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[2014] ZAWCHC 194
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Hanekom v Voigt N.O and Others (15493/2014) [2014] ZAWCHC 194 (10 December 2014)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
Case
no: 15493/2014
DATE:
10 DECEMBER 2014
NICOLENE
HANEKOM
....................................................................................................................
APPLICANT
v
LIZETTE VOIGT
N.O
.........................................................................................................
FIRST
RESPONDENT
LIZETTE VOIGT
SECOND RESPONDENT JANENE GERTRUIDA GOOSEN N.O
.......
THIRD
RESPONDENT
JANENE GERTRUIDA
GOOSEN
...................................................................................
FOURTH
RESPONDENT
LINDA MARAIS
N.O
.........................................................................................................
FIFTH
RESPONDENT
LINDA
MARAIS
................................................................................................................
SIXTH
RESPONDENT
THE MASTER OF THE
HIGH COURT, CAPE
TOWN
................................................
SEVENTH
RESPONDENT
ELIZABETH RENE
MARAIS
........................................................................................
EIGHTH
RESPONDENT
Court: Judge J I
Cloete
Heard: 10
December 2014
Delivered: 10
December 2014
EX
TEMPORE JUDGMENT
CLOETE J
[1] There are
essentially three applications before me. In the main application for
declaratory relief the issue is whether a memorandum
of agreement
concluded on 5 April 2001 (‘the new trust instrument’) is
valid or void. The applicant, acting in her
personal capacity, claims
that it is void. The first to sixth respondents (‘the
respondents’) maintain that it is valid.
Both the seventh
respondent (‘the Master’) and the eighth respondent (who
is the mother of the applicant and the respondents)
do not oppose and
abide the decision of the court. In the counter-application the
respondents seek the removal of the applicant
as trustee of the trust
administered under the new trust instrument (‘the new trust’).
The applicant opposes the relief
sought and has in turn sought
additonal relief by way of an application to amend her notice of
motion, namely for herself and the
respondents to be removed as
trustees, and for the court to appoint new trustees in their stead
(‘the removal application’).
The Master and the eighth
respondent similarly abide the decision of the court in respect of
both the counter-application and the
removal application.
The main application
for declaratory relief
[2] The relevant
common cause facts are as follows:
2.1 The applicant
and the respondents are the granddaughters of the late Willem Daniel
Marais Senior (‘the grandfather’).
2.2 On 8 December
1980 the grandfather executed a Will in terms of which he left his
entire estate to two testamentary trusts in
equal shares. The first
testamentary trust was ‘Die Dr Willie Marais Trust’ to be
administered by his one son, Johannes
Marais, who is the father of
the applicant and the respondents (‘the father’) in the
latter’s sole and absolute
discretion. I will refer to this
trust as ‘the old trust’. The second trust was to be
administered by his other son
and is not relevant for present
purposes. The sole beneficiaries of the old trust are the applicant
and the respondents. The old
trust instrument provided in clause D(d)
that, in the event of more than one administrator (or trustee) being
appointed, decisions
in respect of the trust had to be unanimous.
Clause H thereof conferred the sole discretion on the trustee to
decide when the old
trust would terminate.
2.3 The grandfather
passed away on 25 May 1986. Thereafter his two sons, in their
capacities as administrators (trustees) of the
respective trusts,
concluded a redistribution agreement in respect of the late
grandfather’s assets on 24 November 1986.
In terms of the
redistribution agreement each trust received immovable property with
a value of about R130 000 and cash, policies
and shares of some R30
000. The father was appointed as sole trustee of the old trust under
letters of authority issued by the
Master on 7 March 2000.
2.4 Subsequently the
father, a businessman, placed a number of assets in the old trust.
These were either his own assets, were purchased,
or were held in
entities under his control. As a result of the father’s
investment skill and expertise, by 2003 the trust
had amassed assets
of some R15 million.
2.5 On 5 April 2001
the father, the applicant and the respondents concluded the new trust
instrument which inter alia provided for
their appointment as
additional trustees with the father. On the same date the father
deposed to an affidavit in support of an
application to the Master
for the variation of the old trust instrument by its replacement with
the new trust instrument, which
bears the identical name to that of
the old trust. Both the applicant and the respondents supported this
application. In the applicant’s
words, all were in favour of
the new trust instrument. In his affidavit for submission to the
Master the father declared that:
‘2.2 It can be
seen that the late Dr Marais intended to establish a trust into which
his property would ultimately devolve
upon and be preserved for the
benefit of my children. Also evident is the fact that I was given
total discretion in how to administer
the assets of the trust and the
trust itself. It is in terms of these powers that I have consented to
the amendment of the trust
deed as proposed.
2.3 I have preserved
the trust property to the best of my ability and in fact have
considerably increased the value of the assets
held and also have
contributed a number of new assets to the trust that previously fell
into my own estate.’
2.6 Both the old
trust and new trust instruments were properly lodged with the Master.
On 11 July 2001 the Master appointed the
applicant and the
respondents as trustees along with the father ‘...in die
bogemelde trust, geskep in die testament gedateer
8 Desember 1980 van
Willem Daniel Marais wat oorlede is op 25 Mei 1986’. Thereafter
further assets were amassed by the father
in the new trust, which
also retained some of the assets of the old trust.
2.7 The new trust
instrument provides at clause 8.2 that, generally speaking, decisions
of trustees will be taken by way of a simple
majority.
2.8 The father
passed away on 30 January 2002, since which date the applicant and
the respondents have been the only trustees of
the trust.
2.9 Over time since
the father’s death, tensions between the applicant on the one
hand, and the respondents on the other,
have escalated to the point
at which all agree that there is no prospect of unanimous decisions
being taken by the trustees.
2.10 Since 2001 the
trust has been administered in terms of the new trust instrument,
i.e. on the basis inter alia that the applicant
and the respondents
(along with their late father, while he was still alive) are the
trustees, and that decisions are generally
taken by way of a simple
majority.
2.11 During 2012 the
applicant sought legal advice as to whether the new trust instrument
is valid. She was advised that it is void.
Since that date, albeit
initially inconsistently, she has adopted the position that, because
the new trust instrument is void,
the old trust instrument is valid,
and all decisions of the trustees must thus be unanimous.
2.12 Underlying the
heart of the dispute is the fate of an historic property, Die Opstal,
in the Durbanville area, which is one
of the trust’s assets. It
has a market value of about R8 million. The trust has received an
offer to purchase the property
for that amount (i.e. R9.120 million
inclusive of VAT). The respondents, by way of a simple majority, have
voted in favour of accepting
the offer. The applicant refuses to
accept the offer and wishes to purchase the property herself through
her family trust. She
has made an offer of R8.005 million, but the
respondents contend that she has played a cat and mouse game with
them for months
by refusing to commit to basic terms such as the
identity of the transferring attorneys. The applicant has threatened
to interdict
the transfer to the prospective purchasers, who have
repeatedly extended the period of their offer at the respondents’
request.
The latest offer expires on 19 December 2014, hence the
urgency in making a finding in this matter. That having been said,
both
the applicant and the respondents agree that it is inevitable
that Die Opstal must be sold because its running costs can no longer
be carried by the trust.
[3] The question
which arises is whether the new trust instrument constitutes a valid
amendment to the old trust instrument. Inextricably
linked to this
enquiry is whether or not the declaratory relief sought by the
applicant is competent for this court to grant, given
the nature of
such relief; and that it was the Master who issued letters of
authority in terms of which the applicant and the respondents
were
authorised to act as additional trustees pursuant to his acceptance
of the new trust instrument as being a valid amendment
to, or
variation of, the old trust instrument.
[4] Section 4 of the
Trust Property Control Act 57 of 1988 (‘the Act’)
provides as follows:
‘4. Lodgement
of trust instrument. – (1) Except where the Master is already
in possession of the trust instrument in
question or an amendment
thereof, a trustee whose appointment comes into force after the
commencement of this Act shall, before
he assumes control of the
trust property, upon payment of the prescribed fee, lodge with the
Master the trust instrument in terms
of which the trust property is
to be administered or disposed of by him, or a copy thereof certified
as a true copy by a notary
or other person approved by the Master.
(2) When a trust
instument which has been lodged with the Master is varied, the
trustee shall lodge the amendment or a copy thereof
so certified with
the Master.’
[emphasis supplied].
[5] That the Master
was of the view that the new trust instrument constituted a valid
amendment to the old trust instrument is apparent
from the following:
5.1 The only query
raised by the Master in respect of the new trust instrument related
to why it was necessary for four additional
trustees to be appointed
along with the father. This is evident from a letter dated 21 June
2001 addressed by the attorney acting
for the trust, the father, the
applicant and the respondents, one Mr Lood Hanekom who,
coincidentally, is the brother-in-law of
the applicant. This letter
is annexed to the respondents’ answering affidavit as JGE4.
5.2 The Master must
have been satisfied with Mr Hanekom’s response because he
appointed the applicant and the respondents
as additional trustees on
11 July 2001, a few weeks later.
5.3 The letters of
authority (annexure D to the applicant’s founding papers)
reflect that they were appointed as additional
trustees, together
with the father, of the trust created in the will of the grandfather.
5.4 There is no
suggestion on the papers that when the new trust instrument was
lodged with the Master, any fee was paid as is required
by s 4(1) of
the Act when a new trust instrument is lodged.
[6] In Honore’s
South African Law of Trusts 5th Ed at 219 – 220 the authors
write:
‘The Act
recognizes and preserves the distinction between the appointment of a
trustee, which occurs in terms of the trust
instrument, and a
trustee’s written authorisation, which derives from the Master
by virtue of statutory powers. The trust
instrument remains the
defining source of the trustee’s power and may have to be
consulted by persons dealing with the trustee.
While the creation of
a trust in general thus remains a private act, the authorization of a
trustee ceases to be so. Statutory
authorisation is added for two
purposes: not only in the interests of the beneficiaries, so as to
reinforce the requirement of
security, but to serve to outsiders as
written proof of incumbency of the office of trustee.’
[7] The statutorily
conferred power of the Master to issue the letters of authority of 11
July 2001 could only have been exercised
as a result of his approval
of the new trust instrument as a valid amendment of the old trust
instrument in terms of s 6(1) of
the Act, which provides that:
‘Any person
whose appointment as trustee in terms of a trust instrument, s 7 or a
court order...shall act in that capacity
only if authorised thereto
in writing by the Master.’
[8] It is not
suggested by the applicant that the Master, in so doing, was
exercising any of the powers conferred upon him by s
7(1) or (2) of
the Act, which deal with the filling of vacancies or appointment of
trustees where the Master considers it desirable
despite the
provisions of the relevant trust instrument. Before issuing the
letters of authority he took steps to satisfy himself
that the
appointment of four additional trustees, as envisaged in the new
trust instrument, was both competent and appropriate.
He thus made a
decision that the new trust instrument was a valid amendment to the
old trust instrument and thereafter exercised
his power to issue the
letters of authority in terms thereof. In Deedat and Another v The
Master and Others
1998 (1) SA 544
(NPD) at 548A-C the court had no
difficulty in treating a Master’s decision to authorise a
trustee to act in terms of s 6(1),
which decision was sought to be
impugned, as an administrative act which is subject to judicial
review. Further, in the present
matter, even if the Master was wrong
in his decision to authorise the applicant and the respondents to act
as trustees, this does
not affect the validity of any of the
trustees’ subsequent actions in terms of the issued letters of
authority.
[9] In Oudekraal
Estates (Pty) Ltd v City of Cape Town and Others
2004 (6) SA 222
(SCA) the Supreme Court of Appeal, having found that certain
permission granted by the Administrator was unlawful and invalid at
inception, held at para [26] that:
‘Is the
permission that was granted by the Administrator simply to be
disregarded as if it had never existed? In other words,
was the Cape
Metropolitan Council entitled to disregard the Administrator’s
approval and all its consequences merely because
it believed that
they were invalid provided that its belief was correct? In our view,
it was not. Until the Administrator’s
approval (and thus also
the consequences of the approval) is set aside by a court in
proceedings for judicial review it exists
in fact and it has legal
consequences that cannot simply be overlooked...No doubt it is for
this reason that our law has always
recognised that even an unlawful
administrative act is capable of producing legally valid consequences
for so long as the unlawful
act is not set aside.’
[emphasis supplied].
[10] The present
proceedings are not review proceedings, but rather proceedings in
which the applicant seeks declaratory relief.
S 21(1)(c)
of the
Superior Courts Act 10 of 2013
confers upon a High Court the
discretion, at the instance of any interested person, to enquire into
and determine any existing,
future or contingent right or obligation,
notwithstanding that such person cannot claim any relief
consequential thereto.
[11] However a court
will not grant a declaratory order where no benefit to the applicant
in practical and real terms would result:
see inter alia Herbstein
and Van Winsen: The Civil Practice of the High Court of South Africa
5th Ed at 1440 and the authority
cited therein.
[12] To my mind,
this important consideration must militate against the applicant.
Even were this court to find that she is entitled
to the declaratory
relief sought, she would derive no benefit in practical and real
terms therefrom. First, an order declaring
the new trust instrument
void would effectively declare that the Master had no power to have
issued the letters of authority of
11 July 2011; but the applicant
has not sought to impugn his decision to do so. Even if she could
overcome this hurdle (which in
my view, for the reasons already
given, she cannot) then, at best for the applicant the effect would
be that the trust has no trustees,
given that the only trustee
appointed solely in terms of the old trust instrument died in 2002.
The applicant has not shown that
she and the respondents were
appointed solely in terms of the old trust instrument, i.e. without
any amendment thereto. Accordingly,
neither the applicant nor any of
the respondents would have locus standi to approach this court to
determine any dispute between
them as trustees, because they would
not be trustees. Second, the applicant would derive no benefit from
such an order as a beneficiary
of the trust, but would rather likely
be exposed to at least potential prejudice (along with the other
beneficiaries) at least
until the Master or the Court step in to
assist.
[13] In a nutshell
therefore, I am compelled to conclude that the declaratory relief
sought by the applicant is not competent. It
follows that it fails.
In the exercise of my discretion costs on the party and party scale
should follow the result.
The
counter-application and removal application
[14] The papers
filed in respect of the counter-application for the applicant’s
removal as trustee run to just under 700 pages.
This excludes those
relating to the proposed removal application. The counter-application
was launched largely in response to the
declaratory relief sought by
the applicant. While understandable to a degree, particularly in
light of the pending offer in respect
of Die Opstal, the plethora of
factual disputes to which it has given rise are such that it cannot
reasonably be expected of this
court to determine it on the papers
alone, particularly on an urgent basis two days before court term
ends. In any event, given
my finding that the application for
declaratory relief must fail, any urgency which might previously have
existed falls away.
[15] The fact of the
matter is that, based on the Oudekraal principle, the respondents are
at liberty to proceed with the sale of
Die Opstal in accordance with
the resolution passed by them by way of a simple majority.
[16] There is no
reason why both the counter-application and the removal application
(which seek far-reaching relief) should not
be referred to trial in
due course in terms of
rule 6(5)(g)
of the uniform rules of court,
and in the exercise of my discretion I intend to make such an order,
subject to the parties being
afforded the opportunity to provide me
with proposals as to appropriate directions on pleadings as well as
the definition of issues.
Conclusion
[17] Accordingly the
following orders are made:
1. The applicant’s
application for leave to amend her notice of motion is granted.
2. The application
for declaratory relief is dismissed with costs, including any
reserved costs orders relating thereto as well
as the costs of two
counsel where employed. Such costs shall be paid by the applicant in
her personal capacity.
3. The
counter-application and removal application are referred for trial on
a date to be arranged between counsel for the parties
and the
presiding judge.
4. The parties
shall, in consultation with each other, provide the presiding judge
with written proposals as to pleadings and the
issues to be
determined at the trial, by not later than Friday 6 February 2015.
5. In the event that
the parties are not able to reach agreement on the aforegoing, or the
presiding judge is not satisfied with
their proposals, then she shall
hold a conference in terms of
rule 37(8)
in order to make directions
with regard thereto which shall be binding on the parties.
6. The costs of the
counter-application and removal application (including those
pertaining to the amendment of the applicant’s
notice of
motion) shall stand over for later determination.
J I CLOETE