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Trust Case Law 2005 to Date Cases involving a trust or trustees

Extracted from the newsletter by Costa Divaris

© Costa Divaris South Africa 2005, 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019, 2020, 2021.

Monthly listing—Case law From 33 TSH 2005 to date

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Tax Shock, Horror—Trust Case Law Archive—© Copyright C Divaris Gauteng SA 2006 to date

3—An irreverent newsletter designed to keep you up to date—

Contents 1993 5 2002 5 2007 5 2008 5 2009 6 2010 6 2011 6 2012 7 2013 9 2014 10 2015 12 2016 14 2017 14 2018 17 2019 19 2020 24 2021 31



1993 AD case 31 March 1993: De Leef Family Trust and Others v CIR 1993 (3) SA 345 (A). A

transfer duty case much cited for unrelated reasons & a showcase for a popular but misguided view of property law. See the Monthly Notebook.

2002 Tax court case 14 May 2002: Case no 10915. Having sold their shares to their trusts at net

asset value, the taxpayers tried to avoid donations tax by attempting a fake rectification. They failed. (A fine judgment by Kroon J.)*

2007 High Court case 05 April 2007: Pratt v First Rand Bank Limited and Others (27048/03) [2007]

ZAGPHC 39. Thanks to the Business Times of 10 July 2016, I have been able to track down the judgments in this ongoing saga that I have missed over the years. It’s all about a trust & a bank loan, used for nefarious purposes, EXCON-wise, & one of the most extraordinary arguments for not having to pay back a loan ever uttered. Pratt lost the case.

Tax court judgment 26 October 2007: TC 11286. This is the case we have all been waiting for, about the unwise taxpayer who refused to accept SARS’s transfer duty settlement-offer on the ‘sale’ of a property-owning trust. It will, I hope, feature prominently in next month’s issue. The seller of my present home offered me his trust, was refused, and went on to buy his next home in that fashion—only to be caught by SARS. Talk about Schadenfreude!

SCA judgment 26 November 2007: CSARS v Airworld [2007] SCA 672 (RSA). STC on loans to a discretionary trust under a previous version of s 64C of the Income Tax Act. What erudition is here displayed! A brilliant majority decision on the meaning of a ‘beneficiary’ under a trust. It happens to support the view that I & other conservative commentators, including SARS, took on this now obsolete issue. It’s now settled—a ‘beneficiary’ includes a discretionary beneficiary. The scheme-promoters-for-a-fee lose yet another play on words. Cognitive dissonance retreats a step or two. The world is a slightly better place.

2008 SCA case 12 September 2008: Pratt v First Rand Bank (416/07) [2008] ZASCA 92. Pratt

owns 30% of an SA company, the remainder being held by an offshore trust of which she is the beneficiary, &, says the judge, ‘perhaps its controller’. She gets excon approval for her CC to buy out the trust’s interest in the company, for a cool R25 m. This she borrows from the bank, which transfers the dosh offshore. Thereupon she refuses to honour the obligation, on the ground that the arrangement is null & void, being in contravention of the excon regulations. Counsel for Pratt, none less than the celebrated Cedric Puckrin, submits—I kid you not—that the arrangement was not concluded at arm’s length, & that the price was not market-related. Pray that you never have to make such an admission, yet fear of the regulatory authorities seemingly didn’t discourage the parties from airing their dirty linen before the highest court, where Pratt took a fall.*

New TC case 06 November 2008: Case number TC 12246. Wow! A trust granting vested rights to its income is purportedly converted to a discretionary trust, retroactively to its formation! So SARS reassess the trust on the income previously distributed to & assessed in the hands of the vested beneficiaries, & raises a 100% penalty! Two assessments are time-expired, & the penalty is dropped. Then SARS abandons its reliance on the amendment of the deed, on the basis, essentially, that time travel has yet to be invented. It then gets slaughtered on s 25B of the Income Tax Act, & slapped with a costs order! Which moegoe at SARS failed to appreciate the true patrimonial consequences of the purported amendment?*

Tax court decision 01 December 2008: TC 12399. A joint will left the residue to an inter vivos trust. This included a loan due by the trust to the testatrix. The executor never



actually collected on the debt but awarded it as part of the trust’s claim against the estate. Was the debt discharged for no consideration, & did the trust acquire it for no consideration, thus triggering the infamous para 12(5) of the Eighth Schedule to the Income Tax Act? If so, the trust was liable to the CGT. The court decided the issue on the basis of the testatrix’s intention, which is odd, since the parties subject to para 12(5) were the deceased estate & the trust. Duncan McAllister, author of the Comprehensive Guide to Capital Gains Tax, points out that the estate, not the testatrix, was the creditor. The court’s decision in favour of the trust was thus based upon an incorrect understanding of para 12(5) within the context of the act as a whole. In order to avoid the CGT, the executor was required either to call up the loan & then make a distribution to the trust or formally apply set-off. Executors relying upon this judgment are cruising for a bruising, & face being personally called to account by beneficiaries. Moreover, in my view the executor’s L&D account did not comply with the requirements of GN R 473 GG 3425 of 24 March 1972, in that a claim against the trust was shown merely as an award to it. How strange that the first two CGT case reports both deal with para 12(5), whose purpose I still struggle to grasp.

2009 New TC case 27 August 2009: Case number TC 12167. A case in which donations tax was

found to be payable on invalid ‘donations’ made by a trust. It is a travesty. What I would give to know the story behind the story! Was this an asset-stripping operation?*

2010 SCA case 01 October 2010: Curators Ad Litem to Certain Beneficiaries of Emma Smith

Educational Fund v The University of KwaZulu-Natal (510/09) [2010] ZASCA 136. A case under the Trust Property Control Act. A will creates a charitable ‘object’ trust, administered by the university. Applicants for a bursary must be white SA women living in Durban. The Kwazulu-Natal High Court allows the removal of the ‘racially restrictive provisions of the bequest’, as well as the substitution of ‘the Ethekwini Municipality’ for ‘Durban’. The SCA was happy only with the first change, finding no reason to interfere with ‘Durban’ as a geographical description. Was it odd that the curators (Douglas Shaw QC & adv Andrea Gabriel) sought to preserve the racially exclusive nature of the trust? They had good reasons for doing so, according to their reports.

SCA case 29 November 2010: The Abraham Krok Trust v SARS (58/10) [2010] ZASCA 153. SARS loses a case (with costs) on the exemption from donations tax enjoyed by trusts. This is in fact an appeal from the hugely controversial ITC 1840 (2009) 72 SATC 79 (87 TSH 2010). The donations by one set of trusts to another were found to be valid in terms of the deeds, & so were exempt under s 56(1)(l) of the Income Tax Act. I am unsettled by the judgment’s seemingly skeptical, provisional acceptance of what to me are established points of law.

2011 High Court case 24 March 2011: Khabola NO v Ralitabo NO (5512/2010) [2011] ZAFSHC 62.

Well, well. Here is the explanation why the SARS return for trusts speaks of contributions made to a trust. The so-called trust involved in this matter was in fact a partnership masquerading as a trust, with the result that all the partners enjoyed locus standi to sue the hell out of each other. Perhaps it also explains the apparent obsession of the tax return for trusts with trusts as partners. Who would be so bloody mad?

SCA case 10 May 2011: CSARS v Founders Hill (509/10) [2011] ZASCA 66. I have been worrying whether the definition of the term ‘trading stock’ in s 1 of the Income Tax Act ever allowed for a concept such as a realization trust or realization company, as suggested by early cases. Here is a decision proclaiming that a realization company acquiring land to sell it in a business of selling land trades in that land. The good news is that it went off on its own facts, leaving the ‘realization’ principle intact. The taxpayer, a subsidiary of AECI Ltd, acquired its land from inception as trading stock. The judgment offers a guided tour through



some famous cases but says nothing about the definition of ‘trading stock’. I wonder how many people, even experts, are aware that my concern was in truth settled by Anglovaal v SARS (411/08) ZASCA 109 (22 September 2009) (81 TSH 2009)? No matter how closely an asset might fit into the definition, unless it is acquired (or converted) and disposed of in a profit-making scheme, the proceeds arising will be of a capital nature.*

High Court case 20 July 2011: First Rand Limited trading inter alia as First National Bank v Britz and Others (54742/09) [2011] ZAGPPHC 119. What a pity that all involved in this case were deeply ignorant of the common law of trusts. What a pity, too, that the judge concerned relied upon a clerk who couldn’t produce a decent, readable typed version of his judgment. It’s no surprise that the ‘planners’ in this matter received advice to set up a pour-over trust, controlled by its sole beneficiary, yet another trust, seemingly controlled by them, even though such a set-up is a marker for probable fraud. There are practitioners (especially attorneys) making a fortune selling dumb & even fraudulent advice on trusts. In the upshot, the bank was able to seize assets supposedly owned by the trust. This was probably the correct outcome, although for the wrong reasons. Badenhorst is a case easily misunderstood, with nothing to be gained by a bald citation of Jordaan. I hope to have a look at Brunette v Brunette and Another 2009 (5) SA 81 but I shall certainly not look at the other case cited, which—for crying in a bucket!—had to do with piercing the corporate veil. As a long-standing, albeit indifferently served, customer of FNB, I am prepared to give them a free hour’s consultation the next time they decide to attack a trust.

SCA case 30 September 2011: Potgieter v Potgieter (629/2010) [2011] ZASCA 181. What a case! It overturned an extraordinary judgment of Bertelsmann J, about which, the less said, the better. The founder of a trust, in the preamble to the deed, accepted the benefits thereunder on behalf of his minor children. (The only preamble you should ever countenance, in any document, is ‘WHEREAS…’.) Moreover, the fact of his acceptance was bolstered by some damning minutes. Under the rules of a contract stipulatio alteri, the deed could thus not be varied without the consent of the beneficiaries. For procedural reasons, the court refused to consider the further question whether the supposedly discretionary trust became a vesting trust upon the founder’s death. In my view, the trust was never discretionary as far as the termination beneficiaries were concerned. The trust property was their property, subject to a time clause & one other little clog. Here’s an admission by the man who drafted the deed, which explains why the great majority of deeds I see are rubbish:

According to Wessels’ testimony, the pronouncement in the preamble relied upon by the appellants amounts to no more than ‘a vague and loose statement’. In any event, he proceeded, this vague statement was without any meaning and was never intended to form part of the document. It unintentionally found its way into the draft, Wessels said, because he slavishly copied a precedent without realizing that the statement was inapposite to the deed that he prepared.

High Court case 06 December 2011: The Board of Executors in re The Benjamin Godlieb Heydenrych Testamentary Trust and Others (9688/08) [2011] ZAWCHC 466. The deeds of three testamentary trusts were altered by the court under s 13 of the Trust Property Control Act so as to remove discriminatory provisions.

High Court case 15 December 2011: Investec Bank Bpk en Anders v Scholtz NO; Investec Bank Bpk en Anders v Scholtz NO; Investec Bank Bpk en Anders v Scholtz NO (3056/2011, 3057/2011, 3058/2011) [2011] ZAFSHC 208. In the unlikely event that you are seeking authority for the proposition that the counterparty to a transaction with a trust need not investigate whether the transaction enures to the benefit of the trust’s beneficiaries, look no further. No one involved had a clue about trust law.

2012 High Court case 2012: Humansdorp Co-operative Limited v Wait NO and Others, unreported,

case no 2896/2012 Eastern Cape Division, Grahamstown. What can I do? People send me things, this one as a Xmas present. Pity the poor students made to sweat over such nonsense. A creditor gained access to the property of the Wait & Wait Family trust, on the ground that it was invalid. Perhaps it was, but not on the grounds listed by Van Papendorp AJ.

High Court case 22 March 2012: Zazeraj NO v Jordaan and Others (22526/11) [2012] ZAWCHC



120. The ‘others’ in this matter are Andre du Plessis, WA Boonzaaier & Professor Kobus van Schalkwyk, trustees together with Jordaan père. On the other side is the curator ad litem for Jordaan fils, referred to in the judgment as ‘the Patient’, being blind, handicapped & in need of full-time care. The trusts involved are the same trusts that featured in Jordaan v Jordaan 2001 (3) SA 288 (C). Incredibly, the trustees claimed res judicata (already decided), on the basis of the earlier case between M et Mme J! Even more incredibly, it was common cause that J père ‘dealt with the trust assets as if they belonged to him’! And so it goes on, with each fresh revelation more outrageous than the last. Since J fils had already accepted conditional benefits, amendments made to the deed without his consent were invalid. The trustees were accountable to him in the matter of full reports, accounting & explanations of any shortcomings. An agreement between just two trustees to amend a trust deed was invalid. J père, on his own representations, deserved to be & was removed as a trustee. The trustees of two of the trusts were prohibited from terminating them without J fils’s consent. And J père had to supply the tax registration numbers of the trusts. Even so, the judgment is wrong, not necessarily because of any fault of the judge. Clearly, the trusts are & always have been invalid, & their assets belong to J père, who can do with them as he pleases. What we need in our law is a form of estoppel, to hold those who pretend to form trusts to their word.

High Court case 04 April 2012: Meijer NO and Another v Firstrand Bank Ltd (formerly known as First National Bank of Southern Africa) and Another, In re: Firstrand Bank Ltd (formerly known as First National Bank of Southern Africa) and Another v Meijer and Others (2123/2010) [2012] ZAWCHC 23. A successful application for rescission of a judgment, the setting aside of a warrant for execution, & an interdicted sale of immovable property. About the disputed resignation of trustees, under s 21 of the Trust Property Control Act, & the authority to act of the remaining trustee. But the real issue was the lack of capacity of the remaining trustee to act on her own. No need for the discursion on trust law, learned as it was.

High Court case 19 April 2012: The Beverley Trust and Others v Penwill and Others (69262/2010) North Gauteng High Court, Pretoria, unreported, even by SAFLII. A drawn-out scrap between two brothers, beneficiaries, together with their mother, of a family trust, of which the brothers were trustees. The one brother accused the other of fraud involving the principal asset of the trust (a cheap sale benefiting the perpetrator), giving Ranchod J the opportunity to cite Gross and Others v Pentz, the facts of which were ‘to a large extent comparable to the facts in’ the case before him, as well as the application by Corbett CJ in that case of the Beningfield exception to trusts. On that basis, the accusatory brother could act in a representative capacity, both as trustee & beneficiary. He was successful in securing the rescission of a default judgment against the trust depriving it of its principal asset & the removal of his brother as trustee.

SCA case 31 May 2012: Raath v Nel (473/2011) [2012] ZASCA 86. A claim for damages against an anesthetist found not to be able to extend to losses suffered by a company once a trust became its sole shareholder. The injured planner sold one of his companies to a family trust, a discretionary trust of which he was not a capital beneficiary. (I should love to know why not.) But he enjoyed the power to substitute the trustees! The court was unable to assess Parker critically, even to the extent of confusing a trust with a stipulatio alteri (106 TSH 2012). Without properly examining the deed & the administration of the trust, & by grossly misunderstanding s 12 of the Trust Property Control Act, it ‘recognized and emphasized’ the ‘separateness of the trust estate’. The trial judge had found that the planner ‘had lawful control over the trust’, yet the SCA simply could not grasp the consequences of that finding. All concerned—judges & counsel on both sides (Majiedt JA, writing for Farlam, Ponan, Malan JJA & Kroon AJA, PP Delport SC for the appellant & JF Mullins sc with R van Reyneveld for the respondent)—were either unfamiliar with the common law of trusts or unwilling to allow the planner to enjoy the best of both worlds; a trust that was simultaneously valid yet utterly transparent to his control. Like Schrödinger’s cat, it was simultaneously alive & dead! His counsel’s argument practically gave the game away. The chances are excellent that this was a faux trust. In any event, SARS should examine the transactions under which it was set up, especially the value at which the company was sold to it in return for a loan in



the planner’s favour. SCA case 28 September 2012: BoE Trust Limited NO & others (846/11) [2012] ZASCA

147. No need for anyone to make a fuss about this rock-solid judgment. The testatrix, wanting to create, post mortem, a racially exclusive bursary (intending to encourage white post-docs to return to SA), was advised that it would probably prove to be ineffectual. She accordingly included an ‘impossibility of performance’ clause in her will, under which her charitable testamentary trust would switch its focus to specified charitable organizations. That was triggered, said the court, when universities indicated that they would not, could not administer such a bursary.

High court case 31 October 2012: Groeschke v Trustee for the Time Being of the Groeschke Family Trust and Others (44105/2011) [2012] ZAGPJHC 228. To me, a single-beneficiary trust is either a bewind or invalid (60, 61, 63 TSH 2008, 78 TSH 2009, 91 TSH 2010, 105 TSH 2011, 113 TSH 2012). As sole trustee, the sole beneficiary’s late father had the power to ‘change’ beneficiaries (a further ground of invalidity). After a fallout, he removed his son as a beneficiary, making himself the beneficiary instead (sole trustee & sole beneficiary—a further ground of invalidity). He gave himself blanket authority to appoint income beneficiaries (ditto). How did Bester AJ deal with this mess of pottage? By claiming that the SCA, in Potgieter, declared a trust to be a stipulatio alteri (it did no such thing; 106 TSH 2012), & finding that the son had never accepted benefits under the trust. If the trust was a bewind, I say, its property belonged to the son. As sole beneficiary, he in any event was protected by the nudum praeceptum maxim (78 TSH 2009 ff). If it was invalid, its property fell into the deceased’s estate.

High Court case 10 November 2012: Rees and Others v Harris and Others (A5070/10) [2011] ZAGPJHC 237. Part of the fallout from the Tannenbaum scandal, one of the issues being whether the Aljebami trust was the alter ego of Rees, a peregrinus. I like the way Salduker J rephrased that essentially silly formulation:

Put differently, the second issue is whether the assets of the Aljebami trust, can effectively be considered to be the assets of Rees.

Oh dear. She then goes on to deal with ‘the separate legal personality, if any, of the Aljebami trust’. It gets worse: what comes next is a discussion about piercing the corporate veil & another about trustees not treating a trust as a separate entity. I intervene here to restate the gravamen of the principal part of the judgement: there were insufficient facts to show that the trust property was in fact the property of Rees. There! Was that so difficult? But it wouldn’t win you a degree from UP. To put it another way, Harris, also misunderstanding trust law, botched his case.

Tax court case 20 November 2012: TC 12524. This bloke works for a labour broker. He is advised to purport to divest the fruits of his personal labours in favour of a trust (a legal impossibility) founded by another trust (a highly suspicious circumstance, often indicative of an intention to defraud creditors, especially SARS). He is the sole trustee of the first trust. He is also advised to claim expenses in the first trust against the income thus (fraudulently) diverted to it. These include (fraudulently) the cost of his family’s groceries! He sells all his moveable assets to the first trust (nutty, from a CGT point of view but potentially helpful in defrauding creditors). He is also advised to transfer all the trust’s purported income to himself, whenever he feels the need. The trust claims back from SARS PAYE deductions made from that income. The law underlying this matter was way above the heads of all involved. What I want to know is this: Why is this taxpayer & his adviser not being prosecuted for fraud? I probably could assist in identifying the adviser, if the police want a tip. I am pretty confident, nevertheless, that he qualifies as a registered 2 tax practitioner.*

2013 High Court case 11 March 2013: Dube v Road Accident Fund 2013 JDR 2343 (GSJ). An

unfortunate, court-ordered trust for a minor child. See the Monthly Notebook.§ High Court case 14 October 2013: Van Greune NO and Another v Van Greune In re: Van Greune

v Van Greune and Others (57674/2012) [2013] ZAGPPHC 291. How not to attack a trust upon your divorce, especially when you are one of the trustees.

SCA case 02 December 2013: Theron v Loubser (161/13) [2013] ZASCA 195. If trustees are at loggerheads, do they have to meet to decide to approach a court for the



resolution of their dispute? Not according to this decision, in which the appellants, one of whom was a trustee, enjoyed locus standi to approach the court in order to discover who were the trustees of a number of trusts. This part of Ponnan JA’s separate judgment represents as well the views of the majority:

Here though in demanding compliance with clauses 4.5.1 to 4.5.3 of the trust deed, the high court appeared to lose from sight that the litigation was not being conducted in the name of or on behalf of the trust. Rather the application to court was intended to have a logically anterior question resolved, namely, who are the trustees of each of the trusts in question? Until that issue was resolved it would continue to remain the subject of dispute between the parties as to who exactly was supposed to participate in the formal process contemplated by the trust deed. In those circumstances any person who had an interest in those trusts, whether as trustee or beneficiary or otherwise, was entitled to approach the court for declaratory relief on that score.

2014 High Court case January 2014: In re Sibusisiwe Ruca v Road Accident Fund (unreported) Case

no 12810/2013 & 73012/13. A judgment of Bertelsmann J in the North Gauteng High Court Pretoria, which has attracted a lot of attention in legal circles. It includes passages on the independence, duties & functions of a curator ad litem, the functions of the Master under various acts, a proposed trust & proposed insurance policies, an extraordinary report filed by the Master in another unreported case before the same court, AN Granova NO v The Road Accident Fund Case no 23167/2007, & various related issues. If you have the Granova judgment, I would welcome a copy.

High Court case 27 January 2014: Modiba OBO Ruca; In Re: Ruca v Road Accident Fund (12810/2013; 73012/13) [2014] ZAGPPHC 1071. Judgment of Bertelsmann J on a court-appointed trust. Reported in 135 TSH 2014 & covered in 203 TSH 2020.

Guernsey case February 2014: Investec Trust (Guernsey) Ltd & Bayeux Trustees Ltd v Glenalla Properties Ltd (2014). A trust under Jersey law entered into a contract governed by Guernsey law, the trust being administered in Guernsey. The trustees were found to be liable for the trust’s very substantial debts. Although perhaps not the utter disaster it appears on its face, this decision has, it seems, caused a little stir internationally. Could it be our very own Investec that was involved?§

High Court case 15 April 2014: Van Zyl NO and Another v Kaye NO and Others (1110/14) [2014] ZAWCHC 52. Was the property of a trust (& a company) available to an insolvent’s creditors? Once again, a court fails to interrogate the essentialia of a valid trust. The judgment of Binns-Ward J, however justified, on the facts, is inevitably going to add to the growing judicial mythology surrounding what is passing as trust law (footnotes suppressed):

Indeed, the applicants’ approach renders it necessary to highlight that establishing that a trust is sham and ‘going behind the trust form’ entail fundamentally different undertakings. When a trust is a sham, it does not exist and there is nothing to ‘go behind’. In my view, the applicants have confused and conflated the concepts in their founding papers. As I shall endeavour to explain, ‘going behind’ the trust is not an available remedy on the alleged facts.

…. Going behind the trust form (or ‘piercing its veneer’, as the concept is sometimes

described) essentially represents the provision by a court of an equitable remedy to a third party affected by an unconscionable abuse of the trust form. It is a remedy that will be afforded in suitable or appropriate cases. The notion of the provision of such a remedy has been postulated as a desirable development in our law; see Parker. I suspect that, rather like the position with ‘piercing of the corporate veil’ in the case of companies, closely defining the applicable principles in the cases in which it is afforded or withheld may prove elusive. That is why I consider it appropriate to describe it as an equitable remedy in the ordinary, rather than technical, sense of the term; one that lends itself to a flexible approach to fairly and justly address the consequences of an unconscionable abuse of the trust form in given circumstances. It is a remedy that will generally be given when the trust form is used in a dishonest or unconscionable manner to evade a liability, or avoid an obligation.

I am not aware of any matter in which a South African court has yet ‘pierced the veneer’ of a trust or gone behind it, although the court came close to doing so in Van



der Merwe. The applicants’ reliance in support of their approach on the Supreme Court of Appeal’s judgment in Badenhorst v Badenhorst is misplaced. Badenhorst did not entail any disregard by the court of the trust involved in that case.

Why, oh why, seek an equitable remedy when it is simpler to ask whether a trust is validly constituted & conducted in continuance, in the same way as you would ask whether the essentialia of a partnership or of (Wink! Wink!) a contract are present?

High Court case 23 April 2014.A sympathetic reader sent the citation for Van Staden and Another v Knoetze NO and Another; In Re: National Director of Public Prosecutions v Van Staden and Others (6277/2014, 20738/2008) [2014] ZAWCHC 58. An application for living expenses against assets restrained under POCA. (A provisional order of restraint was confirmed by the SCA, on petition, on 28 November 2012.) Family trusts can backfire:

In the final analysis, I find that the property from which payment is sought belongs to the Trust and not the applicants and that the conditions stipulated in section 26(6) [of POCA] have not been met. The point of law raised by the NDPP must accordingly succeed.

High Court case 22 July 2014: RP v DP and Others 2014 (6) SA 243 (ECP). I cannot find a report anywhere else, which is a pity, since I should like to keep a copy of the judgment in the Tax Shock, Horror Database. (Anyone with a copy free of © material?) A procedural case in preparation for divorce proceedings, under the accrual system, about the assets of an inter vivos discretionary trust. The wife, even though herself a trustee, claimed that her husband, a successful attorney & businessman, was in control of the assets of the trust, which was his alter ego. In her replying affidavit, however, she substantially changed her line of attack. After a most edifying judgment (see the Monthly Notebook), Alkema j concluded thusly:

I therefore come to the conclusion that the trust and therefore the trustees have a real and substantial interest in applicant’s claim, and accordingly that they should be joined as parties to the action. Also, I find that the proposed amendment of the applicant’s particulars of claim to reflect the joinder and the claim that certain trust assets should be considered as assets in the personal estate of the first respondent, is not excipiable, and the amendment should be granted.§

High Court case 11 August 2014: Hyde Construction CC v Deuchar Family Trust and Another (12471/2012; A460/2013) [2014] ZAWCHC 118; 2015 (5) SA 388 (WCC). A major decision, delivered by Roger J, on the authority to act of trustees, traversing all the famous decisions on the subject. A judgment requiring very careful study.

High Court case 11 August 2014: Hyde Construction CC v Deuchar Family Trust and Another (12471/2012; A460/2013) [2014] ZAWCHC 118; 2015 (5) SA 388 (WCC). Wrongly listed in 152 TSH 2015 as having been delivered on 11 August 2015. See the Monthly Notebook.

SCA case 11 September 2014: Pratt v Firstrand Bank Ltd (696/13) [2014] ZASCA 110. Might this be the end of a drawn-out saga? Earlier actions between these parties were noted in 67 TSH 2008 & 89 TSH 2010 but SAFLII lists five cases between them, in all. Ms Pratt lost this, perhaps final round, on the basis of res judicata (already decided). Here is how I described the action in the first round:

Pratt owns 30% of an SA company, the remainder being held by an offshore trust of which she is the beneficiary, &, says the judge, ‘perhaps its controller’. She gets EXCON approval for her CC to buy out the trust’s interest in the company, for a cool R25 m. This she borrows from the bank, which transfers the dosh offshore. Thereupon she refuses to honour the obligation, on the ground that the arrangement is null & void, being in contravention of the EXCON regulations. Counsel for Pratt, none less than the celebrated Cedric Puckrin, submits—I kid you not—that the arrangement was not concluded at arm’s length, & that the price was not market-related. Pray that you never have to make such an admission, yet fear of the regulatory authorities seemingly didn’t discourage the parties from airing their dirty linen before the highest court, where Pratt took a fall.

SCA case 19 September 2014: Vesagie NO & others v Erwee NO & Another (734/2013) [2014] ZASCA 121. Here’s a decision, by Gorven AJA, that is going to shock the financial community rigid—if it is correct—or have it howling in disbelief—if it is not. One trust sells shares to another on terms & at interest. On appeal, without any participation by the defendants (the first trust), the court decides that the contract is a credit transaction under s 8(4)(f) of the National Credit



Act but is void, since the seller of the shares is not registered as a credit provider under s 40. The court says not a word about s 4, on the application of the act, or about s 39, on the application of s 40. Didn’t anyone involved think about the implications of such a judgment? Did anyone read the act? The last time I used the expression per incuriam (judicial cockup) was in response to the Tradehold fiasco (110 TSH 2012). At the time of Brummeria (54 TSH 2007 & passim) &, even earlier, of Metcash (first mentioned in 23 TSH 2005), I was unaware of the term.

2015 High Court case 18 February 2015: Gounden and Another v Master of the High Court and

Others (3698/2014) [2015] ZAKZDHC 6. Acting, presumably, under s 35(9) of the Administration of Estates Act, the Master refused to accept the L&D account in an intestate deceased estate, on the basis of objections, to the effect that the spouse of an intestate heir, married in community of property, was also an intestate heir. On a procedural issue, Pillay J saw an application to seek a declarator under s 19(1)(a)(iii) of the Supreme Court Act as being, in the circumstances, an acceptable alternative to a PAJA review of an administrative decision by the Master. Gounden repudiated her contingent interest in the estate. The Master insisted that her repudiation required her spouse’s consent, or that of his executor. Pillay J seemingly misspoke when he said (footnote suppressed):

Turning to the authorities, all acknowledge that inheritance in an intestate estate vests on the death of the deceased.

What vests, rather, is a contingent interest; a personal right against the executor. In De Leef Family Trust & Another v CIR 1993(3) SA 345 the distinction made between dies cedit & dies venit superficially overlooks the contingent nature of a beneficiary’s interest but was in fact likened to a shareholder’s right to participate at some future time in a company’ s surplus assets, which is blatantly contingent. (I am hoping in a future issue to cover the case law on the transmissibility of such contingent interests.) Read carefully, Pillay J’s judgment coincides fully with the views on this issue expressed in this newsletter:

The person having the most direct interest in this matter is the first applicant. It is not for the executors in any estate to make such election. The first applicant acquires on dies cedit a right to claim her inheritance. It is that right that vests in her on the death of Somnaidoo. It is not the right to the inheritance itself. The inheritance would only vest in her joint estate with the deceased after the accounts have lain for inspection without objection. The accounts have not been approved by the Master. Furthermore, creditors have still to lay their claims and, until dies venit occurs, the first applicant was free to dispose of her inheritance as she pleased.

Read that passage in conjunction with what Van der Heever JA said in the famous case of Crookes, NO and Another v Watson and Others 1956 (1) SA 277 (A):

The oft-repeated saying that a legatee does not acquire a legacy unless he accepts it, misplaces the stress; it would be more correct to say that he acquires a right to the subject-matter of the bequest unless he repudiates it.

Difficult to absorb at once though it might be, this is a mainstream judgment, & the Master’s improper interference was rightly rebuffed.

SCA case 13 March 2015: WT & Others v KT (933/2013) [2015] ZASCA 9. Yet another case about a divorce & a trust, & yet another instance of utter judicial confusion about trust law, even though it ought to be clear to anyone with a clear head with access to the case law (such as is contained in my own The SA Common Law on Trusts—Chronological Database). Since the couple were married in community, & since the trust, even if valid at inception, was administered in flagrant violation of the relevant common-law principles, in my view this case is, to say the least, unfortunate. Nay, even though poorly defended by the ex-wife, it was incorrectly decided. Despite the trust’s being hugely active financially, the trustees passed only four resolutions, ever. Hubby’s co-trustee, his brother, was ‘supine in relation to the affairs of the trust’, while the trust was managed by Hubby ‘at all relevant times’. The affairs of Hubby, his companies and the trust were ‘inextricably linked’. In Mayat AJA’s opinion, a discretionary trust is sui generis. (Actually, it’s a humble contract.



That appellation pertains to a testamentary trust, which is also a form of contract, and treated as such in law.) Beneficiaries have ‘notionally separate interests to trustees who control such trusts’. (Huh? Actually, they enjoy contingent interests, as well as limited ancillary rights.) The Trust Property Control Act governs the patrimonial aspects of a trust. (Actually, the act constitutes nothing more than a brilliant celebration of the common law of trusts.) You look behind the veneer of a trust as you pierce the corporate veil. (Actually, there is no need whatsoever to import company law into the trust field, & to do so is not part of our common law. Although RP v DP & Others—143 TSH 2015—is cited, it remained unread.) And then, alas, this (footnote suppressed):

Even if one accepts in the present case that the trust form cannot be separated from the personal affairs of W T [hubby], and even if one accepts further that W T did not act jointly with his brother in relation to affairs of the trust, as contemplated in the trust deed, there is no legal basis for contending that either W T or his brother, as trustees of the trust, owed any fiduciary responsibility to W T [‘K T’ is intended, that is, the ex-wife]. This is simply so as W T [again, K T is intended] did not qualify as a defined beneficiary of the trust at any stage, nor was there any evidence that she had transacted with the trust as a third party at any stage before or after her marriage to W T.

The issue was not whether the ex-wife was a beneficiary but whether Hubby (and therefore also his ex-wife) owned the property or the trustees. By Mayat AJA’s own account, there was no trust property—just joint property. Mute participants in this miscarriage of justice were Lewis, Bosielo, Pillay, & Mbha JJA. I forbear from naming the other joint wrongdoers concerned, the legal teams on both sides.

High Court case 25 March 2015: Kidbrooke Place Management Association and Another v Walton and Others NNO 2015 (4) SA 112 (WCC). A case on the removal of a trustee from a trust, & a trustee’s purchase of immovable property from the trust.§

SCA case 22 May 2015: Standard Bank v Swanepoel NO (20062/2014) [2015] ZASCA 71. Talk about chutzpah! You borrow in the name of a trust & then declare the contract to be invalid, on the ground that a trust is not a legal entity! Per Lewis JA:

The agreements are both in standard form, as is the suretyship. The agricultural loan was authorized by a resolution of the ‘Trustees of Harne (Proprietary) Ltd’ a puzzling nomenclature (but undoubtedly an error arising because the resolution was in standard form and catered for companies, trusts and other legal entities), but was signed by Swanepoel as trustee. A resolution was embodied in the application for the business account, and that too was signed by Swanepoel ‘for’ the Harne Trust. In my view, while the documents were not carefully drawn, it is patent that Swanepoel, when signing the loan agreement and the application for the business account, was clearly doing so in his capacity as trustee of the trust. I fail to understand the argument for Swanepoel, accepted by the court a quo, that ex facie the two agreements the Bank intended to contract with the trust, and not its trustee. Both contractual documents clearly designate the trust (as duly registered) as the party to the contract (the borrower) acting through Swanepoel as trustee. There is no indication whatsoever that Swanepoel was acting in his personal capacity. And there is nothing in the particulars of claim that suggests that the trust was in some way acting without a trustee.

High Court case 13 August 2015: Hanekom v Voight NO and Others (15 493/2014) [2015] ZAWCHC 116; 2016 (1) SA 416 (WCC); [2016] 2 All SA 155 (WCC). Blast! I missed this case when updating my The SA Common Law on Trusts—A Chronological Database. It deals with the Master’s powers, the variation of a testamentary trust & the nature of a testamentary trust.

High Court case 13 August 2015: Hanekom v Voight NO and Others 2016 (1) SA 416 (WCC). Now that I have had a chance to look at this more closely (157 TSH 2016): Good grief! A pretty ropy judgment overall, involving, the amendment of a testamentary trust (!), seemingly by way of a holus bolus substitution of the deed (!!). The composer of the SALR headnote saw it as developing some fanciful lines of law. I prefer to await corroboration.§

High Court case 13 August 2015: YB v SB and Others NNO 2016 (1) SA 47 (WCC). Also reported as B v B and Others (8064/2014) [2015] ZAWCHC 109. Also missed this one. Another divorce case involving a trust.



2016 SCA case 09 June 2016: Gowar v Gowar (149/2015) [2016] ZASCA 101. It beggars belief

but here is a bitterly disputed case on the administration of trusts yet nowhere are the types of trusts involved characterized. Were they are of a discretionary nature, or were they bewinds? Did any real rights vest? Hells, bells, were they even valid? Both the appeal & the cross-appeal failed, so nothing was achieved. When will wealthy families realize that the price of not settling disputes in a calm, rational fashion is to make lawyers filthy rich. It’s odd but, in trust matters, the citation of authority just doesn’t inspire confidence in the courts’ mastery of this branch of the law. Yet all that is needed is to read the judgment of Alkema JP in RP v DP and Others 2014 (6) SA 243 (ECP) (143 TSH 2015).

High Court case 29 June 2016: Penwill NO and Another v Penwill and Others (61782/2012) [2016] ZAGPPHC 473. About the validity of wills for purposes of the Administration of Estates Act. Per Van Oosten J (who went on to cite a song):

Prophetically, I see this ugly difference of opinion, and the waste of assets, continuing after I have departed this earth. This continuing disagreement without reason is a struggle without victors, only victims.

Peter D'Arcy Herrman, Chartered Accountant (SA), Tzaneen, 26 January 2007. And, indeed so it has come to pass: almost 10 years hence—Peter D'Arcy-Herrman

in the afterlife and the Penwill brothers head locked in a titanic legal battle. The trust involved in the matter sounds invalid to me, including as it does a

power to appoint undesignated beneficiaries. As usual in such matters, the point did not arise. The wills concerned were declared null & void, & a copy of the judgment was ordered to be forwarded to the General Council of the Bar of SA. Fat lot of good that would do, if the Great Geach VAT scandal is anything to go by (116, 117 TSH 2012).

High Court case 15 August 2016: Trustees for the Time Being of the Roy Seawright Trust v Seawright (A108/2016) [2016] ZAWCHC 98. Should the trustees be ordered to pay costs de bonis propriis on a punitive basis to a 78-year-old beneficiary, following the withdrawal of an application to have her placed under curatorship, on the ground of alleged prodigality? Per Savage J:

For all of these reasons, the appeal against the judgment and order of the Court a quo must succeed. There is however no reason as to why the respondent, given the unique circumstances of this matter, should be required to bear any of the costs of the appeal, including her own costs in opposing the appeal. Given the facts of the matter and the basis for the appeal, I see no reason as to why all such costs should not properly be borne by the appellants on an attorney and client scale, payable from the Trust estate. Given the issues involved, there is no reason as to why costs should not include the costs of two counsel where employed.

High Court case 15 August 2016: Society of Advocates of KwaZulu-Natal v Lange (8049/2015) [2016] ZAKZPHC 102. The respondent (a colourful character) was suspended from practising as an advocate for six months, for being an active participant in the transaction complained of, invalidated, & reversed in The Beverley Trust matter, in fact, as the result of a complaint lodged against her by the successful brother in that case. Clearly, not a man to be trifled with.

High Court case 08 September 2016: Collect NO and Others v A and Another (618/2016) [2016] ZAECGHC 70. Following upon a divorce, the existence of a lease or similar user right entered into by a trust was claimed. Very properly, since there was a lack of due process under the deed & trust law, the claim was rejected.

High Court case 11 October 2016: Statusfin Finansiale Dienste (Edms) Bpk v Die Trustees van Tyd tot Tyd van die IET Trust en Andere (13156/2011) [2016] ZAGPPHC 898. Was a trust bound under an agricultural loan? Yes, said the court, while misunderstanding what Cameron JA actually said about the Turquand rule in Land And Agricultural Bank.§

2017 High Court case 01 February 2017: Van Staden NO v Nel NO and Another (11114/2015) [2017]

ZAGPPHC 26. Another family & professional bust-up over a trust. Did the deceased beneficiary make a loan or a donation to the trust? If a loan, the trust was insolvent. SARS please note: the trust was found not to be insolvent.



High Court case 03 February 2017: Da Encarnaçäo NO and Another v CSARS (33302/2014) [2017] ZAGPPHC 23. Here, good grief, is a trust carrying on business as an importer of cigarettes. SARS ought to have stopped right there. Instead, it grabbed cash from the trust’s bank account, by way of duty allegedly payable on cigarettes lifted in an armed robbery, & not recovered. Also lost: it’s case.

High Court case 07 March 2017: Pakade NO and Others v Lukhanji Leisure (Pty) Ltd and Others (3390/2016) [2017] ZAECGHC 22. One of the issues under consideration was whether a trustees’ resolution authorizing a professional firm to act on their behalf allowed its representative to bring an application for relief sought under s 163 of the Companies Act. I am uncomfortable with the failsafe relied upon by Gqamana AJ:

In any event, even if I am wrong in that regard, but in my view it will not be in the interests of justice to depose of a matter of this nature with such huge commercial interest to all the parties by way of the technical bar of lack of standing.

Especially with a ‘huge commercial interest’, it behoves the parties to pay attention to issues of locus standi, especially when a trust is involved. In the event, the decision, on the merits, made the issue moot. On a personal note, having just spent a night at the Queens Casino & Hotel (caught up in the dispute), I can recommend it as a most comfortable & convenient hotel.§

SCA case 09 March 2017: M v M (332/2015) [2016] ZASCA 5. When you remarry the same bloke for the third time, refer to trust assets in your ANC, & include sanctions specifically aimed at extramarital affairs, you have to expect trouble upon your inevitable third divorce, especially in finding good advice on how best to attack your ex-husband’s ‘trusts’. Once a lawyer (including a judge) refers to a trust being someone’s alter ego, you know that he or she knows feathers about trust law.

SCA case 30 March 2017: Marais & others v Varicor Nineteen (Pty) Ltd (843/16) [2017] ZASCA 46. When will people learn never to do business with a trust? The suppliers in this matter won their case, eventually, but would have been better off under a policy prohibiting trusts as customers. As for SARS, does it ever wonder, I wonder, at the proliferation of business trusts? Suckers.

High Court case 05 May 2017: Vogel NO v Melamed and Others (35494/16) [2017] ZAGPJHC 127. A disgraceful matter involving the abuse of trust funds, confidently disposed of by Bham AJ. The trust was established to administer funds arising from a divorce. One of the founding trustees, an attorney, failed to transfer the funds into the possession of the trustees. He was removed from his position by the Master yet still retained possession. His defence was that the sole remaining trustee, Vogel, lacked authority to claim them, since the deed required there to be three trustees. Footnotes suppressed:

There is another way to state the proposition. It would seem to me absurd to suggest that if a party who is not entitled to be in possession of funds of the Trust but is in possession of the funds of the Trust (such as is the case with the first respondent), and upon a request made by the remaining trustee of the Trust to transfer those funds into a bank account of the Trust refuses to do so. the remaining trustee even if he is in default of the obligation to appoint an additional trustee Is left impotent in taking steps to obtain possession of the funds of the Trust.…

A punitive costs order was granted against the attorney & the ex-husband, who unwisely chose to join the attorney in opposing the application:

…. There is then no reason for him to escape the cost consequences of his conduct In this regard. And, he could have been under no illusion, having been party to the circumstances which resulted in the formation of the Trust for the benefit of his own children, that property of the Trust cannot be held by anyone but the trustee of the Trust, even at a time when there is only a single trustee.

High Court case 15 May 2017: Maree NO and Others v Van Rensburg and Others (1453/2014) [2017] ZAFSHC 78. A ridiculous case, in which it was argued, without success, that the deed of a trust inter vivos should be read as a will. Alas, the court misdirected itself by seeing a trust as a stipulatio alteri, but it cannot really be faulted on that score, since it relied, mainly, on the flawed Potgieter judgment. Once again, no one involved had the faintest idea about trust law.

High Court case 18 May 2017: Harris and Another v Burger NO and Another (786/2017) [2017] ZAFSHC 68. It was denied that the sole trustee of a trust, who was also a beneficiary, enjoyed the authority to dispose of trust property. Shoddy.§

High Court case 14 June 2017: Cunningham-Moorat and Others v Bester NO and Others Case no 45551/2012 Gauteng Local Division, Johannesburg. As usual with anything



involving trusts, there is much to say about this case, supposedly about a missing founding donation. Details must await a future issue.

SCA case 15 June 2017: NMB Bank Ltd v Capsopoulos (505/2016) [2017] ZASCA 94. A complex violation of Zimbabwe exchange controls, depending in part upon offshore trusts effectively conceded to be invalid. The recipients of very large US dollar amounts found to be complicit in fraud, & ordered to refund the amounts to the bank, plus interest & costs.§

High Court case 30 June 2017: First Rand Bank Limited v Bezuidenhout NO and Another (80818/15) [2017] ZAGPPHC 332. Yes, the trust borrowed money from the bank, but, alas, lacked the authority to do so. It was found that, by ratification, the trustee was authorized to act. The argument that the loan was not for the benefit of the beneficiaries was dismissed, although without the degree of contempt it deserved. And there was no prohibition in the deed against borrowings. Why do banks persist in doing business with trusts?

High Court case 30 June 2017: Harper and Others v Crawford NO and Others (9581/2015) [2017] ZAWCHC 78. On the meaning of the words ‘children’, ‘descendants’, ‘issue’ & ‘legal descendants’ as used in a trust deed. Alternatively, an application for the amendment of the deed by the court. The applicants failed. This looks like a fascinating judgment, which I hope to cover in a future issue.

High Court case 23 August 2017: Makgoba and Others v Ledwaba NO and Others (16046/2017) [2017] ZAGPPHC 564. Per Makgoka J:

In all circumstances, the applicants’ application should be seen for exactly what it is—a stratagem to avoid relinquishing their control over the trust. From the papers, there is ample evidence that the applicants have used every trick in the book to hold on to being the trustees. Therefore, this is not a bona fide application towards the resolution of the core dispute between the parties. It is an abuse of this court’s process, which cannot be countenanced by any court.§

SCA case 21 September 2017: Costa NO v Arvum Exports (969/2016) [2017] ZASCA 113. On the authority to act of a trustee. Per Lewis JA:

In my view, the clear context was the acquisition of the farm Klein Botrivier. The trustees, having resolved to purchase and take transfer of the farm, authorized Mr Costa to sign all documentation necessary for that purpose. They did not confer upon him the authority to conclude business agreements with other parties. The conclusion of business contracts, as opposed to the day-to-day administration of a trust, is not something that trustees may delegate to a person. They must decide what contracts to conclude.…

And then, on the issue of ostensible authority: The majority of the full court, finding apparently that Mr Costa had himself made the representation that he was duly authorized, was clearly wrong in that he was not the principal, but merely the agent of the other trustees. Only if Mrs Costa and Mr Coetzee had represented to the Fruit Group, by their words or conduct, that Mr Costa was duly authorized, would ostensible authority have possibly been found. The Fruit Group has not shown any conduct on their part that would lead to that conclusion.

I consider, therefore, that Mr Costa had neither actual nor ostensible authority to enter into the PLA and the SMA and that they are not enforceable.§

High Court case 07 November 2017: De Beer v Master of the South Gauteng High Court and Another (38761/2016) [2017] ZAGPJHC 317. An action for the removal of a trustee, which succeeded. Van der Linde J made a poor fist of things. What he said of trusts in general was unsteady. As for the trust before him, it sounds as if it was a bewind. A most upsetting read.

High Court case 07 November 2017: De Beer v Master of the South Gauteng High Court and Another (38761/2016) [2017] ZAGPJHC 317. Successful application to have ex-husband removed as trustee of trust established to mediate divorce settlement. How did the home of the ex-wife (as usufructuary) & the children end up in the trust? By way of loan account, said ex-hubby. Nuts. It was through the discharge of an obligation arising from the divorce settlement. This sounds like a vesting trust to me, & the children, being the owners, should have been represented. See also 176 TSH 2017, for my earlier reaction to this case. I have been worrying that I was unfair to the judge, but not enough to make a retraction.



2018 High Court case 14 February 2018: National Home Builders Registration Council v Andendorf

NO and Others (1640/2015) [2018] ZALMPPHC 5. For the third time, a trust is found not to be a person for purposes of the Housing Consumer Protection Measures Act. I’m fine with that conclusion, but some of the things said about trusts require some comment. See the Monthly Notebook.

High Court case 16 February 2018: Van Zyl and Another v Van Zyl and Others (30163/2017) [2018] ZAGPPHC 17. This was supposed to be about the removal of trustees, but they wanted out, in any event. So it became a case about costs. These ended up lying where they fell.§

High Court case 16 February 2018: Matthews NO and Others v Thyne NO and Others (20714/17) [2018] ZAGPPHC 30. An ugly fight over a family trust. A trustee & beneficiary, having been accused of dipping into the funds, but foolishly offering to replace a meagre portion of the alleged misappropriation, sought security for costs in an upcoming trial. He came horribly short. No doubt it seemed like a good idea at the time, & his lawyers had no complaint.§

High Court case 20 February 2018: Special Investigating Unit v and Another v Smith and Others (1127/2017) [2018] ZAECGHC 10. Per FY Renque AJ, relying upon a textbook:

It is clear from the above, that trustees are not absolutely immune. Depending on the circumstances, Trustees can be held personally liable to third parties for failure to comply with their general fiduciary duty.

We’ll see how that idea pans out.§ High Court case 22 February 2018: Friedman NO and Another v Moolman (821/2017) [2018]

ZAECPEHC 5. Trustees of a trust enter into an agreement to buy fixed property, & pay for it. The details cannot be ironed out, so they ask for their money back, to no avail. Hence this case, which they won, on the basis that the agreement was of no force or effect, since it did not comply with s 2(1) of the Alienation of Land Act. (It was also in breach of s 3 of the Subdivision of Agricultural Land Act.)§

High Court case 22 February 2018: McNair v Crossman and Another (2017/27131) [2018] ZAGPJHC 716. In this opening salvo of a battle that has now ended (read on), Mudau J dismissed the application of Gillian Claire McNair for the removal of Gerald Sydney Crossman & Warren John Fletcher as co-trustees of the McNair Family Trust, & for other persons to be appointed in their stead:

I am inclined to agree with submissions made on behalf of the first respondent that the inference is unavoidable that this application has been brought with the motive of revenge for what had happened in and with Applied and the alleged financial losses, the applicant sustained in Applied. The applicant’s business dealings in Applied and with David and the first respondent have no bearing on the performance of the co-trustees. The applicant has not shown that the first respondent’s private interests in Top Spin conflict with those of the Trust beneficiaries.

High Court case 08 March 2018: Keyter NO v Keevy and Others (CA311/2017) [2018] ZAECGHC 19. The deceased left a usufruct over much of his estate to his spouse, & his farming operations to a testamentary trust. The trustees & the usufructuary then let the farms, implements & livestock, under a sheep lease, to Keevy. The lease terminated on the death of the usufructuary. Keevy failed to honour the terms of the sheep lease, & the livestock ended up in the possession of the deceased usufructuary’s executor. Under a sheep lease, ownership passes to the ‘lessee’. A claim for delivery is not a rei vindicatio but a ‘debt’ under the Prescription Act, with the result that the appellant’s claim had prescribed.

High Court case 10 May 2018: Richter NO and Others v Richter and Others (1988/2017) [2018] ZAFSHC 45. The trustees of three trusts are busy suing the previous trustees ‘for losses suffered by the Trusts as a result of improper and/or unlawful conduct on the part of the defendants during their tenure as the trustees of the Trusts’. The defendants failed in their exception to the particulars of claim. Naidoo J said:

…. In my view, the issue of the authority of the trustees to act only after authorized to do so by the Master, and whether they would attract any liability for such acts prior to being authorized by the Master, can only be properly dealt with by the trial court, after considering all the evidence. Such an exercise may very well call for an interpretation of the law in relation to Trusts, which falls outside the scope of the matter before this court.…

High Court case 15 May 2018: Tugh NO and Another v Rajbansi and Others (9220/2015)



[2018] ZAKZDHC 12. A trustee removed by order of court. Per Koen J: The First Respondent finds herself in the invidious position of laying claims to the shares as executrix whilst in the proper discharge of her fiduciary duties as trustee she might also be required to pursue those shares on behalf of and for the benefit of the Trust directly. That places her in a position where she has to choose sides. Whether she is correct in having chosen the side of the deceased estate is not the issue. By placing herself in a position where she has to choose sides results in a situation where she cannot remain impartial and non-partisan.

No proof of mala fides or dishonesty is required. Her positions as executrix and as trustee in relation to the transfer of the shares simply involve two positions which are mutually destructive, with conflicting duties.

SCA case 17 May 2018: Osborne v Cockin NO & Others (549/2017) [2018] ZASCA 58. Someone, now deceased, by his own hand, owes you money. Fraud is involved. Would you try to sequestrate his trust, on the basis that it was a sham? Hope you said No. Per Lewis JA:

As the court a quo suggested, the proper procedure that should have been followed by Osborne was to make a claim against the trustees of the insolvent deceased estate, and to insist on enquiries or an investigation in terms of ss 64, 65 and 66 of the Insolvency Act. Proper investigation might establish which of his assets, if any, were on trust property, and whether the trustees of the Cockin Trust were liable to return any a cattle or pay damages.

In the circumstances, the appeal must be dismissed. Osborne did not establish that the Cockin Trust was his debtor and was insolvent or had committed any act of insolvency.

The judge in the lower court was Alkema J, who relied in part on his (by me celebrated) judgment in RP v DP and Others 2014 (6) SA 243 (ECP) (143, 144 TSH 2015, 159, 165 TSH 2016) (I’m still looking for a copyright-free copy), only to be rapped over the knuckles by Lewis JA.

High Court case 01 June 2018: Van Wyk v Daberas Adventures CC (1431/2016) [2018] ZANCHC 31. Did a trustee enjoy locus standi to launch motion proceedings? The lower court said No. It was reversed, in a highly instructive judgment of the full bench, delivered by Mamosebo J (I think; there is some typographical confusion about authorship), both on the locus standi issue & delegation. Up for a closer look in a future issue. As for the loser, once you hang your cap on a point in limine, against a determined opponent, you might find no head to which to return it.

High Court case 26 June 2018: Du Plessis NO and Others v Van Niekerk and Others (836/2018) [2018] ZAFSHC 120. Don’t ask me how this matter came before Daffue J & stayed there, once, in the second paragraph of his judgment, he admitted that the trust before him had a sole income & capital beneficiary, who was a major (with full legal capacity). He thought it to involve a novel question, on the attempted removal of a trustee, & so it well might, had there been a trust in existence & thus a reason to read beyond that paragraph.

Concourt case 05 July 2018: Minister of Constitutional Development and Another v South African Restructuring and Insolvency Practitioners Association and Others [2018] ZACC 20. The majority found against the Minister & the Master, upsetting their plan to restrict access to insolvency work (132 TSH 2014, 164 TSH 2016). Jafta J, describing the policy the minority supported:

…. These clauses are essential to the structure and implementation of the policy. Clause 6 requires that insolvency practitioners who become eligible to be appointed as trustees must appear on a Master’s list. This list must be divided into four categories. [C]ategory A must comprise African, Coloured, Indian and Chinese females who became South African citizens before 27 April 1994. This being the date on which democracy was established and a constitutional order came into existence. Notably the category does not include people who became citizens on or after 27 April 1994 who belong to these groups which were disadvantaged by the discriminatory laws and practices of the apartheid era.

Category B consists of African, Coloured, Indian and Chinese men who became South African citizens before 27 April 1994. Category C must reflect white women who became citizens before 27 April 1994. Curiously category D comprises white men irrespective of when they became citizens. Additionally African, Coloured, Indian and Chinese practitioners who became citizens on or after 27 April 1994 fall under this category regardless of whether they are men or women. White women who gained citizenship on or after that date also come under this category. For undisclosed reasons, there is no distinction drawn between men and women falling



under the previously disadvantaged groups. The names of practitioners in each category must be ‘arranged in alphabetical order

according to their surnames’. But the names that are added to the list after its completion do not have to be arranged in this order. They must simply be added at the end of the relevant category. The list must also distinguish between senior and junior practitioners within each category. A senior practitioner is defined as a practitioner who has been appointed as a trustee at least once in each year of the preceding five years.§

SCA case 17 October 2018: Harvey NO and Others v Crawford NO and Others (1016/2017) [2018] ZASCA 147. In a trust deed, did ‘children’, ‘issue’, ‘descendant’, ‘legal descendant’ include adopted children? Per Molemela JA:

For all the above reasons, I find that there is no basis for finding that the donor’s manifest intention was to exclude adopted children from benefitting from his Trust. It follows that I would uphold the appeal with costs and would therefore grant an order declaring that the words ‘children’, ‘descendants’, ‘issue’ and ‘legal descendants’ in the Trust Deed of the donor include the adopted children (the second and third appellants).

See the Monthly Notebook, on the history of the law of adopted children. High Court case 14 August 2018: S v Bennett (SS40/2006) [2018] ZAGPJHC 501. Yet another

case involving Susan Bennett & Gary Porritt, before (who else?) Spilg J. Failed applications for a special entry having to do with the Surrey Development Trust & the Pembroke Trust.

SCA case 17 October 2018: Harvey NO and Others v Crawford NO and Others (1016/2017) [2018] ZASCA 147. Charles Evison, a sharp-eyed reader, quickly & correctly pointed out that, in 187 TSH 2018, I mistook the minority judgment of Molemela JA for the judgment of the court. Sorry. The majority found, first, that public policy did not require the court’s interference on the issue of adopted children, &, secondly, that s 13 of the Trust Property Control Act did not apply. The dissenting judge took the approach that the deed failed to exclude adopted children from the set “children”.

SCA case 04 December 2018: Makgoba & others v Ledwaba NO & others (054/2018) [2018] ZASCA 181. A messy case about the trustees of a community trust whose term of office had expired but nevertheless secured fresh letters of appointment. If a single one of these community trusts is properly constituted & administered, I’ll be pleasantly surprised.§

High Court case 13 December 2018: Jackson v Louw NO and Another (CA&R 149/17) [2018] ZAECGHC 141. A voidable preference case involving a trust. It deals in part with a lease over animals, although without mentioning the line of cases dealing with sheep leases (see the Monthly Notebook).§

2019 High Court case 17 January 2019: Bayard NO and Others v Strategy House (Pty) Ltd and Others

(26469/17) [2019] ZAGPJHC 7. Per Molahlehi J (footnotes suppressed): In relation to locus standi the respondents contended that the applicant does not possess the requisite locus standi because of failure to attach the Master’s letter of authority and trust deed to the founding affidavit.

In Breetzke and Others v Alexander and Others, the court held that the general rule is that only the co-trustees of a trust acting together have the locus standi to bring or defend legal proceedings on behalf of the trust.

In Gross and Others v Pentz, the court held that, as a general rule, the proper persons to act in legal proceedings on behalf of a trust, testamentary or otherwise, are its trustees, and the beneficiary of the trust does not have locus standi to do so. But a distinction must be drawn between actions brought on behalf of a trust for example to recover damages from a third party, on the one hand, and on the other, actions brought by trust beneficiaries in their own right against the trustee for maladministration of the trust estate.

Trusts do not have juristic personality, and therefore, unless a statute confers juristic personality on a specific trust, it cannot sue or be sued. Therefore, to litigate for or against a trust, it is the trustees in their capacity as such (and not in their private capacity) who must bring and defend actions about a trust. Trustees who bring an action or application need to aver their capacity and also need to state that they were properly appointed by a given instrument (for example a trust deed) or order of the court. Unless the others authorize one or more of the trustees, all



trustees must be joined in suing and all trustees must be joined when action is instituted against a trust.

It couldn’t be made clearer. Many thanks to Molahlehi J. My advice to litigating trustees is for the full complement to be joined, thus avoiding questions about capacity, unless they are acting against each other, in which event the requirement for joint action falls away.§

SCA case 26 March 2019: National Home Builders Registration Council v Michiel Wessel Adendorff & others (406/2018/) [2019] ZASCA 20. This is the Mike’s Trust case (179 TSH 2018), & you might as well give up on the common law of trusts, since our courts are now well down the road of creating something entirely new & monstrous. Mike’s Trust was certainly a home builder, but can you really conclude, as did Saldulker JA, that:

It is declared that trusts are home builders as envisaged in ss 1 and 10(1) of the Housing Consumers Protection Measures Act 95 of 1998?

In the two cases held to have been decided incorrectly, Botes & Van Rooyen, one trust was building homes as an investment, & in the other the trust was building a family home. Why on earth should the act apply to them? Not a single mention was made of trustees—the only possible economic & legal actors in a matter involving a trust. No one at any stage even thought of looking at the deed to see if a valid trust was involved. (In the building industry? You gotta be kidding.). And the misperception of the wretched Parker case by the lower court was unthinkingly replicated. Much as I have been expecting this moment, I am massively discouraged, but it’s now official: a trust is a je ne se quoi after all. The charlatans of the field can dance in the streets.

High Court case 26 March 2019: J McWilliams v G McWilliams and Others (3145/2015) [2019] ZAECPEHC 16. Preliminary proceedings in a divorce matter, between wealthy spouses. Only very recently have I come across a couple of marriage agreements under the accrual system excluding any benefit under a trust. In my humble opinion, it’s bollocks, & egregiously invalid.

High Court case 09 April 2019: McWilliams J v McWilliams G (3145/2015) [2019] ZAECPEHC 23. Per Rugunanan AJ (footnote suppressed):

The dispute whether the respondent has control of trust assets and access to trust funds is a controversial issue that cannot be determined in favour of the applicant in these proceedings. The issue is triable in the divorce proceedings, for two reasons. Firstly, if regard is had the provisions of the ante-nuptial agreement concluded between the applicant and the respondent which expressly exclude trust assets from the operation of the accrual. Secondly, the pronouncement by the Supreme Court of Appeal in [M v M] [7] 2017 (3) SA 371 (SCA) wherein it was held that control by a trustee of a trust asset in breach of the trust deed does not change the nature of the trust asset and does not vest ownership of the trust asset in the trustee spouse, nor does it lay a foundation for taking a trust asset into account in determining the accrual of a spouse’s estate.

Ms Gassner submitted, and correctly in my view, that in seeking to justify the costs contribution she seeks the applicant has nowhere in her papers identified prima facie evidence from which it can reasonably be inferred that the trust assets are beneficially owned by the respondent, nor has she identified or particularized any assailable transactions regarding the respondent’s alleged handling of trust assets as personal assets notwithstanding extensive forensic investigations by her accountant one Greyling. Absent any prima facie evidence, alternatively fact-specific evidence, the claim for a further costs contribution cannot be supported by speculative inferences which appears to be the approach adopted by the applicant. In this regard the applicant’s further affidavit, which introduced the respondent’s application for administrative relief under the Exchange Control Special Voluntary Disclosure Programme in terms of which the respondent was permitted to repatriate to this country US$678 486,00 worth of assets, does not assist in advancing the applicant’s case for a costs contribution. The respondent maintains that these are not his personal funds but funds held by the Highway Trust and that the dispute concerning these funds cannot be ventilated in the present rule 43 proceedings.§

High Court case 09 April 2019: McWilliams J v McWilliams G (3145/2015) [2019] ZAECPEHC 23 takes another procedural step forward (193 TSH 2019), it now being revealed that twenty-seven trusts, two offshore, have been joined in the pending divorce proceedings. Per S Rugunanan AJ:

It is clear from the papers that both the applicant and the respondent are wealthy people and that they enjoyed a luxurious lifestyle during the subsistence of their



marriage. The respondent is a businessman who has accumulated wealth both locally and abroad, the bulk of which is held in various trusts. In pursuit of her claim for the division of the accrual, the applicant believes that the respondent is the alter ego of the numerous trusts presently cited as defendants in the main action and that he has control of trust assets and has access to substantial trust funds both for his personal benefit and for financing the costs contribution which she seeks. For this reason the applicant sought leave to file a further affidavit attaching documentation pertaining to the Exchange Control Special Voluntary Disclosure Programme.

The dispute whether the respondent has control of trust assets and access to trust funds is a controversial issue that cannot be determined in favour of the applicant in these proceedings. The issue is triable in the divorce proceedings, for two reasons. Firstly, if regard is had the provisions of the ante-nuptial agreement concluded between the applicant and the respondent which expressly exclude trust assets from the operation of the accrual. Secondly, the pronouncement by the Supreme Court of Appeal in REM v VM 7 2017 (3) SA 371 (SCA) wherein it was held that control by a trustee of a trust asset in breach of the trust deed does not change the nature of the trust asset and does not vest ownership of the trust asset in the trustee spouse, nor does it lay a foundation for taking a trust asset into account in determining the accrual of a spouse’s estate.

In the ultimate divorce judgment, will the parties’ names be suppressed? High Court case 26 April 2019: Nair NO v Nair NO and Others (AR 699/17D) [2019] ZAKZPHC 23.

A very unusual successful application to court under s 13 of the Trust Property Control Act to replace trustees. A sober, impressive judgment. I hope to cover it in detail in a future issue.

High Court case 30 April 2019: De Wet NO v Barkhuizen and Others (2330/2018) [2019] ZAECPEHC 25. Section 71(1) of the Administration of Estates Act prohibits anyone administering property as tutor or curator without letters of authority. As we know from trust law & the law of deceased estates, in the absence of the requisite LOA, any act of a purported trustee or executor is invalid. The same rule applies to tutors & curators. The issue is dealt with in Bouwer NO Saambou Bank Bpk 1993 (4) SA 492 (T) &, especially, Shea v Legator McKenna and Others [2008] 1 All SA 491 (D). S Rugunanan AJ awarded part of the costs, de bonis propriis on an attorney-client scale, against the applicant, an attorney, & his attorney. (The appeal in Shea ought to be famous; see 69 TSH 2008.)

Tax court case 03 May 2019: TAdm 00052/2018. When a trust comes to court, I wish judges would append the deed to their orders. This was a dispute about the reasons for an assessment, seemingly way out of time, which the taxpayer lost, having agreed away its side of the dispute. I would have expected the taxpayer to reconsider its approach, & come back fighting, with weapons appropriate to the particular theatre of war. But, according to Ernest Mazansky, the ‘outcome of [this] application is not of great relevance…, as it is highly technical in nature’ (Personal Finance 10 July 2019).*

High Court case 10 May 2019: Joubert and Others v Joubert and Others (9168/2018) [2019] ZAWCHC 56. (Note to self: Never overlook any case involving a Joubert.) Bozalek J did not cover himself with glory in this judgment, involving the insertion of ‘my wife for the time being’ (a little inside joke) as a beneficiary of a trust established by the testator’s dad:

The trust deed provided further that the capital of the trust was to be retained by the trustees until the termination date when the capital still in the trust would vest and be paid in the proportions as determined in the last will and testament of the testator [a trustee & beneficiary].

The wife concerned was the testator’s second wife, & her inclusion was approved by the court, although we are not told if or how in his will he exercised his power under the testamentary reservation. Much learned discussion, including reference to the controversial Potgieter case, but all moot. If this was a trust, it was invalid, & the decision, although correct, was meaningless. But if what Dad created was a quasi-usufruct, the decision was wrong. Wish I had a copy of the deed! (Anyone?)

High Court case 21 May 2019: Nedbank Limited v Botha NO and Others (1210/2018) [2019] ZAECGHC 57. In practice, a trust simply cannot raise a bank loan. One of the sureties for the loan to the trust involved in this matter was a close corporation. It claimed that the suretyship it signed was invalid, under s 52 of the Close Corporations Act, which, in s 52(1)(c), prohibits a targeted loan (or provision of security) to some ‘other juristic person (except a corporation)’. The CC accepted



that a trust was not such a juristic person but claimed that s 52 applied nevertheless (que?). Roberson J had to deal with some whacky arguments: A supposed confusion between a trustee & a beneficiary; business trusts are often operated as if they possess juristic personality; & this howler:

It was submitted on behalf of the cc that even where there are several trustees the reality is often that the trust is effectively controlled by the sole beneficiary who operates the trust for himself as beneficiary, as if the trust is a corporation with the sole beneficiary as the shareholder. This reality, so it was submitted, is what is referred to in ss 52(1)(b) and (c) of the Act.

High Court case 05 June 2019: Bouwer NO and Another v Smit NO and Others (59423/2015) [2019] ZAGPPHC 264. Here’s a first—two documents competing to be the trust deed! A most complex fight about removing trustees, most of whom wanted out anyway. They got their wish, while another survived, albeit to be joined by two independent trustees appointed by the Master, all of them directed to fulfil the parties’ desire to wind the thing up. It sounds like the beneficiaries, at least as a class, were vested beneficiaries. Oh, & one other thing:

The will also provided that after Anna Viljoen’s death [with a lifetime usufruct], the usufruct would devolve upon the children for a period of one year, and should a beneficiary pass away during the currency of the usufruct, his/her children would step into the shoes of that beneficiary.

Sound familiar? This very month someone asked me for a copy of ‘A famous estate duty scheme: my latest view & some bad news’ 71 TSH 2009, except that, in the event, there was no bad news.

SCA case 06 June 2019: Joan Cynthia Griessel NO & others v De Kock (334/18) [2019] ZASCA 95. Leave to appeal granted, & the appeal itself partially successful, in a trust matter. Per Molemela JA (footnotes suppressed):

In this matter, the privilege of having a vacation on a farm situated in a game reserve was taken away from the first respondent while the other potential beneficiaries continued to enjoy the same rights. That constituted differential treatment without a justifiable basis. This was evidently prompted by the attitude of the first respondent towards the development of the farm for commercial purposes, which, over the years, increased to the point that the first respondent considered the second applicant, his own mother, to be openly hostile towards him.

The role of a trustee in administering a trust calls for the exercise of a fiduciary duty owed to all the beneficiaries of a trust, irrespective of whether they have vested rights or are contingent beneficiaries whose rights to the trust income or capital will only vest on the happening of some uncertain future event. While discrimination on the basis of need may, under certain circumstances, be justified by the needs of a particular beneficiary, the trustees did not advance ‘need’ as the reason for treating the first respondent less favourably. It is clear from the averments made in the affidavits and the tenor of the attorneys’ correspondence that he was regarded as obstructive and contrarian. That may be so, but that does not suffice as justification for treating him less favourably. This therefore means that the trustees unfairly discriminated against him. It follows that the court a quo was correct in re-instating his right to visit the farm on a rotational basis.

To the extent that the judgment depends upon Potgieter & any textbook, I reserve all rights. But bless Molemela JA for citing the relevant provisions of the deed. (It included a supposed beneficiary, at best, pro non scripto, at worst, invalidating the trust, & a preamble to the powers clause that was certainly pro non scripto.) He also impressed by describing the type of trust it was: (fully) discretionary. The beneficiary discriminated against was what in the trade we describe as a quasi-party to the deed, by virtue of receiving under it, by way of enjoying occupation of trust property. Such a beneficiary is not to be trifled with on the matter of amendments to the deed, no matter how you read Potgieter. How gratifying to see, in addition, the cause of equitable (not necessarily equal) treatment of beneficiaries promoted by the SCA. But there is a fly in the ointment—a company owned the farm concerned. It was merely owned in their fiduciary capacity by the trustees:

They therefore make decisions pertaining to the farm, including granting access rights. The upshot of this finding is that there was no need for the court a quo to pierce the corporate veil as it purported to do.

That, alas, is not how companies work, so this judgment ought not to prove popular in future decisions (it is missing critical moving parts). And (I waste my breath here) SARS ought to look into the question whether the company



concerned has been distributing ‘dividends’ all these years, including, in some years, what I—appropriately enough, in the context—happen to call ‘discriminatory dividends’. I suspect that something more than a precarium (126 TSH 2013) was involved. The whole purpose of a trust-owned company is to remove the trustees from involvement in corporate affairs.

High Court case 13 June 2019: Ferreira and Another v Van der Merwe NO and Others (2727/2018) [2019] ZAECPEHC 39. Another vesting trust unrecognized as such, although the outcome happened to honour that fact. A purported amendment to the deed expelling two beneficiaries (& altering vested rights!) & appointing trustees was declared invalid, the deed making no provision for amendments.

High Court case 13 June 2019: Ferreira and Another v Van der Merwe NO and Others (2727/2018) [2019] ZAECPEHC 39. Judgment of Mullins AJ on acceptance by vested trust beneficiaries. Reported in 195 TSH 2019 & covered in 204 TSH 2020.

High Court case 05 July 2019: Nedbank v Trustees for the time being of The Mthunzi Mdwaba Family Trust and Others (7901/2017) [2019] ZAGPPHC 336. It continues to mystify me why banks continue to do business ‘with trusts’, which are in any event usually invalid & used for the purposes of tax evasion, family & other fraud, & money laundering. Because a trustee or trust beneficiary & his children used the mortgaged property as his primary residence, rule 46A of the Uniform Rules precluded an ordinary execution over the property.

High Court case 08 August 2019: Malatji v Ledwaba NO and Others (925/2019) [2019] ZALMPPHC 40. Fallout from the unedifying circumstances of Makgoba and Others v Ledwaba NO and Others (16046/2017) [2017] ZAGPPHC 564 (23 August 2017) (174 TSH 2017), which was, on appeal, the subject-matter of an order handed down in Makgoba and Others v Ledwaba NO and Others (054/2018) [2018] ZASCA 181 (4 December 2018) (189 TSH 2018), currently alleged, unsuccessfully, to have been breached. Endumeni cited for the purpose of interpreting the SCA’s order! When you have fifteen trustees & 603 beneficiaries, there is bound to be some of what the original trial judge considered to be an abuse of court process (174 TSH 2017). In this iteration, two unauthorized trustees were booted. These ‘community trusts’ are a pile of old codswallop but electrifying as prolific generators of professional fees.§

S SCA case 04 September 2019: Goldex 16 (Pty) Ltd v Capper NO & others (543/2018) [2019] ZASCA 105. A trustee of a trust, warranting that he is authorized to do so, enters into an agreement to buy a fixed property, except that he isn’t so authorized, the other trustee of the trust refusing authorization. Plus, the agreement was in violation of the Alienation of Land Act, & so void. The seller tries to hold the warrantor liable for the purchase price, magnanimously offering to transfer the property to him, as a package deal. Per Leach JA:

The ingenuity of this argument is surpassed only by its lack of substance. Despite appellant’s counsel’s contrary protestations, what the appellant is essentially seeking is specific performance of a void and invalid contract against the person who signed that contract but was not a party to it—this on the basis that if he’d had the authority to sign, which he had not, the property would have been sold to another. This merely had to be stated to be rejected.

Why oh why does anyone do business with a trust? But, then, would you have taken the matter to the SCA, after losing in the lower court?

High Court case 05 September 2019: McNair v Crossman and Another (A5023/18) [2019] ZAGPJHC 298. Fierce enmity between trustees leads to the removal & replacement of the accountant trustee, who, it seems, became too embroiled in family affairs, & lost his cool, at least once.

High Court case 05 September 2019: McNair v Crossman and Another (A5023/18) [2019] ZAGPJHC 298; 2020 (1) SA 192 (GJ) (see 198 TSH 2019). In this appeal, Vally J ordered the removal of Warren John Fletcher as trustee of the McNair Family Trust and his replacement by Carole van Vuuren. Now read on.

High Court case 05 September 2019: Mabikwe v Absa Trust Limited and Another (5696/2019) [2019] ZAGPJHC 311. If this matter weren’t so funny, it would be serious. As is the norm in such matters in the South Gauteng High Court, the applicant was made the sole beneficiary of a purported trust, under a court order, including the direction that any amendment was to be subject to the leave of the court. He unsuccessfully tried to turf the trustee, remove the need for security, & terminate the trust, under s 13 of the Trust Property Control Act.

High Court case 18 September 2019: Strydom NO and Others v Bennet NO and Others



(53908/2016) [2019] ZAGPPHC 432. An application to appeal dismissed, with the result that the DVD House Trust was not sequestrated. Includes the revelation that fixed property was acquired by the respondents by way of acquiring control of the trust, varying its deed, & changing its trustees. If I were SARS, I would be reminded of TC 11286 (26 October 2007), a transfer duty scam by way of ‘selling a trust’, which, by the way, led to the expansion of the reach of the Transfer Duty Act.

High Court case 20 September 2019: Standard Bank of South Africa Ltd v Slippers and Others (4252/2017, 4258/2017) [2019] ZALMPPHC 45. The respondent, the trust & the liquidated close corporations were ‘financially inter-dependent upon each other’. The trust & the liquidated close corporations ‘conducted business as a single unit &…it is difficult to distinguish between the interests of the different legal entities’. The respondent, as sole member of the liquidated close corporations & a trustee of the trust ‘was in charge of, managed & controlled a large game farming business under the name & style of lngogo Safaris’. Per Makgoba JP:

On the conspectus of evidence before me, I am satisfied that the Respondent and the Trust are insolvent or have committed an act of insolvency and that there is a reasonable prospect that some pecuniary benefit will result to creditors. There is a substantial estate in the form of immovable properties to sequestrate given the fact that the Applicant, as the creditor, cannot obtain payment of its debts in the ordinary way. I believe that it will be to the advantage of creditors that the Respondent’s and the Trust’s estate be sequestrated.

High Court case 19 November 2019: Van der Merwe NO and Others v Moodliar NO and Another; Van der Merwe NO and Others v Moodliar NO and Another; Nkhoma NO and Others v Moodliar NO and Others (Gamble J) [2019] ZAWCHC 160. I offer no undertaking to list all cases involving Gary Walter van der Merwe, his daughter & his trusts, nor do I even seek them out. I merely keep tripping over them. Gamble J’s closing remarks:

Each one of the latest wave of applications has been shown to be an abuse of process by the van der Merwe interests. They have been carefully planned and designed to interrupt the winding-up process and to cause as much collateral damage to the liquidators and creditors as possible. The applications collectively took up five days of valuable court time (let alone the time set aside for reading) during which other bona fide litigants were made to stand in the queue and were kept out of court. It is said that litigation is serious business and not a game. Van der Merwe and his interests have been afforded a fair opportunity to place their case before court and they have trifled with the Court. Such behaviour warrants appropriate punitive costs orders being made as an indication of the Court’s displeasure with the Applicants’ conduct.§

2020 High Court case 14 February 2020: Rossiter NO v Nedbank Limited (AR94/19, 8244/2010)

[2020] ZAKZPHC 7. Lopes J must be celebrated as someone with a firm grasp of trust law. Yet another case in which, trustees, having borrowed millions, then claim that they lacked the power to raise the loan:

With regard to costs, the appellant persisted with her amended plea and counterclaim without the consensus of a majority of the trustees in accordance with the trust deed. The appellant had no legal standing or authority to act as she did. There is accordingly no reason why the trust, or the beneficiaries of the trust, should be prejudiced as a result of the appellant’s actions. See: Blou v Lampert & Chipkin NNO & others 1973 (1) SA 1 (A).

I maintain that the Trust Property Control Act should be amended so as to impose personal liability in such circumstances, but, in the meantime, the banks should at last learn never to deal with trusts. Some interesting points made here about the representation of a trust deserve a closer look.

High court case 14 February 2020: Rossiter NO v Nedbank Limited (AR94/19, 8244/2010) [2020] ZAKZPHC 7. Judgment of Lopes J on litigation by trustees. Reported in 205 TSH 2020 & cited in 206 TSH 2020.

High Court case 20 February 2020: S[…] NO and Another v PJN S[…] Familie Trust and Others (2017/66789) [2020] ZAGPPHC 52. The family home was moved from the husband’s ownership to the ownership of a company owned by a family trust. The property was mortgaged to raise business capital, & a usufruct was



created in the husband’s favour; it is not clear exactly when (was a transfer duty scam involved?). The mortgagee must have been pretty dumb to finance a near-worthless property, burdened as it was with a usufruct (was fraud involved?). Having failed to attack this structure during their divorce, the ex-wife sought the dissolution of the trust, under s 13 of the Trust Property Control Act, in an attempt, as Mokose J put it, to ‘take a second bite of the cherry’. As an ex-trustee & ex-income-beneficiary of the trust, the ex-wife was remarkably lax in comprehending the trust’s affairs. She also mishandled the motion proceedings, failing, for example, to address the usufruct. But SARS ought to (but won’t) be interested in the company’s award of the usufruct to the ex-husband (not to mention the mortgagee, & the trustees). Strangely, the ex-husband vehemently & repeatedly made his point that the structure existed in order to protect the family home from creditors. Really? While he personally owned the great bulk of its value? The outcome might have been preordained but the bullshit was flowing copiously. A male planner wins again!§

High Court case 13 March 2020: Mellet NO and Others v Vermeulen and Another (2702/2019) [2020] ZAFSHC 61. With the seller being a trust (perhaps), the buyers tried to welch on the purchase of a member’s interest in a CC, by relying on two entirely irrelevant cases for their argument that a trust may not own a CC. In fact, however, this trust qualified as such an owner. But what worries me (& perhaps should worry SARS as well, but, I can promise you, won’t) is that the interest was owned in his personal capacity by one of the trustees. In order to facilitate the ‘sale by the trust’, he ‘transferred’ his interest to the trust. There could be only one purpose why he might arrange the transaction in such a strange manner. Another trustee personally owned 40% of the CC, only to acquire the 60% balance later, by way of a fraudulent transfer effected by an employee of the CA(SA) handling the transfers, ‘whose actions were reported to the police’. Since the purchasers were made to abide by their contract, one can only hope that their property was restored to them. I must say, they do things differently in the Free State.

High Court case 20 March 2020: Lange NO and Others v Maartens NO and Others (1094/2019) [2020] ZANCHC 8. SARS was one of twenty-three successful respondents in this case. A trust, which is to say (in the absence of the deed), its trustees owned a CC. One of the trustees, acting as managing member, placed the CC in business rescue proceedings, & then regretted it, claiming, with some force, if you have regard to case law, that he lacked authority to do so. Alas, either he did not know enough trust law or else the judge ignored his reliance upon it, since he was found to be the only person capable of taking the fateful decision. Although lacking the solomonic elegance & validity of the famous Parker judgment, what Makoti AJ said achieved a rough sort of justice:

It is quite strange and rather opportunistic for the applicants, who were at all material times aware and participating in the business rescue proceedings could come to court and claim that the processes should be stopped because they have become unlawful. It seems to me that the only reason why they have adopted this stance is because they were not able to acquire the property and they did not want the practitioner to sell it to any other person. I do not agree with the submissions of Mr Janse van Rensburg that the applicants were not au fait with business rescue processes and relied on the practitioner to guide them through the processes. Amongst them, the third applicant is a practicing attorney. I therefore agree with sentiment that the applicants simply wanted to continue holding on to the property.

It is my keenly held view that the Trust Property Control Act should be amended so as to hold trustees personally liable when they plead, to their potential advantage, lack of capacity, after having done the dirty deed.

High Court case 24 March 2020: Van Rensburg v Van Rensburg NO and Others (1458/2019) [2020] ZAECGHC 29. What a mess! It’s not a good idea to attempt to approach trust disputes by way of motion proceedings. The surviving wife failed to repudiate under a joint will with a seven-day trigger & so gave up her estate for a discretionary benefit under a testamentary trust. (Perhaps I have been hasty in dismissing joint wills as being old fashioned. The age-old quest to deprive women of testamentary power by depriving them of property is not yet over.) The children were vested beneficiaries, ab initio, as a class, with the survivors to take all upon the death the wife, their mother. When she died, an attempt was made to distribute the trust property to them, except that one of them lost out, thanks to email fraud. The rest of what happened, & the judgment are too



embarrassing to mention. High court case 06 May 2020: Investec Bank Limited v Fraser NO and Another (33437/2019)

[2020] ZAGPJHC 107. Fraser & The Best Trust Company (Pty) Ltd were trustees of a trust that had bound itself as surety & co-principal debtor. The actual debtor having defaulted, the bank was successful in obtaining an order, to the effect that a fixed property owned by the trust was specially executable. Fraser alleged that the property was her primary residence, relying upon Rule 46A & Nedbank v The Trustees for the time being of the Mthunzi Mdwaba Family Trust (7901/2017) [2019] ZAGPPHC 336 (9 July 2019) (197 TSH 2019). Per Lapan AJ (footnote suppressed):

The provisions of rule 46A encapsulate the protections afforded to indigent persons who are in danger of losing their homes and which protections are necessary to give effect to section 26 of the Constitution. These protections were put in place following upon the Constitutional Court decisions in Jaftha and Gundwana which mandated that a remedy be sought to protect poor people who are at risk of losing their homes in circumstances which would implicate their rights in terms of section 26 of the Constitution. The facts in these cases are instructive.

…. Accordingly, in the present matter, the provisions of rule 46A are not applicable as

the property sought to be executed against is registered in the name of the Trust and it is irrelevant that the trustee and her children reside on the property and consider it their home. Since the Trust, being the judgment debtor, is not a natural person, the constitutional safeguards are not available to it where execution is sought against its immovable property.

…. In my view, the decision in Nedbank is clearly wrong and this court is not bound to

follow it. This court is bound by the decisions in Jaftha, Gundwana, Mokebe and Folscher. Therefore, in the present matter, the first issue is decided in favour of the applicant and the provisions of rule 46A are not applicable. The applicant was correct to proceed in terms of rule 46 to obtain execution against the immovable property of the Trust.

High Court case 21 May 2020: Leathern NO and Others v Reserve Bank of South Africa (41306/2019) [2020] ZAGPPHC 181. The successful applicants were the trustees of the insolvent estate of Ahmed Dawood Bhorat, whose estate was provisionally sequestrated, after SARS obtained a civil judgement against him for R44 360 076,59 in the Johannesburg High Court (sounds like a real judgment). The final sequestration order was granted on 5 March 2018. Did monies in Growbank Ltd (formerly the Bank of Athens) vest in the trustees, even though the SARB had placed them under a ‘blocking order’? Such an order, it seems, precedes the forfeiture of such funds, under the EXCON rules. The SARB’s representative was supposedly so bound by secrecy rules that he made an extremely poor witness, reflecting even more poorly upon his employers. Said Holland-Muter AJ (footnote suppressed):

It is clear from South African Reserve Bank v ACE Currency Exchange(Pty) Ltd 2014 JDR 2106 {GP) at [13] that ‘a blocking order does not deprive an account holder of possession of or its contractual claim against the bank in respect of the money standing to the credit in the account and when the blocking order is cancelled, uplifted or lapses, the account holder can then proceed to deal with the money…’ if this is correct, the effect of a blocking order is only to prevent the account holder to deal with the money in the account while the blocking order is in force.

The next bit is, as it relates to the SARB, extremely concerning in the light of the many forfeitures it claims (as so richly illustrated in this very issue):

In light of the above I am satisfied that the Applicants made out a case that the monies blocked in the two accounts indeed vest in the Trustees of the insolvent estate of Bhorat. The blocking order only prohibits the trustees to deal with the money in accordance to the Insolvency Act and the concursus creditorum. In terms of Walker v Syfret 1911 AD 141 the purpose of the Insolvency Act is to ensure a due distribution of assets among creditors in order of their preference. The contention of the Applicants is that SARS has a preferent claim of R44 360 076,59 in terms of section 101 against the insolvent estate. I am also of the view that the First Respondent failed to prove that Bharat received the monies as an agent or that there was any fraud involved in obtaining the monies.

High Court case 05 June 2020: Ameropa Commodities (Pty) Limited v Benchimol NO and Others (D2873/2019) [2020] ZAKZDHC 14. To frustrate its creditors, including the



plaintiff, this CC transfers fixed property to a trust. In futile desperation, the trustees try to throw three pathetic spanners into the works, only to have Steyn J explain the actio Pauliana & rubbish their grounds of exception. I hope to cover the judgment & transactions in fraudem creditorum in a future issue.

SCA case 25 June 2020: Tshaka NO and Others v Standard Bank of South Africa Limited and Another (141/2019) [2020] ZASCA 73. The Bakubung-Ba-Ratheo Economic Development Trust sets up its banking arrangements, with less than the greatest care (not to say ‘utterly recklessly’). Then, when a trustee complains to the bank of fraudulent payments being authorized & duly paid out, seeking to change the banking arrangements, the bank asks for a mandate signed by all the trustees. This is not forthcoming, for so long that a further questionable withdrawal is effected. How extraordinary that it might have been thought that the bank was responsible! Almost as extraordinary as the very South African notion that what you control is yours, to do with as you please.§

High Court case 26 June 2020: Members of Seed of Life v Board of Directors of Seed of Life and Others (2201/2019) [2020] ZANCHC 31. A R100 million dispute about intended distributions by a ‘charitable broad-based black economic trust’, the Bafathi Trust, to companies whose directors were members of Seed of Life. I list it because the court papers include the trust’s deed. Wish I had access. The outcome? I pass.§

High Court case 30 June 2020: Land and Agricultural Development Bank of South Africa v Engelbrecht NO and Others (2973/2020) [2020] ZALMPPHC 43. The Anlem Trust owes the bank money, resulting in the bank’s obtaining an order enabling it to harvest a cotton crop standing on the trust’s farm. The bank acquired its rights by way of cession from Unigro. Among the futile defences of the trustees was the claim that Unigro indulged in reckless credit under the NCA, rendering the claim invalid. Per Makgoba:

It should be noted that the Anlem Trust raises this defence several years after having received and used the credit advanced by Unigro. Anlem Trust never raised this defence against Unigro before the cession of Unigro’s rights to the Applicant. It is only now when Applicant enforces its rights that the Anlem Trust comes up with the defence that the supply of credit was reckless and that it is as a result over-indebted.

In my view, the credibility of the Anlem Trust is questionable in this regard.§ High Court case 10 July 2020: January NO and Others v January (860/2019) [2020] ZANCHC 45.

A family dispute ends up with the confirmation of a rule nisi interdicting & restraining the respondent from acting, alternatively, from holding out that he is acting for & on behalf of the JP January Trust. (The few citations of clauses from the deed included do not inspire confidence in the trust’s validity.)§

High Court case 24 July 2020: AJ v JJ and Others (4366/2016) [2020] ZAWCHC 63. The Tafika Trust & the Tafika Trust, Mauritius feature prominently. The wife, engaged in divorce proceedings, argues, most cogently (given the rubbish usually spouted in such circumstances), that the assets claimed to be owned by the trusts are beneficially owned & controlled by her husband, do not constitute assets owned by the trusts, & form part of her husband’s estate. Just to be sure, she ventures as well into the dark side, by claiming that the trusts are her husband’s alter ego & that he abused the trust form by using the trusts as vehicles to accumulate personal wealth. But the order she seeks is rock solid, including a declaration that the assets of the trusts are held & controlled by her husband in his personal capacity & for his personal benefit. That is the way to do it, prospective litigants, please note! But there’s more to learn from this astute applicant & her (unnamed) legal team. She asked for reams of relevant documents, not from the trustees but from her husband. That raised the issue whether he was in possession or control of them. Slingers J, in dealing learnedly with the issue, cited Loureiro and Others v Imvula Quality Protection (Pty) Ltd ] (15228/2009) [2016] ZAGPJHC 396 (8 July 2016), a case dealing with the Tax Administration Act, which I shall certainly look at. She ended her judgment with a carefully compiled list of documents the husband was to produce, concerning as well as forty-five entities (all duly listed) he was purported to enjoy an interest in. Bravo! (I would lay money on the Mauritian trust’s being a bewind or, worse, a singe-beneficiary trust. Perhaps I could even guess who set it up.)

High Court case 04 August 2020: Tsebe v Absa Trust Limited and Others (18079-2020) [2020] ZAGPPHC 399. This is the best trust judgment I have ever seen. It was delivered by Fabricius J. I reproduce it in full, apart from the order terminating the trust:



The applicant herein, a major male, seeks an order terminating a trust that was established after he succeeded with a claim for damages against the Road Accident Fund. He was the sole beneficiary of such Trust.

Respondent was appointed as the sole Trustee. It obviously acts through an employee, who need not be joined in these proceedings, contrary to Respondent’s contention.

According to cl 5.1 of the Trust Deed applicant will have immediate vested rights in the trust fund.

It is difficult to discern on which basis Respondent opposed this application. There is no or insufficient evidence that Applicant cannot deal with the trust monies on the basis of mental incapacity. In Respondents’ heads of argument it is stated that respondent will abide by the decision of the court.

There is no need to deal with collateral issues such as whether or not the Respondent diligently dealt with applicant’s monies to his satisfaction or not.

It is not its concern how applicant now wishes to deal with his monies. According to the provisions of s 13 of the Trust Property Control Act 57 of 1988 a court has a discretion to terminate a Trust if certain circumstances arise or are present. I am satisfied that Applicant also has the constitutional rights that he refers to in par 4 of his Replying Affidavit.

In my humble opinion, the only reason why you would take such a matter to court would be because you thought it was cheaper than launching a vindicatory action against a benighted & uncooperative ‘trustee’. To a trustee who is merely ignorant, not obstructive, I usually recommend laughing off the ‘trust’, but, were the victim to approach me, I would advise investigation into a possible delictual claim, for poor administration during an irregular ‘agency’.

High Court case 21 August 2020: Du Preez v Du Preez NO and Others (10832/2020) [2020] ZAWCHC 112. Before Norton J. A dodgy trust, if you ask me, the Du Preez Family Trust. The late founder & his late eldest son were the original trustees, under a deed that not only afforded the founder a testamentary reservation to appoint trustees in his will (which is OK) but purportedly gave him the sole right to appoint trustees during his lifetime. Zap! It’s a nullity, not merely when his son died but at inception. Next problem: the new trustees were about to remove a younger son as trustee, whether or not he participated in the relevant resolution. For that, you need a court order & the consideration of the ‘paramount consideration’ identified in Sackville West & Volkwyn. No matter how you might read the deed, a majority vote would not cut it, not without the participation of the intended defenestree, or the intervention of a court. Norton J paid only lip service to the interests of the beneficiaries. This judgment notwithstanding, the intended removal is unlawful. If I am right, how odd would that be? Nor can I help remarking that the now de rigueur citation by every judge & his or her dog of a passage from Endumeni is unhelpful if (a) the merits of the matter lie elsewhere than in interpretation, & (b) you see a distinction between an inter vivos deed & a ‘commercial contract’ Endumeni concerned just such a document; why cite it if it is irrelevant?

High Court case 25 August 2020: F[....] v F[....] (AR485/19) [2020] ZAKZDHC 42. Here’s an unusual matter, heard by Kruger J. The wife had been successful in her accrual claim, despite the husband’s disposal ‘of assets of significant value days before the trial commenced’. It had been found that he made a donation to a trust & a ‘loan repayment’ ‘fraudulently or at least maliciously to reduce [the wife’s] accrual claim’. The donation (SARS please note) was made to a BVI trust fifteen days before the trial:

…. The [husband] indeed confirmed this when testifying. [He] sought advice on how to reduce the value of his estate and thereby the [wife’s] accrual claim. What is startling, in my view, is that his attorneys of record, who were aware of the [wife’s] accrual claim, assisted the [husband] in drawing up the Deed of Donation to the trust. The [husband] then sold his immovable property situate in London and the donation was subsequently paid to the trust deed during July 2015.

As for the loan, he had remembered that his father had advanced it about twenty-three years ago. Not only did he fail in winning condonation but also in an application to lead further evidence:

The evidence which the [husband] seeks to place before the court on appeal is the fact that he had obtained an opinion from Senior Counsel regarding the lawfulness of establishing a trust and making a donation to it. The [husband] had obtained a written opinion from Stokes SC, which he now seeks to introduce into evidence. He



has further averred that he enquired from his Counsel, during the trial, whether he was going to lead such evidence and was advised that it was unnecessary. It is common cause that Stokes SC represented the [husband] during the trial. Finally the [husband] has averred that the opinion is relevant and would have affected the outcome of the trial in that the court a quo would not have concluded that the donation be included in the accrual calculation.

I am glad to note the approval by two judges of the judgment of Alkema J in RP v DP and Others 2014 (6) SA 243 (ECP) (143, 144 TSH 2015, 159, 165 TSH 2016, 182 TSH 2018, 207 TSH 2020). I am still looking for a copyright-free rendition of the judgment. Anyone?§

High Court case 26 August 2020: LW v CW and Others (12866/2014) [2020] ZAWCHC 86. One of the issues that Salie-Hlophe J had to decide upon was whether assets registered in the husband’s trust formed part of his estate for the purposes of calculating the accrual that had taken place in his estate. This might deserve mention in a future issue.

High Court case 26 August 2020: LW v CW and Others (12866/2014) [2020] ZAWCHC 86 (209 TSH 2020). Husband & wife were (supposedly) trustees & beneficiaries of the family trust, but ‘she did not have any involvement in the matters relating to the trust’, while he trousered the rental income on trust property. In the course of their divorce, he paid amounts to her pendente lite out of the trust property. She wouldn’t co-operate in authorizing the payments, being sacked as a trustee via a majority resolution (to which she was obviously not a party) placed on her car at their children’s school grounds. But—Hey!—she was subsequently reinstated. He agreed to pay university & boarding fees but wanted the trust to make the payments & be reflected as a loan due to him or his company. The trust was ‘a channel or conduit for funding’:

…. The trust gets funding but it goes through to other persons. Whilst it funds the children’s school fees etc, which is normal in a trust, in this case the school fees are funded by the business, paid by the trust and the trust repays the first defendant.

If you don’t understand the bookkeeping involved, take it from Salie-Hlophe J that ‘he was looting the assets of the trust to the detriment of its beneficiaries’. He & the trust’s ‘independent trustee’ (his bookkeeper) signed a significant resolution without troubling the wife in any way, although, to be fair, the independent trustee ‘did not wish to get involved with decision making of the affairs of the trust’. His attorney acted also as attorney for the trust. On the ground of ‘abuse of the trust form’, Salie-Hlophe J held that:

…. Accordingly the value of the trust assets is to be added to the value of the first defendant’s personal estate for the purpose of calculating the accrual calculation.

There you have it, Ladies & Gentlemen, the typical, male-dominated, professionally served (by males) South African ‘trust’, in all its glory.

High Court case 26 August 2020: Scott and Others v Scott and Others (D5946/2019) [2020] ZAKZDHC 37. A wealthy & successful father of 91 & his much younger wife are taken on by his children & brother in a failed attempt to have a curator ad litem appointed to investigate his mental condition. As I like to say, you should choose whether to be wealthy or have a family. The two together do not mix well. A learned & empathetic judgment by Chetty J. (Note to SARS: perhaps you ought to have a look at the offshore Watermark Trust & its protector.)§

SCA case 02 September 2020: Breetzke and Others NNO v Alexander NO and Others (232-2019) [2020] ZASCA 97. Among the property holdings of the Sleepy Hollow Trust was a commercial building let to SARS. Thereby hangs a murky tale. When the trust decided to sell the portfolio, one of the trustees, Robert Edward Alexander, offered to buy it. He nominated as purchaser a company owned & controlled by him. Within six months his company resold the SARS property at a significant profit. The St Francis Trust & the June Alexander Family Trust were the beneficiaries of Sleepy Hollow. Per Wallis JA:

One final point is relevant and it is well illustrated by the present case. If a person who aids, enables or facilitates the execution of a breach of trust with knowledge that the transaction involves a breach of fiduciary duty can escape liability for their involvement it will render it relatively easy for those who owe fiduciary duties to escape the consequences of their wrongdoing. The use of corporate vehicles to execute business transactions is commonplace. Here Mr Alexander is alleged to have offered to purchase the properties through a nominee. Ziningi, a company owned or controlled by him and in which he is alleged to have a financial interest, was the nominee. In the passage from the high court’s judgment quoted in para 9 it was said



that Ziningi was in effect an innocent bystander—a person overhearing something in a coffee shop. That was incorrect. It was Mr Alexander’s chosen corporate vehicle to purchase the properties. If the allegations regarding his connection to Ziningi are established, I fail to see on what basis it can be said that Ziningi was in the position of an innocent bystander. His knowledge would clearly be attributed to Ziningi. It is against the legal convictions of the community for people to assist others to breach their fiduciary duty. The law should not make it easier for them to do so.

In the language of Gross v Pentz, this was a ‘direct action’ by a beneficiary. The judgment is a primer if not a vade mecum on the nature of a fiduciary duty, & will feature in a future issue.

SCA case 02 September 2020: Breetzke and Others NNO v Alexander NO and Others (232/2019) [2020] ZASCA 97. Judgment of Wallis JA on fiduciary duties under a trust, reported in 209 TSH 2020 & covered in 211 TSH 2020.

High Court case 17 September 2020: Nedbank Limited v Bestbier and Others (Scholtz Intervening) (12654/18) [2020] ZAWCHC 107. Why, oh why, do banks deal with trusts? At least in this matter the bank succeeded in its application for a money judgment against the trustees, together with an order declaring a property belonging to the Goode Hoop Trust, operating a commercial wine farm & cellar in the Stellenbosch area, to be specially executable. Kusevitsky J had to decide over a bunfight about Rule 46A of the Uniform Rules of Court (execution against residential immovable property) & its application to a trust. Having given their word on the indebtedness of the trust, the trustees then welched, claiming that the trust’s property was a ‘primary residence’:

After a conspectus of the relevant facts, I am of the view that Rule 46A and Practice Directive 33A finds no application in this matter. I am also satisfied that on the evidence, this is not an instance where the ‘primary residence’ of the First and Second Defendants is ‘nominally’ registered in the name of the Trust, as for all intents and purposes, the Trust and its property, is a well-oiled commercial enterprise. I am also satisfied that no section 26 rights will be infringed upon the granting of this order. The Plaintiff is entitled to its judgment and to have the property declared specially executable.

High Court case 25 September 2020: Weir-Smith NO and Others v Master of the High Court of South Africa, Gauteng Division, Pretoria and Others (20088/2020) [2020] ZAGPPHC 541. The Master makes a decision, under s 16(1) of the Trust Property Act, to require the trustees of the Tuscany Trust to deliver twenty-four years’ of documents & information. Mr & Mrs W-S are engaged in divorce proceedings. She made the complaint leading to the Master’s impugned decision, & represented herself in these proceedings before Movshovich AJ. Against her were ranged the trustees (one of whom was Mr W-S), who alleged that the impugned decision constituted an administrative action that was unlawful, irrational, unreasonable & procedurally unfair under PAJA or fell to be set aside on the basis of the principle of legality. All of Mrs W-S’s preliminary & procedural points were dismissed, as lacking merit. The impugned decision was found to be susceptible to review under PAJA. The trustees listed several grounds upon which it ought to be set aside, which, to Movshovich AJ, too narrowly interpreted the s 16(1) power. More importantly, the Master had failed to notify the trustees of the complaint & so had acted in a procedurally unfair manner. (In the background was the unexplored question whether Mrs W-S had made the request for a purpose unrelated to the remit of the Trust Property Control Act, namely, as an aid in the divorce proceedings.) Although the Master’s decision was found to be ‘unconstitutional on the basis of a lack of consultation, procedural unfairness & related irrationality’ & was thus reviewed & set aside, no machinery existed for his decision to be substituted by that of the court. The order remitting it for his reconsideration came with this admonition:

… It is, however, important to ensure that such reconsideration takes place in accordance with the correct constitutional and legal precepts, so that there is an effective remedy and mitigation of recurrence. I thus intend to direct that the reconsideration occurs with due regard to the findings and principles set forth in this judgment.

Was the Master duly mortified, or is he, too, shameless? High Court case 20 October 2020: Van der Walt v Van der Walt NO and Others (5525/2018)

[2020] ZAWCHC 120. Some nice points of trust law, in the context of the Van der Walt Family Trust, expertly dealt with by Rogers J. This is how the matter ended,



leaving aside the punitive costs order: Since Mr van der Walt does not have standing to claim the other relief, it is not necessary to deal with the other complaints which underlie his claim for the removal of trustees. In his founding papers these were an alleged failure to keep minutes and proper accounting records. It is enough to say that if my finding that Mr van der Walt lacks standing is wrong, the answering papers show that the complaints were without merit.

The respondents seek a punitive costs order against Mr van der Walt. In my view this is justified. He has attempted to meddle in the affairs of a trust in circumstances where he ceased to be a trustee and beneficiary during 2008/2009. He has advanced spurious grounds. He has flouted rules of procedure. His interference has caused the Master to hold back from authorizing new trustees. He has claimed to be acting in the best interests of the beneficiaries when it is perfectly clear that he has his own selfish interests at heart. His proper remedy was simply to sue the WFT for any amount allegedly owing to him.

There is also evidence that he is fuelled by vindictiveness. According to Mrs van der Walt, her ex-husband has communicated with their children, saying that he intends to sue her and the WFT, and that the children will be subpoenaed to testify in court. On 19 July 2018 he sent an SMS to their daughter which included the following threat: ‘Ek gaan julle uitroei veral jy en jou ma’. Mr van der Walt has not denied sending this message.

SCA case 23 October 2020: Fletcher v McNair (1350/2019) [2020] ZASCA 135. The appeal from McNair v Crossman and Another (A5023/18) [2019] ZAGPJHC 298; 2020 (1) SA 192 (GJ) (5 September 2019) (above). The judgment of Makgoka JA effectively left Warren John Fletcher as co-trustee of the McNair Family Trust, thus vindicating the founding judgment of Mudau J (above):

I therefore conclude that the state of the relationship of the appellant and the respondent has not [imperilled] the Trust property or its proper administration. I find no other basis on which it would be in the interests of the Trust and its beneficiaries to remove the appellant.

‘Our jurisprudence on the removal of trustees’, said Makgoka JA, ‘is neatly collated in Gowar at paras 31–32’:

The suggestion that ‘once mutual respect and trust is lost’ then ‘the administration of the Trust as well as the management of its property is placed at risk’ should be qualified. I assume that what the court [on appeal to a full court] meant to convey was that if the loss of mutual respect and trust among trustees results in the Trust property being [imperilled], that could form a basis for removal of one or more of the Trustees. This seems to tie in with the court’s earlier remarks when introducing this topic.

Warren John Fletcher is to be commended for confirming his status as accountant trustee. But the imbroglio lends support to my long-held view that outside or independent trustees should not be involved at all in the affairs of companies owned by trusts, despite the critical shortage of suitable talent.

High Court case 27 November 2020: I K v M K and Others (5600/2017) [2020] ZAFSHC 221. A divorce case in which the assets of three purported trusts, a family trust, a business trust, & the Bulhoek Trust, were taken into account in the accrual calculation.§

2021 SCA case 06 January 2021: Haitas v Froneman and Others [2021] ZASCA 1. What a mess

of a situation, bearing me out in my conviction that it is vital to choose between being wealthy & having a family. Having lost his successful father and being young, the appellant, crass & aggressive, clashes with the trustees of a wealthy trust, whose behaviour is hardly accommodative. There have been some offshore payments that SARS, were it a real taxing authority, might be interested in investigating. It is not clear why the recipient, the late father’s romantic partner, not being a beneficiary of the trust, was enjoying these & other, not insubstantial payments from the trustees. Advisers encouraged the incumbent trustees to become directors of companies owned by the trust (something that would have raised my eyebrows), so as quickly to access cash (que?). The trust deed seems at some stage to have been replaced in its entirety, the later incarnation including a highly suspect clause aimed at prejudicing the appellant, and, very probably, constituting a nudum praeceptum. Nicholls JA



was not at all curious how the appellant might be the SOLE beneficiary & yet not own the trust property, able to defenester the trustees. The father’s will also seems to include a nudum praeceptum. I say again: what a mess! Not to mention the waste involved in losing two court cases in trying to dislodge the trustees. Or the sheer incompetence of the appellant, being both a trustee & a (good grief, THE SOLE) beneficiary, in not gaining access to information about the trust’s affairs.

High Court case 21 January 2021: RS NO and Others v CMS and Others; In re: CMS v RS and Others (6837/2020) [2021] ZAWCHC 6. Wife obtains a subpoena against Investec Bank to provide information in its possession, which it is willing to provide, unless the subpoena is set aside by way of an order of court. That is, indeed, what the trustees of the Regardt Trust are hoping to do, before Wille J. But Wife is well advised, & I like Wille J’s careful language:

The plaintiff is seeking, inter alia, the following relief; a decree of divorce; maintenance for herself and the (4) minor children born of her marriage to the first defendant; an order declaring that the assets acquired by the trustees of the trust (which they ostensibly hold in their capacities as trustees of the trust) are in effect owned by the first defendant; an order that when calculating the joint estate (alternatively, any accrual that has taken place in the first defendant’s estate), the net value of the assets referred to above (at the time of the dissolution of the marriage), must be taken into account as forming part of the joint estate (alternatively, the first defendant’s estate).

Further, in the alternative, an order is sought for damages against the first defendant, inasmuch as it is alleged, that he breached the terms of the ante-nuptial contract, by acquiring assets in the name of the trust (so as to place these beyond any claim that the plaintiff may have in regard to the joint estate and/or any accrual) and, an order that should the first defendant hold insufficient assets to satisfy the order made against him, that sufficient assets be transferred from the trust, to satisfy such order.

The trustees are duly thrashed. Is their opposition not strange? Wife, after all, is a beneficiary of the trust. Their arguments are rubbish, especially the one that the documents are irrelevant at this stage of the bunfight.

High Court case 21 January 2021: Scharrighuisen NO and Others v Scharrighuisen and Others (6837/2020) [2021] ZAWCHC 19. I thought the facts sounded awfully familiar (trustees deservedly thrashed in divorce proceedings). SAFLII has decided in its wisdom to report this case twice, the first time as RS NO and Others v CMS and Others; In re: CMS v RS and Others (6837/2020) [2021] ZAWCHC 6 (21 January 2021) (see 214 TSH 2021).

Tax court case 18 March 2021: SARSTC IT 24918 (IT) [2021] (Johannesburg). The taxpayer, a trust, won this case before Wright J:

…. All three counsel had submitted thorough and learned heads of argument shortly prior to the hearing.

This was a ‘dead trust bounce’ matter, the taxpayer trust being the vested beneficiary of other trusts (a structure often associated with fraud). The capital gains vesting in it each year it were distributed to its own beneficiaries, who paid the CGT. It claimed to have earned no capital gain, since it was a ‘conduit pipe’. And there I was thinking that the conduit principle had been extinguished via codification in the law! The latest amendment to s 25B(1) of the Income Tax Act, in my view almost wholly unnecessary, was taken to be significant. (If it ain’t broke, don’t fix it!) In 209 TSH 2020, I said that s 25B(1), before its amendment, being nothing more than a statement of the common law, must apply to the CGT, but without any consequence. As the judgment has it, an ‘amount’ includes a capital gain, a wholly artificial concept!

In short, the capital gains in question fall within the purview of section 25B(1), section 25B(2) and paragraph 80(2) but not within paragraph 80(1) at least as these sub-sections and sub-paragraphs read for the years under consideration.*

Perhaps the most startling thing about this wrongly decided case was the citation by counsel for SARS of s 7(1). Only in Cape Town (and along the Eastern seaboard) do they believe that s 7(1) is anything other than a dead letter, yet this was a Johannesburg matter. See the Guest Column.*

SCA case 26 March 2021: Massmart Holdings Limited v CSARS (84/2020) [2021] ZASCA 27. When CSARS v Massmart Holdings Limited (IT 14294) [2018] ZATC 2 (11 July 2018) emerged (see 184 TSH 2018) it was a puzzle how the taxpayer’s identity might have been so exposed. By the time TC IT 13798, 13931 & TAdm 14294



(17 September 2019) was reported (see 201 TSH 2019), the earlier breach of confidentiality had been forgotten, & the identical revelatory slip-up was suppressed, at least in polite (yet forgetful) circles. Before the SCA, however, there are no hidden identities, & the taxpayer’s strange share-incentive scheme finally came a cropper, for once & for all. Visually, Ponnan JA’s judgment is jarring, thanks to its inclusion of so much verbatim testimony. After taking advice on its strange employee share trust, the taxpayer amended it, equally strangely. Some years later & on the basis of the amendment, it claimed CGT capital losses totalling almost R1 billion. In the course of the dispute, it gave up its argument that it was a vested beneficiary of the trust (as if that would have helped with a loss!). Its loss, it then claimed, arose on a right it enjoyed ‘to claim performance, against the trustees’. The witnesses it called (including its CEO) ‘bolstered SARS’s contention’ that no such asset existed, hence the focus upon testimony, which is richly entertaining. In any event, was there any disposal? And why were amounts advanced to the trust shown as loans? The upshot:

The unpaid loans plainly constituted an asset in the hands of Massmart. There could thus be no loss to speak of. Instead, what Massmart purported to do was to account for the Trust’s losses in its books. This despite the fact that at the outset they had received legal advice from Mr Lewis that they could not, by arrangement between them and the Trust, change the incidence of capital gains or losses.*

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