apparent that the powers of the Master
cannot be overlooked or underestimated, and that any person
who has
an interest in the trust property should approach the Master if he or
she feels aggrieved by the conduct of the trustees,
or has a
complaint regarding the manner in which the affairs of the trust are
being conducted. The aforementioned powers of the
Master can be used
in appropriate circumstances such as the complaints raised by the
applicants in this matter, to provide appropriate
relief. All that is
required from them is to show that they have a sufficient interest in
the trust property to request action
by the Master.
[18]
With regard to ‘sufficient interest’ of the first and
second applicants in the trust, counsel
for the applicants referred
to
Potgieter
and Another v Potgieter
NO
and Other
,
[13]
where the appellants were contingent beneficiaries and the court held
as follows:
‘
The
only relevant consideration is whether the right is worthy of
protection, and I have no doubt that it is. Hence, for example,
our
law affords the contingent beneficiary the right to protect his or
her interest against mal-administration by the trustees
(see. Gross v
Pentz
[1996] ZASCA 78
;
1996 (4) SA 617
(A) at 628I-J).’
[14]
In my view, it is not
controverted that the first and second applicants are contingent
beneficiaries and the only applicant with
vested rights is the third
applicant. Even though the first and second applicants are contingent
beneficiaries, they have sufficient
interest to protect their
interest against mal-administration by the trustees.
[19]
This brings me to a question of whether the applicants’
application for the relief sought in terms
of s 13 of the Act is
appropriate and sound in law. I deem it apposite to mention that the
founding affidavit is interspersed with
factual allegations by the
applicants against maladministration by the trustees of the trust.
In
Mokoena
the
court held as follows at para 8: ‘A court should adjudicate
disputes in application procedure having regard to the well-known
Plascon-Evans
Paints
[15]
dicta
’
which has been approved and considered in more depth in
Wightman
t/a JW Construction v Headfour (Pty) Ltd and Another,
[16]
in paras 12 and 13:
‘
[12]
Recognizing that the truth almost always lies beyond mere linguistic
determination the court have said that an applicant who
seeks final
relief on motion, must in the event of conflict accept the version
set up by his opponent unless the latter’s
allegations are, in
the opinion of the court, not such as to raise a real, genuine or
bona fide dispute of facts or are so far-fetched
or clearly untenable
that the court is justified in rejecting them merely on the papers…
[13]
A real, genuine and bona fide dispute of fact can exist only where
the court is satisfied that the party who purports to raise
the
dispute has in his affidavit seriously and unambiguously addressed
the fact said to be disputed.’
[20]
Having assessed the totality of all the evidence, it is my view that
the arguments submitted by the applicants
are untenable and
fundamentally flawed for the relief sought in terms of s 13 of the
Act. All the allegations relating to maladministration
by the
trustees, raised by the applicants are very serious. To safeguard
their interest, they should have addressed them to the
Master, who
would have exercised the powers vested in him in terms of the Act. It
is apposite to note that s 13 of the Act empowers
a court to
terminate a Trust or make some other order it deems just in the
circumstances.
[21]
In the event that the court orders that a Trust should be terminated,
the order would certainly have to include
instructions on how Trust
assets must be dealt with. The power of the court to act only
arises if the trust instrument contains
a provision which; (a) brings
about consequences which in the opinion of the court the founder of a
trust did not contemplate or
foresee and; (b) which: (i) hampers the
achievement of the objects of the founder; or (ii) prejudices the
interests of the beneficiaries;
or (iii) is in conflict with the
public interest. In
Gowar
and Another v Gowar and Others
,
[17]
the court said that the provisions of s 13 have both subjective and
objective criteria. The former relates to the founder’s
lack of
foresight or contemplation and the latter relate to prejudice to the
trust object, beneficiaries or the public interest.
This requires the
applicant to establish on a balance of probabilities that any of the
trust deed has brought about any one of
the consequences mentioned in
s 13
(a)
,
(b)
and
(c)
and that the founder of the trust did not, at the time the trust was
established, contemplate or foresee such a result.
[18]
[22]
In conclusion, the applicants failed to establish jurisdictional
criteria
[19]
required in terms
of section 13 of the Act, as a result it would not be competent for
the court to exercise the statutory power
conferred in it by section
13. Thus, the alternative relief sought for an order in terms of
section 13 also stands to be dismissed.
COSTS
[23]
I now turn to deal with the issue of costs. Costs are governed by two
basic principles, firstly, that unless
expressly otherwise enacted,
the granting thereof rests within the discretion of the court, which
discretion must be exercised
judiciously and secondly, that
generally, costs follow the result, that is, they are awarded in
favour of the successful litigant.
In my view the latter is found to
be the most appropriate, in that costs should follow the results.
Consequently,
I make the following order:
[AK1]
Application
is dismissed with costs on a Rule 67A on scale B.
MGUDLWA
AJ
ACTING
JUDGE
Appearances
For
the Appellant:
Adv.
D Watson
Instructed
by:
c/o
Hendre Conradie Inc
119
President Reitz Avenue
Westdene
Bloemfontein
E-Mail:
e-service@ rossouws.com
Ref:
KEI2/0019
For
the Third to Fifth Respondents:
Adv.
A White
Instructed
by:
Honey
Inc
Northridge
Mall
Kenneth
Kaunda Road
Bloemfontein
Tel:
051-403 6600
E-Mail:
marie@honeyinc.co.za
[1]
Watt
Sea Plant Products Bpk
[1998] 4 All SA 109
(C) at 113H.
[2]
Four
Wheels Drive CC v Leshni Rattan NO
[2018] ZASCA 124
;
2019 (3) SA 451
(SCA) para 7.
[3]
Firm-O-Seal
CC v Prinsloo & Van Eeden Inc and Another
[2023] ZASCA 107
para 6.
[4]
Annexure
FA12.
[5]
Clause
16 – Renunciation of Beneficiary – ‘Any
Beneficiary shall be entitled, by written notice to the trustees
to
declare that he shall thenceforth ceases to be a beneficiary of the
trust and upon delivery of such notice this trust shall
thenceforth
take effect as if that beneficiary were dead’.
[6]
Betlane
v Shelly Court CC
[2010] ZACC 23
;
2011 (1) SA 388
CC para. 29.
[7]
Swissborough
Diamond Mines (Pty) Ltd & Others v Government of the Republic of
South Africa & Others
1999 (2) SA 279
(T) at page 323I – 324A.
[8]
Business
Partners Ltd v World Focus
754 CC 2015 (KZD).
[9]
Mokoena
and Others v Lengoabala; In Re Lengoabala v Nhlapo and Others
[2016]
ZAFSHC 4
[10]
Ibid para 7.
[11]
W
Geach
Trust
Law in South Africa
at 121.
[12]
1996
(1) SA 111 (W).
[13]
Potgieter
and Another v Potgieter
NO
and Other
[2011] ZASCA 181
;
2012 (1) SA 637
(SCA).
[14]
Ibid para 28.
[15]
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
1984 (3) SA 623 (A).
[16]
Wightman
t/a JW Construction v Headfour (Pty) Ltd and Another
[2008]
ZASCA 6; 2008 (3) SA 371 (SCA).
[17]
Gowar
and Another v Gowar and Others
[2016]
ZASCA 101; [2016] 3 All SA 382 (SCA).
[18]
Ibid para 34.
[19]
Curators
Ad Litem to Certain Beneficiaries of Emma Smith Educational Fund v
The University of KwaZulu-Natal
[2010] ZASCA 136; 2010 (6) SA 518 (SCA).
[AK1]
To
the secretary
Kindly
remind judge to indicate the scale of the costs.