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Court case on litigation based on wrong version of trust deed – Cohen NO & Others v D [2023] ZASCA 56

Cohen NO & Others v D [2023] ZASCA 56

The Century City Property Investment Trust (the trust) sold some fixed property leading to substantial capital gains. These gains were allocated (and therefore attributed) to beneficiaries of the trust. The respondent (D) was a beneficiary of the trust as a result of her marriage and until her divorce in 2019. The total amount allocated to her in 2013 and 2014 was just over R6m. The amounts allocated were shown as vested liabilities in the annual financial statements of the trust for the relevant years. D issued summons against the trustees for the payment of this amount to her. After the trustees as defendants filed their plea, D applied for summary judgement. The Cape High Court (Allie J) issued summary judgement in 2022. On the day of hearing of the application for summary judgement, both D and the appellants (the trustees) realised that all the papers relied on an amended version of the trust deed which was not yet in force when the allocations were made. The trustees relied on their powers in the amended deed to withhold payment of allocated benefits until a date to be determined by the trustees in their sole discretion. Despite the fact that pleadings were based on the incorrect version of the trust deed, the Cape High Court found that it was of no moment and granted the summary judgement. This court also found it strange that the trustees had a “peculiar” defence in that they insisted on their powers to withhold payment of the benefit, but paid the tax arising out of the allocation on behalf of the beneficiary.

The Supreme Court of Appeal (SCA) (Nicholls JA (Saldulker and Mocumie JJA and Mali and Siwendu AJJA concurring)) held that the summary judgement should not have been granted as the trustees had disclosed a “bona fide defence” in their pleadings. The mere fact that they did not raise the reliance by D on the wrong version of the trust deed in their papers or in argument, did not negate the fact of the existence of their defence and therefore summary judgement was not appropriate. The appeal was allowed and the summary judgement replaced with an order that the trustees (defendants in the High Court, appellants in this matter) be granted leave to defend D’s main action for payment of the allocated benefit.


While this case turned on procedural issues, practitioners should ensure that proper version control is maintained over successive versions of trust deeds to avoid grounds for attacks on trustee decisions.


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