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Court case on removal of trustees

Nair N.O v Nair N.O and Others [2019] ZAKZPHC 23

In an appeal to a full bench of the KwaZulu-Natal High Court, the appellant (PN), who was also the applicant in the court a quo, appealed against an order that the PPC Property Trust be terminated.  In his original application PN asked the court to remove his brother, JN (the first respondent in both cases), as a trustee of the trust and appoint an independent co-trustee.  In his pleadings as respondent, JN asked for the removal of PN as trustee and the appointment of an independent trustee.

In the original case the court (D Pillay J) held that it is unlikely that such appointment will solve the continuous problems resulting from the fact that the two brothers were at loggerheads and have not co-operated as trustees for at least six years.  This in a trust where they were the only trustees .  The feud was the result of a disagreement about the nature and ownership of three businesses the brothers were involved in.  The court invoked the provisions of sec 13 of the Trust Property Control Act (TPCA) which reads as follows:
13.   Power of court to vary trust provisions.—If a trust instrument contains any provision which brings about consequences which in the opinion of the court the founder of a trust did not contemplate or foresee and which—
(a)       hampers the achievement of the objects of the founder; or
(b)       prejudices the interests of beneficiaries; or
(c)       is in conflict with the public interest,
the court may, on application of the trustee or any person who in the opinion of the court has a sufficient interest in the trust property, delete or vary any such provision or make in respect thereof any order which such court deems just, including an order whereby particular trust property is substituted for particular other property, or an order terminating the trust.

The court held that the founder could not have foreseen the feud and that it would hamper the proper administration of the trust, and ordered the termination of the trust.  The court held that removing trustees and appointing independent trustees would cost money and place a burden on the trust which would not be to the benefit of the trust and its beneficiaries.

PN appealed to the full bench and in argument conceded that it would be better if both him and JN be removed as trustees, but argued that the termination of the trust would not be to the benefit of the beneficiaries.

The full bench (Van Zyl J,  Steyn et Nkosi, JJ concurring) held that sec 13 of the TPCA cannot apply as there is no provision in the trust deed which brings about consequences that the founder did not contemplate or foresee and that this is a jurisdictional requirement for the court’s powers under sec 13.  The trust deed makes provision for a maximum of four trustees and has no requirement that PN or JN be trustees.  The court also rejected the argument that the cost of independent trustees would not be in the best interests of the trust and its beneficiaries.  The court removed both PN and JN as trustees and ordered the Master to appoint two independent and appropriately skilled trustees, using the powers granted to the Master under sec 7(1) of the TPCA.

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