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Court case about removal of trustee


Jooste NO and Another v Pretorius and Others (695/2023) [2024] ZASCA 130

The appellants (J and L), somewhat unusually, launched an appeal against an interim interdict granted to the first respondent (P) by the Gauteng High Court. The SCA granted leave for the appeal, although appeals are not usually allowed against interim orders but only once the main suit has been completed, on the basis that the facts leading to the interim order and those in the main suit were inextricably linked. The interdict was granted pending an application by P to have J and L removed as trustees of a trust known as the Rhino Pride Foundation. J and L brought a counter-application for the enforcement of a resolution calling for the resignation of P as a trustee under clause 11.1.5 of the trust deed, taken at a trustee meeting in March 2022.  The high court granted the interdict and dismissed the counter-application.

The facts were that P was the founder of the trust and requested J and L to join as trustees.  The purpose of the trust was to create a rhino sanctuary to protect rhinoceroses (rhinos) against poaching and treat wounded rhinos. J and L acquired a substantial sponsorship from an anonymous donor for the administration of the trust and to fund its activities. J and L became concerned about the state of the management of the sanctuary when P and her fiancé started living on the farm where the sanctuary was situated and staff began to complain about how they were treated by the two of them. It was agreed between the parties that P and her fiancé would leave the farm, only for P to bring an ex parte application that possession of the farm be restored to her.  She succeeded, but this order was later set aside on application by J and L on the basis that several of P’s assertions in the ex parte application were patently untrue. Disagreements developed between the trustees and P refused to resolve these through mediation. A meeting was scheduled for early March 2022, attended by P, J and L, at which meeting a resolution was adopted in which J and L requested P to resign as trustee in accordance with clause 11.1.5 of the trust deed. This clause requires a trustee to resign if all other trustees unanimously in writing request such resignation.  Shortly after this P launched the application for the interim interdict and the main application to have J and L removed as trustees on the basis that it is in the trust’s best interest as they requested her to resign in a manner that infringed her constitutional right to fair administrative action. J and L then launched the counter-application. The high court (Maumela J) found that the counter-application cannot succeed because there were disputes of fact which can only be resolved by oral evidence and that it would be premature to remove a trustee on the basis of untested allegations.  Therefore the interdict should be granted pending the main suit, P’s application to have J and L removed as trustees.

The SCA (Schippers JA (Nicholls, Mothle and Unterhalter JJA and Baartman AJA concurring)) held that the decision by J and L to request P to resign was not administrative action under the Promotion of Administrative Justice Act and the audi alteram partem rule was thus not applicable. However, it was not correct that that P’s side of the matter was not heard by J and L – that was the whole purpose of the meeting held. The provisions of clause 11.1.5 were enforceable because its aim was to ensure proper administration of the trust and achieving its objectives and not wilful abuse by trustees of their powers. The court also found that the high court erred in its finding that there were serious disputes of fact. The court found that the common cause facts were sufficient to determine the matter on the papers and that, where P’s version did differ, it was made up of bald denials without any factual support or utterly implausible allegations.  The court then interpreted the clause in question, its purpose and its reference to the provisions of the Trust Property Control Act, and found that it would be in the best interests of the trust if the resolution be enforced and P be required to resign as trustee. The court ordered that the interim interdict be set aside, J and L’s counter-application be granted, P be removed as trustee and replaced by one B, that if P refuses to sign the papers to effect her resignation within seven days the sheriff be authorised to sign on her behalf, and that P pays the costs de bonis propriis, i.e. in her personal capacity.

Comment:  

  1. Practitioners will do well to study carefully the court’s findings on the interpretation of the relevant clause in the deed and ensure that the provisions of deeds they prepare are aligned to this interpretation.
  2. Depending on the provisions of this deed w.r.t. amendment of the deed it may be that further litigation will be necessary should the need ever arise to amend the deed in this case, as it is possible that P, as founder, may refuse to co-operate.  

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