Snyman v De Kooker NO and Others [2024] ZASCA 119; [2024] 4 All SA 47 (SCA)
The appellant (JS) lodged an appeal to the Supreme Court of Appeal (SCA) against a judgement of the full bench of the Gauteng (JHB) High Court (Senyatsi, Crutchfield and Dlamini JJ), which overturned a decision in her favour by a single judge in the Gauteng (JHB) High Court (Mali J).
JS was involved in a motor vehicle accident in which she sustained injuries. According to a neurological report submitted during action proceedings in the Gauteng High Court, she is capable of managing her own affairs, but “… would need assistance with large amounts.” The action proceeding against the Road Accident Fund (RAF) was settled and the settlement made an order of court. The order made provision for the setting up of a trust for the benefit of JS. The respondents were appointed as trustees. Part of the court order was that the setup costs and administration costs of the trust would be for the account of the RAF. Shortly after the formation of the trust, JS became concerned about the trustees’ administration of the trust and the investments they had made. She demanded an account from them about their administration of the trust. They supplied her with bank statements and investment reports, but not with financial statements. JS then approached the Gauteng High Court with an application for the termination of the trust, alternatively the removal of the trustees, and alternatively the appointment of two further trustees. The Johannesburg High Court (Mali J) then ordered the termination of the trust under section 13 of the Trust Property Control Act, 57 of 1988 (TPCA), an account by the trustees within 30 days, the payment of the trust capital into the trust account of JS’s attorney pending the setting up of a new inter vivos trust for the benefit of JS, and the right for JS to claim consequential relief resulting from the account to be given by the trustees, and ordered costs against the trustees de bonis propriis (from their own pockets). The trustees appealed to the full bench of the Gauteng High Court, which sustained the appeal with costs and overturned the high court’s order.
The SCA (Makgoka JA (Mocumie and Goosen, Molefe JJA and Koen AJA concurring)) held that Mali J conflated the variation of a trust instrument under section 13 with the removal of trustees under section 20(1) of the TPCA. It also criticised the full court for not limiting itself to the case pleaded before it and the same conflation of issues it found the single judge to be guilty of. The court also found that the trust that was set up in material respects did not comply with the court order warranting the founding of the trust. It found that this was sufficient grounds to satisfy the jurisdictional factor in section 13, that circumstances had arisen that the founder did not foresee, and that the consequences of this required by the section, i.e. that it hampers the achievement of the objects of the founder, or prejudices the interests of beneficiaries, or is in conflict with the public interest, are also present. The court referred to Doyle v Board of Executors 1999 (2) SA 805 (C) and found that the trustees had to supply JS with a full account of all transactions they conducted in their capacities as trustees, that it was unacceptable that they made unsubstantiated payments to themselves from the trust funds for their fees while the RAF was responsible for the administration costs of the trust, and effectively reinstated the court of first instance’s order that the trust be terminated and a new trust be set up for the benefit of JS with new trustees as well. The appeal was sustained with costs de bonis propriis against the respondents (the trustees).
Comment:
It is clear from the judgement that the persons responsible for the drafting of the trust deed used a precedent for a normal “family” inter vivos trust instead of following the court order after the settlement between JS and the RAF. Fiduciary practitioners will do well to avoid following precedents slavishly when drafting trust deeds (and wills for that matter), and apply their minds properly whenever they draft documents.