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Court case: Application by beneficiary for information from trustees – Kruth v Rall NO and Others

Kruth v Rall NO and Others [2023] ZAWCHC 196

The applicant (KK), a capital and income beneficiary of the Elbert de Wit Family Trust (the Trust), brought an application for an order compelling the trustees to supply her with various documents reflecting the financial position of the Trust and decisions regarding distributions of benefits to the beneficiaries of the Trust. The three trustees (PR, LJW and TW) are the first three respondents in their capacities as trustees, while TW and LJW are also capital and income beneficiaries and cited as respondents as such in their personal capacities. Apart from KK, LJW, and TW, the other two beneficiaries (MS and EW) are also cited as respondents. KK alleged that no financial statements had been prepared for the Trust for several years, that TW used trust assets for his personal benefit, that the trustees took decisions about distributions without informing the beneficiaries and that no income tax returns were prepared for the Trust. LJW, the mother of the other beneficiaries, initially opposed the application in conjunction with her co-trustees, but later abandoned her opposition and apparently tried to play a mediating role. The Trust appears to be the only shareholder in a variety of businesses of which TW is the CEO. It is not necessary to go into the detail of these. The trustees disputed most of the allegations, and had supplied some of the requested information by the time the matter was argued.

The court (Mangcu-Lockwood J) held that the disputes of fact were such that it cannot be decided on the papers, as is the procedure in application proceedings. The court held further that the trustees did supply some of the information requested, but that KK should have known that substantial disputes of fact would arise which would not be possible to resolve on papers and by argument. Therefore, application proceedings were not the appropriate process. The court did remark, with reference to case law, that contingent beneficiaries have a general interest in the proper administration of the trust property. The application was dismissed and the court ordered that the costs be paid from the funds of the Trust.

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