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[1994] ZASCA 185
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Deedat and Others v Master of the Supreme Court, Natal and Others (253/94) [1994] ZASCA 185; 1995 (2) SA 377 (AD); [1995] 2 All SA 60 (A) (30 November 1994)
CASE NO 253/94
IN THE SUPREME COURT OF SOUTH AFRICA APPELLATE DIVISION
In the matter between:
YOUSUF AHMED DEEDAT
First Appellant
AHMED HOOSEN DEEDAT Second Appellant
GOOLAM HOOSEN AGJEE Third Appellant
and
THE MASTER OF THE
SUPREME COURT (NATAL) First Respondent
YUSIIF AIIY
Second Respondent
NAUSHAD HOOSEN
Third Respondent
ISLAMIC PROPAGATION CENTRE
INTERNATIONAL
Fourth Respondent
CORAM:
JOUBERT, VAN HEERDEN, VIVIER, NIENABER
et HOWIE JJA Heard: 1 November 1994 Delivered: 30 November 1994
JUDGMENT
JOUBERT JA:_
2
This is an appeal against a judgment of HURT J in the Natal Provincial
Division, dismissing an application brought by the appellants
against the
respondents. In their notice of motion, dated 11 July 1992, the appellants
sought
a declaratory order in the following terms:
"1 It is declared
that:
(a)
First,
Second and Third Applicants are not trustees as defined in either the Trust
Moneys Protection Act No. 34 of 1934 or the Trust
Property Control Act No. 57 of
1988;
(b)
Fourth Respondent
is not a trust as defined in the Trust Property Control Act No. 57 of
1988;
(c)
First Respondent is
not entitled, in respect of First, Second and Third Applicants and Fourth
Respondent, to exercise any of the powers
vested in him by the Trust Property
Control Act No. 57 of 1988.
2.
First Respondent
is ordered to pay First, Second and Third Applicants'
costs.
3.
Any Respondents
unsuccessfully opposing this application are ordered to pay the costs occasioned
to First, Second and Third Applicants
by such opposition jointly and severally,
any one paying
the others to be
absolved."
Leave to appeal to this Court was granted in terms of sec. 20 (4) (b) of
Act No 59 of 1959. For the sake of convenience I shall refer
to the First and
Fourth
3 Respondents as "the Master" and "the IPCI"
respectively.
The material background facts to the appeal are common
cause and may be broadly outlined as follows.
During 1957 the
Islamic Propagation Centre ("the IPC") was constituted as a voluntary
association with a written constitution. Its
object was to raise funds by
soliciting donations from donors in order to use them for the propagation of the
Islamic Faith worldwide
by means of lectures and the dissemination of
literature. By 30 June 1984 the IPC owned assets which according to its
financial statements
amounted to R176 069-14, comprising a General Fund of R151
761-76 plus an Interest Fund of R24 307-38. In 1985 the IPC was managed
by
Second and Third Appellants and G.H.E. Vanker.
On 1 April 1985 a notarial deed of trust was executed by the five
settlors,
viz Second and Third Appellants as well as the Second Respondent, G H
E
Vanker and Mohamed Yusuf Buckas, to constitute the IPCI as a trust. Its
relevant
provisions are the following:
Clause 1
"The name of the Trust is the '
Islamic Propagation
Centre International
' (hereinafter referred to as 'the Trust')."
4
Clause 2
sets out the objects of the Trust which are
(1) "
to create a fund
primarily to promote charitable and religious
activities of the Islamic Faith" (Clause 2.1) [My underlining]
(2) "to propagate the Islamic faith to Muslims and non-Muslims" according to
the methods set out in Clause 2.2.1. to
2.2.8.
Clause 3
confers powers on
the trustees to further and realise the objects of the Trust which include the
preservation, maintenance and upkeep
of properties held by the Trust (Clause
3.2); to administer the Trust Fund (Clause 3.3 and 3.4); "
to raise
or
borrow
money for the purposes of the Trust in such manner and on such
security as may be determined
" (Clause 3.5). [My underlining].
Clause 4
stipulates that the trustees are to "hold the Trust Fund
upon trust
for the application of the income and/or capital thereof for
the promotion "of the objects of the Trust. [My underlining].
Clause 5
provides for 5 Muslim trustees for life. The first
trustees mentioned in
Clause 6
are the Second and Third Appellants
together with Second Respondent, G H E Vanker and Mohamed Yusuf Buckas.
Clause 14
requires the trustees to keep proper set of books of
their administration of the funds of the Trust and to have them audited annually
by an independent auditor.
It is recorded in the deed of trust that a certain Suleman Ebrahim
Lockat
accepted on behalf of the five designated trustees their appointments as
such.
I may add that the deed of trust was subsequently amended on
various
5 occasions but these amendments are not relevant for
purposes of the present
proceedings. At present the trustees of the
IPCI are the three Appellants and the
Second and Third
Respondents.
On 19 June 1985 the deed of trust was registered in the office of the
Master as a trust instrument in terms of the provisions of the
Trust Moneys
Protection Act No 34 of 1934 ("the 1934 Act"). This Act which came into
operation on 1 September 1934 remained in force
until it was repealed
in
toto
and replaced as from 31 March 1989 by the Trust Property Control Act No
57 of 1988 ("the 1988 Act"). The IPCI has throughout been
dealt with by the
Master as a trust in terms of the 1934 Act and subsequently the 1988
Act.
Towards the end of 1990 a serious dispute arose between the Appellants on
the one hand and the Second and Third Respondents on the
other hand in regard to
the administration of the IPCI's assets. Accordingly the Master, acting pursuant
to the provisions of sec
16 (2) of the 1988 Act, on 18 October 1991 instructed
Messrs. Coopers, Theron Du Toit, a firm of chartered accountants, to investigate
the administration of the IPCI by its trustees and the disposal of its
6
trust property. Matters came to a head when the Master decided to further
the
investigation by having the trustees questioned. The reaction of
the Appellants was to inform him that the steps taken by him were
unlawful since
the IPCI did not fall within the definition of a "trust" in the 1988 Act and
that they intended to apply to Court
for a declaratory order. That application
was brought by their notice of motion, dated 11 July 1992.
In paragraph 15 of the founding affidavit the First Appellant stated the
following:
"I respectfully draw the attention of this Honourable Court to the fact
that the five contracting parties, who called themselves 'Settlors',
did not
undertake in the first agreement to transfer any assets to themselves as
'Trustees' and no one was bound to transfer anything
to Fourth Respondent or its
Trustees. It was not an agreement by which moneys were settled on the Trustees,
but a contractual constitution
binding them to operate according to its
provisions." (The 'first agreement' refers to the notarial deed of trust, dated
1 April
1985. In the above paragraph the First Appellant sought to disavow the
validity of the IPCI as a trust
7 according to our common
law.)
The Court
a quo
was apparently not called upon to decide the
common law validity of the IPCI. What it did decide was the issue whether or not
the
IPCI was a statutory trust for the purposes of the 1934 Act and the 1988
Act. That issue was decided affirmatively and accordingly
the application was
dismissed with costs.
Charitable trusts are classified under trusts for impersonal purposes
e.g. scientific, educational, health, religious purposes. Unlike
private trusts
they do not have beneficiaries in a legal technical sense. One of the essential
elements of a valid trust, according
to the common law, is a definite or
identifiable subject-matter. Consult
American Jurisprudence.
2nd ed.,
1992, vol. 76 z.v. Trusts § 48: "A valid trust requires an ascertainable,
definite, or clearly defined trust res, a
definite or certain subject of the
trust, or definite trust property. That is, a trust cannot be created unless the
subject matter
is definite or definitely ascertainable, and it is essential to
the creation and validity of a trust that the trust res be pointed
out with
reasonable certainty. The trust res must be so sufficiently described
or
8 capable of identification that its title can pass to the
trustee upon actual delivery
of the trust corpus, or if the character of the property composing the
corpus is
such, there must be a legal assignment of the corpus to the trustee
sufficient to
convey present title." See also
Scott on Trusts.
2nd ed., 1956 vol
1 § 96;
Halsbury's Laws of England.
4th ed., 1984, vol 48 s.v. Trusts
§ 551 and
Halsbury's
Laws of England.
4th ed. reissue, 1993, vol 5 (2) s.v. Charities
§ 77; Corbett
Hahlo Hofmeyr and Kahn,
The Law of Succession in South Africa
409,410 Q.
A close examination of the deed of trust reveals a clear intention on
the
part of the settlors and the trustees to create a
charitable trust for the promotion
of the charitable and religious activities of the Islamic Faith. However,
the deed
of trust, although referring to a "Trust Fund", does not expressly
identify its source
and nature. In
American Jurisprudence, supra
§ 19, it is
said:
"It would seem to be clear that even a charitable trust, regarded
fundamentally as a gift, will necessarily fail if it purports to
be of some
specific property or amount of money but the property or amount is not
sufficiently described or specified as to be identifiable.
The exact amount need
not be stated in the instrument of gift if it is, or will be, capable of
definite ascertainment in the light
of the terms employed."
I shall assume, without deciding, that this passage correctly reflects
our own law.
9 But on this assumption the charitable trust will not
fail if the subject matter of the
trust is capable of ascertainment by admissible means of interpretation.
Such
means may be proof of extraneous facts which are admissible because they
bear
no relationship to the oral agreement or negotiations giving
rise to the creation of
the trust. (See Honore's
The South African Law of Trusts.
4th ed.,
118 and the
cases cited.)
In the instant matter it is agreed on the papers that the ownership of
the
assets of the IPC was taken over by the IPCI. In
1985 the IPC was managed by
the Second and Third Appellants and G.H.E. Vanker while the initial
trustees of
the IPCI were the same three gentlemen together with the Third Appellant,
the
Second Respondent and Mohamed Yusuf Buckas. Moreover, it is significant
that
the first financial statement and balance sheet of the IPCI as at 30 June
1985
included in its opening balance of accumulated funds the amounts of R151
761,76
and R23 307,38 which formed part of the assets of the IPC according to
its
financial statement and balance sheet as at 30 June 1984
(supra)
.
These financial
statements and balance sheets, duly audited, furnish acceptable evidence
of an
10 identificatory nature of the existence and extent of the
"Trust Fund" referred to in
the trust deed. It follows that the assumed requirement of the common law
that
the subject matter of a trust must be
in esse
and be
identifiable, has been satisfied;
and that after the "take-over" the
IPCI was
in esse
as a valid charitable trust. The
trust fund
thereupon consisted of current as well future assets. It is common
cause
that the trustees of the IPCI in exercising their powers under
clause 3.5 of the
Deed of Trust succeeded in supplementing substantially the capital assets
of the
IPCI by their acceptance of donations, legatees, inheritances etc. and
the
investment thereof. In this manner the IPCI has become a multi-million
rand
concern.
The next question is to determine whether the IPCI qualifies as a trust
for
purposes of the 1988 Act. The answer thereto depends
on whether or not the IPCI
falls within the description of a trust as defined in the 1988 Act.
According to
section 1 trust "means the arrangement through which the ownership in
property
of one person is by virtue of a trust instrument made over or bequeathed
-
(a) to another person, the trustee, in whole or in part, to be
administered or
11
disposed of according to the provisions of the trust instrument for the
benefit of the person or class of persons designated in the
trust instrument or
for the achievement of the object stated in the trust instrument; or .
.
Section 1 defines
trust instrument
as meaning
"a written agreement or a testamentary writing or a court order according to
which a trust was created." It follows from
the definition of "trust instrument"
that an oral trust agreement is excluded from the scope of the 1988
Act.
Mr Southwood, on behalf of the Appellants, submitted that the
definition of "trust" in the 1988 Act connects the "trust instrument"
(which
must be in writing) with the "making over" of ownership in property by providing
that such ownership must be made over "by
virtue of" the "trust instrument".
Here, so it was submitted, there was no trust instrument making over the trust
property: the trust
deed itself was silent about it; and the trust property that
was transferred was "made over" by IPC to IPCI either orally or by conduct
and
hence not in writing.
This submission has already been refuted by my earlier conclusion
that
12
facts extraneous to any negotiations or oral agreements between the
settlors
identified the assets which vested in the "Trust Fund" referred to in the
trust instrument. There is in any event much to be said
for the view - adopted
by the Court
a quo
- that the words "by virtue of must be widely
construed as "on account or by reason of. It may well be that the definition of
a trust
in the 1988 Act is wide enough to encompass property, duly identifiable,
which is only to be acquired by the trustees in future from
outside sources. In
my judgment the IPCI therefore constituted a trust under the 1988 Act.
All counsel were
ad idem
that the appeal should be dismissed
should the Court come to such a conclusion. It is accordingly unnecessary to
consider the position
of the IPCI under the 1934 Act. The First Respondent acted
pursuant to the powers conferred on him by the 1988 Act. The appeal must
accordingly fail.
The appeal is dismissed with costs (including the costs of two counsel
for
the First Respondent). It is recorded that Mr Mamewick who appeared with
Mr
Choudree for the Fourth Respondent presented no argument in this Court.
Nor did
he ask for any relief or associate himself with any of the other parties.
No relief
13 was in turn asked against the Fourth
Respondent.
C.P. JOUBERT JA
CONCUR
VAN HEERDEN JA VIVIER JA NIENABER JA HOWIE JA