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Court case on adding a beneficiary to a trust – Joubert and Others v Joubert and Others [2019] ZAWCHC 56

Joubert and Others v Joubert and Others [2019] ZAWCHC 56

The Chris Joubert Trust (the Trust) was established by the founder (P) in 1996 and the first trustees were his son (T), grandson PJ (T’s son) and an independent trustee, O, representing a firm of accountants (G).  G’s successors in title (C2M) thereafter at all relevant times prior to the current dispute had a nominee as trustee of the Trust.  The capital beneficiaries of the Trust when established were PJ and his siblings, LC, CJ and MJ.

On 19 September 2014 the trustees adopted a resolution to add T’s spouse SJ (the existing beneficiaries’ stepmother) as a capital beneficiary.  PJ, LC, CJ, and MJ, (the applicants) brought an application for a declaratory order focussing on two issues:

• Whether the decision of 19 September 2014 to add SJ as a capital beneficiary was a valid decision, as the nominee of C2M (E) resigned as trustee with effect from 30 June 2014, while his successor (N) was only authorised by the Master, acting under section 6 of the Trust Property Control Act, 57 of 1988, on 22 September 2014;
• Whether the amendment to the Trust deed to include SJ as a capital beneficiary could be made without the consent of LC, CJ and MJ, as beneficiaries who have accepted benefits under the Trust.

The first of these questions turned on whether the trustees were quorate on the date the resolution was adopted.
The court (Bozalek J) interpreted the Trust deed and found that there is no minimum number of trustees required to be in office.  The court, after referring to Simplex v Van der Merwe 1996 (1) SA 111 (W) and Lupacchini v Minister of Safety and Security 2010 (6) SA 457 (SCA) held that at the time between E’s resignation and N’s authorisation by the Master C2M remained a trustee but could not act for lack of a nominee authorised by the Master.
With regard to the second question the court found that there is no evidence that LC, CJ and MJ ever accepted benefits under the Trust.  There was, therefore, no need to obtain their permission for the amendment, as was the case in Potgieter and Another v Potgieter NO and Others 2012 (1) SA 637 (SCA). The court did, however, refer to the provisions of the Trust deed w.r.t. amendments of the deed and came to the conclusion that the deed made it clear that while T was alive the trustees, of which T was one, could amend the Trust deed in any way they saw fit.  After T’s death the Trust deed could only be amended with the permission of the beneficiaries who accepted benefits.  As the courts have consistently ruled that an inter vivos trust is an agreement akin to a contract for the benefit of a third (stipulatio alteri), the rules relating to a stipulatio alteri had to be observed.  Under these rules the third party cannot accept benefits piecemeal without any burdens that come as part of the contract.  Where a trust deed provides, as in this case, that the trustees can amend in any way they see fit, there is a strong argument that any beneficiary accepts benefits subject to this provision.

The application was dismissed with costs.  The court refused to order that costs be paid from the Trust.