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[2015] ZAWCHC 116
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Hanekom v Voight N.O and Others (15 493/2014) [2015] ZAWCHC 116; 2016 (1) SA 416 (WCC); [2016] 2 All SA 155 (WCC) (13 August 2015)
IN THE HIGH COURT OF
SOUTH AFRICA
(WESTERN CAPE DIVISION,
CAPE TOWN)
CASE NO. 15 493/2014
DATE: 13 AUGUST 2015
In the matter between:
NICOLENE
HANEKOM
..................................................................................................
APPELLANT
AND
LIZETTE VOIGHT
N.O
........................................................................................
1ST
RESPONDENT
LIZETTE
VOIGT
..................................................................................................
2ND
RESPONDENT
JANENE GETRUIDA GOOSEN
N.O
.................................................................
3RD
RESPONDENT
JANENE GETRUIDA
GOOSEN
.........................................................................
4TH
RESPONDENT
LINDA MARAIS
N.O
............................................................................................
5TH
RESPONDENT
LINDA
MARAIS
....................................................................................................
6TH
RESPONDENT
THE MASTER OF THE HIGH COURT, CAPE
TOWN
..................................
7TH
RESPONDENT
ELIZABETH RENE
MARAIS
.............................................................................
8TH
RESPONDENT
CORAM: BOZALEK, J et DLODLO, J et
RILEY, AJ
JUDGMENT DELIVERED ON 13 August 2015
DLODLO, J
INTRODUCTION
This is an appeal emanating from an
application which served before Cloete J on 10 December 2014. This
matter came to Court consequent
upon a dispute between four sisters,
namely, the Appellant and the individuals cited as the First to Sixth
respondents who are
both trustees and the beneficiaries of the Dr
Marais Trust registration number MT3990/86. The Appellant appeals
against certain
findings made by Cloete J. The necessary leave to
appeal was granted on 2 February 2015.
The Appellant initially only applied
for a declaratory in connection with the validity of an amendment to
the original Trust Deed
of the Dr Willie Marais Trust (“the
1980 Trust Deed”). Thus there appears to be suggested that the
two trust deeds
relevant in this appeal are: (a) the trust deed which
is attached to the Last Will and Testament by means of which the
1980 Trust
Deed was created and (b) a document with the heading
“Memorandum van Ooreenkoms” signed in 2001 (“the
2001 Memorandum”).
The Respondents answering to the
Appellant’s application for the abovementioned declarator in
connection with the validity
of the 2001 memorandum as an amendment
to the 1980 Trust Deed, brought a counter-application for the removal
of the Appellant as
a trustee of the trust. The Appellant then
amended her notice of motion to provide for the removal of all four
trustees of the
trust (including herself) and for the appointment of
four independent trustees in their stead.
The findings and orders made by the
Court a quo which to a greater extent form the crux of this appeal
are that (a) the Master of
the High Court, (the Seventh Respondent)
carried out an administrative action during 2001 by making a formal
decision that the
2001 Memorandum is valid and, as a consequent
thereof that the Appellant did not bring an application for the
review of the Master’s
administrative action, the 2001
Memorandum stands as the trust deed, valid since 2001; and (b) both
the Appellant’s application
for the removal and substitution of
all the trustees and the Respondents’ application for the
removal of only the Appellant
as a trustee, was referred to trial.
Thus this Court is not called upon to make any decision regarding
those applications. The
only question before this Court for
determination is whether the 2001 Memorandum constituted a valid
amendment of the 1980 Trust
Deed. It is only helpful to first set out
the background to the dispute over the Trust Deed.
BACKGROUND FACTUAL MATRIX
It is common cause that there is a long
standing dispute between the parties (with the Appellant in one camp
and the First to Sixth
Respondents in the other). This dispute is
captured in the following averment contained in the Respondents’
Answering Affidavit,
namely:
“Die dispute en meningsverskille
het vele fasette maar sentreer veral rondom die lotgevalle van wat
tans die waardevolste
bate van die Trust daarstel, naamlik ‘n
Kaap-Hollandse woning in Eversdal, wat oorspronklik ‘n
plaas-opstal was (“die
postal”).
Die Applikant probeer ten alle koste
verhoed dat die opstal aan ‘n buitestaander verkoop word (selfs
teen ‘n prys wat
ongetwyfeld die markwaarde daarvan
weerspieël), maar aan die ander kant het sy al herhaaldelik
probeer of aangebied om self
(en in die mees onlangse geval via haar
familietrust) die opstal te koop. Dit alles geskied teen die
agtergrond daarvan dat die
Trust likiditeitsprobleme het – die
resultaat van die feit dat die Trust aan die een kant geen
noemenswaardige inkomstegenererende
aktiwiteite huisves nie, maar aan
die ander kant noemenswaardige lopende kostes het, sodat ‘n
gunstige verkoping van die
opstal tot die voordeel van alle
belanghebbendes sal wees. Ek sal later in hierdie eedsverklaring die
Trust se finansiële
posisie in meer detail behandel.”
On 8 December 1980 one Willem Daniel
Marais, the grandfather of hte sisters (trustees in the 2001
Memorandum) signed his Last Will
and Testament in terms of whch one
half of his estate was bequeathed to Dr Willie Marais Trust. The last
mentioned Trust is now
known as the 1980 Trust Deed and it stands
central in this appeal. Perhaps it should be mentioned that hte
Appellant’s case
is that it is the 1980 Trust Deed which
governs the affairs of the trust. On 7 March 2000 after the demise of
Willem Daniel Marais,
his son (father of the four sisters) was
appointed as the only trustee of the 1980 Trust. On 5 April 2001
before the death of the
father to the four sisters, the five trustees
(the present four sisters and their father) signed a document with
the heading “Memorandum
van Ooreenkoms”. This is the
document playing a pivotal role in these proceedings and which
assumes the name of “the
2001 Memorandum”. The
Respondents’ contention is that the 2001 Memorandum constitutes
a valid amendment to the 1980
Trust Deed. The Applicant contends
differently.
The 1980 trust Deed (in its original
form) although created in the Last Will and Testament of the sisters’
grandfather (a)
is clearly substantially a product not of the
latter’s violation but is rather the wishes of their father who
was then still
alive and (b) who, as far as its contents (assets) are
concerned, had an initial make-up which differed substantially from
the
make-up at the time of the conclusion of the 2001 Memorandum.
It is common cause for instance that
the assets representing the subject-matter of the dispute (especially
including the manor house)
did not come from the sisters’
grandfather and were in no sense disposed of via his testament. They
were instead derived,
subsequently to the death of the grandfather,
from theestate of the sisters’ father or from the entities
controlled by him.
IS THE 2001 MEMORANDUM A VALID
AMENDMENT TO THE 1980 TRUST DEED
The Trust Deed was created by the
grandfather of the current trustees is attached to the Last Will and
Testament of Willem Daniel
Marais. The 1980 Trust Deed provides inter
alia that the trust should be kept and used for the benefit of the
children of Johannes
Linde Beyers Marais (father of the sisters) as
the beneficiaries. The assets of the trust would vest “in die
adminstrateur”.
Johannes Linde Beyers Marais was the only
administrator or trustee of the trust. Clause D (d) of hte1980 Trust
Deed provides that
if there are more than one trustee, any decision
taken by them should be unanimous (“moet hulle besluite
eenstemming wees”).
Clause 1 deals with the continuation of the
trust and it provides as follows:
“VOORTSETTING VAN TRUST:
Indien ‘n begunstigde te sterwe
kom voor beëindiging van die trust, sal die begunstigde se
afstammelinge en by ontstentenis
aan afstammelinge sy erfgename in di
eplek en stede van die afgestorwe begunstigde tree as begunstigde”.
It is accepted thatthe 2001 Memorandum
does differ from the 1980 Trust Deed in several respects. For
instance (a) whereas the 1980
Trust Deed provides that the four
sisters are to be the only beneficiaries of the trust and in the
event of one of them passing
away before the termination of the
trust, such deceased sisters’ descendents would become
beneficiaries in her stead, the
2001 memorandum (in contrast)
broadens the group of income beneficiaries and capital beneficiaries.
In the 2001 Memorandum the
group of beneficiaries is added to include
“aanverwante van die kapitaal begunstigdes”. (b) Whereas
the 1980 Trust
Deed requires unanimous decisions by the trustees, the
2001 Memorandum provides that a simple majority is all that is
required
for valid decisions by the trustees, save for certain
exceptions.
Thus in Mr Coetsee’s submission
the descendants of the sisters identified n the 1980 Trust Deed as
potential beneficiaries
in the event of their mother passing away are
prejudiced or are in a worse position if the 2001 Memorandum is to be
held as valid
particularly because the group of beneficiaries is
added to by way of the 2001 Memorandum. I do not of course agree with
Mr Coetsee
in this regard amendments to a trust deed is that the
trustees and the beneficiaries can amend a trust deed. I also accept
tht
where minor beneficiaries or unborn beneficiaries are concerned
ordinarily a Court order is required for a valid amendment of a
trust
deed. In boltering his contention herein Mr Coetsee relied heavily on
Ex parte Watling and Others
1982 (1) SA 936
(CPD) a judgment by
Tebbut J in which he concluded as follows:
“In the present case the
applicant’s sons have agreed with the applicant to postpone
their rights to the capital of
the trust until her death. They can
do so but they cannot in this way alter the scheme of devolution set
out by the testator.
As stated by Schreiner J in the Loewenthal case
supra:
‘...it is not merely the rights
of the beneficiaries” (ie the applicant’s sons’
rights) “that are
involved but the right, if it can be called
such, of the testator to have his plan carried out’.”
That plan, in the present case,
involves the minor grandchildren of the testator. They are not
before the Court. The Court cannot,
therefore, approve a variation
which may affect their rights. In any event, if it were to do so it
would have to give its consent
to the agreement on their behalf in
its capacity as the uppermost guardian of minors. I would not be
prepared to do so as the
variation sought may well adversely affect
them. Moreover, there may also be beneficiaries not yet in esse.
The Court cannot
give its consent on their behalf as it is not the
uppermost guardian of that which does not exist (see Ex parte
Odendaal
1928 OPD 218
; Ex parte Swanepoel
1953 (1) SA 280
(A): Ex
parte Leandy and Another (supra at 366 D-H)). This ground for the
variation sought must therefore also fail.”
Strictly speaking the Ex parte Watling
case supra is not relevant in the instant mater. At 939A of the
judgment the following appears:
“The general rule is that, save
in exceptional or peculiar circumsances, the courts will not
authorise the variation of the
provisions of a will which are capable
of being carried out and are not contrary to law or public policy.”.
Another case on which Mr Coetzee placed
reliance is Bydawel v Chapman N.O. and Others
1953 (3) SA 514
(AD)
dealing with family agreement (whether it can constitute a valid
amendment of a Last Wil and Testament. Talking to this apsect
the
Appellate Division (per Van der Heever AJ) made the following
finding:
“But it must be plain that any
rights acquired under the agreement are contractual and cannot affect
the devolution of the
testator’s estate; in other words they
may contract to render toeach other the fruits of the dvolution, if
any when they
mature or accrue, but cannot alter the devolution by
contract. Moreover in the present case non constat we have before us
all the
beneficiaries or that the agreement had the consent of all
concerned”.
It is helpful to point out that the
headnote of Bydawel v Chapman N.O. and Others supra makes it rather
clear that it does not address
itself to stuations such as obtaining
in the instant matter. Perhaps for purposes of completeness I should
set out infra the headnote
referred to above:
“Whereas the testator had
withheld the adminsitration of his estate from his two daughters, the
agreement purported to give
one daughter the unfettered
administration thereof. Whereas the testator had directed that the
corpus of his estate should be finally
distributed only after the
death of the survivor of his daugters, the agreement sought to
anticipate this date and to provide for
the final distribution upon
the death of one of the daughters, thereby jeopardising the potential
rights of heirs ab intestato”.
There was no evidence to show that all
the beneficiaries were before Court or that they consented tothe
agreement. The same cannot
be said about the instant matter. In mr
Coetsee’s contention the absence of permission by the
descendants of the sisters
and in the absence of a Court order
authorising the amendment of the 1980 Trust Deed by the substitution
thereof by the 2001 Memorandum
is fatal to the validity of the 2001
Memorandum.
The Trust Property Control Act 57 of
1988 contain the statutory backdrop to the process in terms of which
the Master authorises
a trustee in writng in order that the latter
might validly act in that capacity. There is a distinction between
the appointment
of a trustee (occurring in terms of the trust deed)
and his or her written authorization b the Master (in terms of
Master’s
statutory powers) but the point of importance is that
the act through which the Master authorises a trustee to act as such
must
necessarily take place against the backdrop of the particular
trust deed. One of the reasons for the distinction referred to supra
is the very fact that the trust deed is the “defining source”
of hte trustees’ powers. See in this regard Honore’s
South African Law of Trusts 5th edition at pages 219-220 where the
author inter alia explains as follows:
“The Act reconizes and preserves
the distinction between the appointment of a trustee, whch occurs in
terms of hte 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 do
so. Statutory authorization
is added for two purposes: not only in
theinterests of the benficiaries, so as to reinforce the requiremet
of security, but to
serve to outsiders as written proof of incumbency
of theofficeof trustee”.
Of relevance is also Section 6 (1) of
theTrust Property Control Act providing inter alia that:
“Any person whose appointment as
trustee in terms of a trust instrument, s7 or a Court.....shall act
in that capacity only
if authorized thereto in writing by the
Master”.
The clear implication is that the
Master’s authorization of a trustee presupposes the existence
of a particular undelying
trust deed which seves or must serve as the
fons et origo of such authorization.
The abovementioned principle ordinarily
assumes particular importance in a case such as the instant one where
a choice must in effect
be made between two trust deeds. In the
situation such as the present one, the Master simply must make a
choice or at the very
least acquiesce in the choice already made by
the parties involved. His actions are not a mere “rubber
stamping”. The
important fact is that even of the situation
were regarded as a mere “rubber stamping”, the outcome
would still be
that the Master in effect chose or preferred one trust
to another. One must reason so since in the absence of any decision
or judgment
as to which trust deed is applicable, the Master would
and could not even putatively have authorized the relevant person to
act
as trustee.
In truth in appropriate circumstances
the Master may even have a duty to make such a decision. By necessary
implication it is part
and parcel of the Masters’ powers to
authorize persons to act as trustees. Posing a question whether the
Master has specifically
been given the powers to determine the
“validity” of an “amendment” is not a helpful
tool to employ. The
position is simply (as Le Grange contended) that
where the Master is required to authorize a trustee and where he has
been specifically
asked to make a judgment call regarding the content
of the proposed trust deed, he must necessarily apprise himself of
the underlying
trust deed.
It is true that the 2001 Memorandum was
regarded by all concerned including the Master as the relevant trust
instrument (in comparison
with the 1980 Trust Deed). The sisters’
authorization to act as trustees (an also their appointment) simply
occurred in terms
of the 2001 Memorandum. It was found in Oudekraal
Estates (Pty) Ltd v City of Cape Town and Others
2004 (6) SA 222
(SCA) that
Certain permission granted by the
Administrator was unlawful and invalid from inception. But the
Supreme Court of Appeal proceeded
to hold as follows:
“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 is for this reason that our law has
always recognized
that even an unlawful administrative act is capable
of producing legally valid consequences for so long as the unlawful
act is
not set aside”.
The above has come to be known as the
Oudekraal principle. In simple language this says the consequences of
those actions remain,
regardless of whether they wee correct or not.
Therefore the only question is against the backdrop of which trust
deed the appointment
of the additional trustees (and therefore also
their authorisation by the Master) occurred in fact. In passing it
may be mentioned
that section 6 of the Act pre-supposes that
authorization of a trustee can occur only in terms of a particular
trust deed. The
true position is that in order for the Master to
authorize a person to act as a trustee there must be a specific
underlying trust
deed and where there is a choice between two or more
the Master must as a necessary pre-condition to authorization know in
terms
of which trust deed the underlying appointment of that person
as trustee occurred. Authorization without an implicit
acknowledgement
of the trust deed in terms of which the underlying
appointment occurred is infact legally untenable and could clearly
not be what
the Legislature intended. The decision in Groeschke v
Trustee, Groeschke Family Trust and Others
2013 (3) SA 254
(GSJ) at
para [19] talks to this, thus:
“[19] It is in my view quite
clear that the lodgement of a deed of trust and the documents
amending that deed is required
under ss 2 and 4 of the Act simply in
order to facilitate, for example, the identification of the terms of
a trust and powers,
rights and obligations that flow from them”.
In Ex parte Watling supra, a decision
by Tebbut J relied on heavily by Mr Coetsee, the Judge also referred
to what was stated by
Smuts J in Ex Parte Marais, namely
“Dit is ....duidelik dat die Hof
geen inherente diskressie besit om die erfvolging wat deur ‘n
testator beplan is te
wysig slegs op grond van die toestemming van
alle belanghebbendes nie”.
Indeed an amendment to the old trust
deed (the 1980 Trust Deed) would not have been impossible in the
circumstances of the instant
mater. I am in agreement with the
submission made by Mr Le Grange that the question whether the 1980
Trust Deed could validly have
been amended in 2001 Memorandum ought
(from a fundamental point of view) not to be adjudicated with
reference to the co-incidence
that the 1980 Trust happens to be of
testamentary origin. In the above regard it may be helpful to refer
to PA Olivier et al Trustreg
en Praktyk 2nd ed Lexis Nexus para
2.9.2.1 where the following rather convincing argument is advanced:
“Omdat ‘n testamentêre
trust sy oorsprong in ‘n testament het, is die oorheersende
toepaslikheid van die
reël voluntas testatoris servanda est ewe
van toepassing gemaak op so ‘n trust. Dié soort trust
word dus, met
verwysing na wysigings, met ‘n testament
gelykgeskakel wat, ons insiens, nie geregverdig kan word nie.”
The argument proceeded in the same
paragraph as follows:
“Die trust is wel in ‘n
testament vervat, maar wanneer die bedoel (sic) afgehandel is, skuif
die trust as volwaardige
entiteit uit die testament uit en
verlaatas’t ware die erfreg en neem s plek in die ry van
regsfigure as ‘n selfstandige
nuwe regsfiguur. Vanaf daardie
oomblik moet daar trustregtelik geoordelik en beoordeel word en dit
kan slegs aan die hand van die
essensiële elemente van ‘n
trust gedoen word....Ons stem saam met die volgende pleidooi wat
Guantlett voor die promulgering
van Wet 57 vna 1988 gelewer het:”
[...] There is a distinction between best serving the intention of
the settler and a primal
obeisance to the dead hand. More important,
the present position is undesirable. It is based on a simplistic
equation of a settler
– whether inter vivos or mortis causa
–with a testator, attributing to him a foresight beyond the
dreams of most mere
mortals and it petrifies at one arbitrary moment
in a tumultuous age what should be a supple, living institution.”
I fully agree with the above quoted
reasoning.
In the instant matter it is not only
common cause that the deceased estate of the sisters’
grandfather has been long since
been finalised, but in addition
thereto the make-up of the Trust assets at the time of the conclusion
of the 2001 Memorandum was
substantially different from such make-up
at the time of the testator’s death – with the assets at
issue here having
been placed in the Trust only after his death and
from other sources. This makes it even more absurd to treat the trust
deed as
it was in 2001 as if it were nothing more than a testamentary
document.
In order to illustrate the point Mr Le
Grange gave the following though experiment which I find very
telling:
“(a) Suppose a testator (T)
bequeathes certain assets (X, Y, Z) in trust mortis causa.
(b) The beneficiaries of the Trust are
A, B and C.
(c) Long after the finalisation of T's
deceased estate the trustees, complying strictly with the trust deed,
distribute the assets
(X, Y and Z) to A, B and C.
(d) Shortly thereafter, and without the
Trust having been dissolved in the meantime, A donates a valuable
income-producing asset
(W) to the Trust. At that stage and
thereafter it represents the only asset of the Trust.
(e) Subsequently D, A's son, appears on
the scene. All the beneficiaries (A, B and C), and the trustees, are
in favour of amending
the trust deed by adding D, in addition to A, B
and C, as a discretionary beneficiary of the Trust.”
The question is (regard being had to
the above thought experiment) ought our law to set its face without
more against such a proposed
amendment merely because the Trust
originated (historically speaking) in a testament? The law is a
dynamic instrument. The answer
is a simple no. The Appellant relied
on the general rule expressed in cases described as an unwillingness
to interfere with the
devolution of the testator’s estate as
per the expression of intent inhis testament. Compare for an example
Ex Parte Jewish
Colonial Trust Ltd: In re Estate Nathan
1967 (4) SA
397
(N) 408E where the following is recorded:
“The Court cannot make, or
re-make a testator's will for him; it cannot vary the will he has
made. It cannot change the devolution
of his estate as he has
directed it, nor add to or subtract from the benefit he has conferred
upon each of the beneficiaries. They
must be content to take what
they are given, when and on the terms on which it is given. The Court
will interpret the will in order
to ascertain who are the
beneficiaries and the extent to which each benefits and in
interpreting it will give consideration to
what may properly be
implied into the will. The rights of the beneficiaries are determined
by the will properly interpreted.”
Ordinarily, where one is no longer
dealing with the testator’s estate (in the sense of the
material benefits to be derived
out of the estate) clearly the only
judicial basis for an objection against an amendment of the trust
deed also falls away in accordance
with the maxim cessante ratione
legis cessat ipsa lex. In any event one must also have regard to the
provisions of clause H of
the 1980 Trust Deed. It reads as follows:
“H: BEËINDIGING VAN TRUST:
Dit word in die diskresie van die Administrateur gelaat om te besluit
wanneer die Trust
beëindig moet word.”
1. The aforementioned clause gives
arather wide discretion to the “administrateur”. On a
proper interpretation of the
provisions of clause H it is clear that
the view of the “administrateur” (trustee) counts and
that the attitude of
others (including the beneficiaries) could not
stand in the way of the application of the provision. See Natal Joint
Municipal
Pension Fund v Endumeni Municipality
2012 (4) SA 593
(SCA)
para 18.
The provision of clause H of the 1980
Trust Deed must by necessary implication allow an amendment to the
1980 Trust Deed. I say
so because the power to dissolve a trust goes
beyond the mere power to amend it. See also in this regard Cameron
et al Honoré's
South African Law of Trusts 5th ed Juta 2002 at
506, where the authors state that those who can terminate a trust
can necessarily
also amend it. The authors inter alia postulate the
following:
“... [i]t follows that they can
in effect vary the trust, because they can use the trust property to
set up a new trust that
differs from the old.”
See also Ex Parte Knight and Others
1946 CPD 800
811; Ex parte Hulton
1954 (1) SA 460
(C) 468 where the
following formulation appears:
“the possession of the greater
power sanctions the exercise of something less than the whole”.
Accepting the fact that the
administrator of the 1980 trust Deed could validly terminate that
trust, he could thus achieve an “amendment”
via the
termination of the old trust and the creation of a new trust. I,
however, think that it is not necessary to engage in
the alternative
argument postulated in Mr Le Grange’s head of argument in this
regard. It suffices to quote from the judgment
of the Supreme Court
of Appeal in Peters and others NNO v Schoeman and others
[2000] ZASCA 152
;
2001 (1) SA
872
(SCA) at 879:
“There are two classes of
'simulated' transaction known to our law. The first is one in which
the parties have set out to
conceal the real agreement by dressing it
up in the guise of another. The second is one in which the parties
have mistakenly characterised
their real agreement as something
which, when juristically analysed, it is not. In the first, the
simulation is deliberate; in
the second, it is unwitting. In both
instances a court will have regard to the true nature of the
agreement and disregard the description
given to it by the parties.”
See also Registrateur van Aandelebeurse
v Aldum h/a Onecor Group en ander besighede
2002 (2) SA 767
(SCA)
772-773.
I thus fully agree with the stance
adopted by Le Grange that the Court will not necessarily be guided by
the name which the parties
gave to their transaction but will,
instead, in characterising the transaction, have regard to whatever
proves (in objective terms)
to have been the parties’ intent.
Perhaps the point must be made that the
relief sought in prayer 3 of the notice of motion is quite
unrealistic and totally inappropriate
on an administrative law basis.
No court of law can willy-nilly set aside various legal acts with the
consequences where these
have not been indentified apart from the
description “which were not unanimously reached”. Such
legal acts may very
well affect a range of parties who have been
given no notice of any such relief being sought. Those decisions must
stand until
they are individually set aside.
WHAT BENEFITS SHALL APPELLANT OBTAIN
Before engaging in further discussion I
need to mention that on behalf of the Respondents a point in limine
was taken by Le Grange
SC. In truth this appeal is premised upon the
notion that the 1980 Trust Deed (requiring a unanimous
decision-making) is valid
and the 2001 Memorandum (allowing
decision-making by majority) is invalid. Mr Le Grange contended that
even of the above were to
be assumed to be correct it would not avail
the Appellant. In his view even if the situation were governed by the
1980 Trust Deed
the Appellant could in the circumstances not be
allowed to cast a vote in connection with the manor house based on
the breach of
her fiduciary obligation. The above assertion is
correct even though it plays a lesser role in the determination of
the legal question
before Court, namely whether the 2001 Memorandum
is valid. In passing it needs to be mentioned that the fiduciary
obligations of
a trustee such as the Appellant include exercising the
care, diligence and skill which can reasonably be expected from a
person
who manages the affairs of another. See: section 9 (1) of the
Trust Property Control Act 57 of 1988; Tijmstra NO v Blunt-Mackenzie
NO and others
2002 (1) SA 459
(T) 472-73; 473-74. Of course this duty
does include particularly the duty of trustees to avoid a situation
where their fiduciary
duties come into conflict with their private
interests or where they position themselves in such a manner that
their personal interests
clash or merely might clash with their
responsibilities and duties towards the trust and the beneficiaries.
See Hoppen v Shub 1987
(3) SA (C) 201 210; Jowell v Bramwell-Jones
and Others
2000 (3) SA 274
(SCA) para 16; Afrisure CC and Another v
Watson NO and Another
[2008] ZASCA 89
;
2009 (2) SA 127
(SCA) para 54-56. The rule
against conflicts of interest is a rather strict one that leaves
little room for exception. It applies
even if the person in question
acted honestly and bona fide. See Phillips v Fieldstone Africa (Pty)
Ltd and Another
2004 (3) SA 465
(SCA) para [31]. Persons occupying a
fiduciary position also must not exercise their powers for improper
or collateral purposes,
thereby in effect fettering their discretion.
See in this regard Afrisure CC and Another v Watson NO and Another
[2008] ZASCA 89
;
2009 (2) SA 127
(SCA) para 54-56.
2. Indeed the fiduciary obligations
owed by a trustee to the trust and its beneficiaries are equivalent
to, and not less onerous
than the fiduciary obligations owed by a
company director to a company. See: Afrisure CC and Another v Watson
NO and Another supra
para 54. Thus a trustee wishing to purchase a
trust asset as the Appellant apparently does finds himself in, a
precarious position
and his conduct in this regard will have to be
subjected to strict and close scrutiny and shall be measured against
the strictest
possible ethical standards. See: Sibex Construction
(SA) (Pty) Ltd and another v Injectaseal CC and Others
1988 (2) SA 54
(T) 67E). The aforegoing discussion is in line not only with the
elementary principle that a director may not vote in connection
with
a contract or any other matter in which he is personally interested
but also with the position which now applies statutorily
to company
directors who have a personal interest in a transaction to be entered
into by the company. See: Trek Tyres Ltd v Beukes
1957 (3) SA 306
(W)
310). I end this aspect with the following important and telling
commentary by FHI Cassim et al Contemporary Company Law (2nd
edition
Juta p 571 (commentary concerns the applicable provisions of the
Companies Act, 71 of 2008
):
“Having made the disclosure, the
director, if present at the meeting, must leave the meeting
immediately thereafter and may
not take part in the consideration of
the matter, save to disclose to the meeting any material information
and any observations
or pertinent insights relating to the matter ...
(s 75((5)(d)
and (e). These provisions embody the ... “disclose
and recuse” approach. The director's departure from the meeting
does not affect the quorum for the meeting as he or she is deemed for
this purpose to be present at the meeting. But for voting
purposes
and for determining whether the resolution has sufficient support for
its adoption, he or she is regarded as being absent
(s 75(5)(f)(i)
and (ii).”
The above finds support in the
so-called doctrine of the abuse of rights which is applied in our law
in appropriate circumstances.
See: Regal v African Superslate (Pty)
Ltd
1963 (1) SA 102
(A) 107-109; and see the general discussion in
Boberg The Law of Delict vol 1 Juta 1984 206-210. In the instant
matter it would
appear that the Appellant exceeded the proper bounds
of any “right” which she might have had to insist on
unanimous
decision-making (in terms of the 1980 Trust Deed).
CLOSING REMARKS
The appeal before us lacks merits and
it stand to be dismissed. At the risk of repeating what has been
mentioned already, it is
emphasised that the estate of the
grandfather was rather limited. It essentially consisted of two empty
plots and a house in Bergvliet.
It is important to bear in mind that
the two trust created by the grandfather were very much the product
of the thinking of his
two sons. It is the sons that went to
attorneys and instructed them to draw up such trusts. These were, in
turn put infront of
the old man (grandfather to the sisters). The
grandfather as an interested party must have been happy to sign these
off. The beneficiaries
identified then remain the same even to date,
namely the four sisters. Regard being had to the background facts in
this matter,
it is highly artificial to view the initial trust (the
1980 Trust Deed) as solely or principally a testamentary trust and to
artificially
dictate that its whole structure must be determined by
the provisions that in the event that one of the sisters (daughters)
predeceasing
his great grandchildren would be beneficiaries. These
great grandchildren remain amongst the potential beneficiaries but
now as
things stand that is dependent upon what the four sisters in
their capacities as trustees decide.
When the grandfather founded the 1980
Trust Deed, there were no provisions for the four sisters to become
trustees. His (grandfather’s)
son was then the only trustee. In
these circumstances the provisions that any decision that the
trustees make had to be unanimous
were understandable and practical.
But when the only “administrateur” (father to the four
sisters) took a decision
to seek the appointment of all four of the
beneficiaries (his daughters) as trustees the question of a potential
deadlock and/or
lack of unanimity presented itself. The provision
contained in the 2001 Memorandum stipulating that a majority decision
had to
prevail. The father to the four sisters gave himself a veto
power (which applied for as long as he was alive).
It would be problematic to now
resurrect the unanimity clause contained in the 1980 Trust Deed.
Circumstances have completely changed
in a manner which was not
envisaged by the grandfather. Huge assets to which the grandfather
did not contribute and which did not
and may not have been in
existence when he died are now the crux of the trust. I do not agree
that the provisions contained in
the 2001 Memorandum ignore the
scheme of devolution proposed by the original founder of the 1980
Trust Deed. In my view, this case
presents factual scenario that call
upon the courts to adopt a realistic and practical approach and avoid
to let the dead hand
of the testator rigidly prescribe how the corpus
of the trust must be dealt with some thirty five years later under
completely
changed circumstances. It is not my understanding that the
original testator (the grandfather) created a trust to last forever
and which would ultimately include as beneficiaries the great
grandchildren. The latter’s interests merely came into play
if
one of the sisters died or should die before the trust had been wound
up or discontinued. None of them have died. In the circumstances
as
mentioned earlier on this appeal lacks merits.
ORDER
I would make an order in the following
terms:
(a) The 2001 Memorandum constituted a
valid amendment to the 1980 Trust Deed.
(b) The Appeal is dismissed with costs
which are to include costs occasioned by the employment of two
counsel.
(c) Costs shall be paid by the
Appellant in her personal capacity.
DLODLO, J
I agree
BOZALEK, I
RILEY, AJ