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Court case: When does a trust terminate? Van Rensburg v Van Rensburg N.O and Others [2020] ZAECGHC 29

Van Rensburg v Van Rensburg N.O and Others [2020] ZAECGHC 29

D and V made a joint will which created the D Trust in the event of D’s demise before V.  V was to be the only income beneficiary of the D Trust (the trust).  The will provided that:

“With the death of my wife the trust is to terminate and the capital, which includes capital gains thereon and additions thereto, together with any unpaid income, is to be paid in equal shares to my children R…, U…, C… and T…, or the survivors of them…”.

R, U, C, and T were appointed as the trustees of the trust.  After V’s death, R sent an email to the other three trustees with a resolution authorising him to pay out the trust capital to the four of them, and requesting their banking details.  U supplied her details to him, but unbeknown to both of them her email account had been hacked and the hacker(s) supplied false banking details to R.  R paid an amount of R934 913.16 into the account of which the hacker(s) supplied the details.  When she found out what happened, U tried to resolve the issue with her siblings, but their attitude was that the fact that she did not receive her portion was her problem and not a fraud perpetrated against the trust.

U brought an application to have all the trustees removed and for the appointment of new trustees to deal with her problem, on the basis that the trustees suffer from a conflict of interest in that they are all beneficiaries of the trust.  R, C, and T oppose the application on the grounds 1) that the trust ceased to exist upon V’s death and that the four siblings are therefore no longer trustees, 2) the question whether they were ever beneficiaries of the trust, 3) that U herself is conflicted, and 4) whether U has made out a case for the removal of the trustees under section 20(1) of the Trust Property Control Act, 57 of 1988.

The Grahamstown High Court (Mfenyana AJ) held that the trust ceased to exist upon the death of V, that, therefore, the four siblings ceased to be trustees at that moment, and that the four siblings were never beneficiaries of the trust, but became entitled to the trust capital under the provisions of the will.


The judgement does not reveal who the executor(s) of the joint estate happened to be.  It is therefore unclear why the court accepted that R had any authority to distribute the trust capital or on what authority he could do so legally.  If the four siblings were not the joint executors of the estate and they were also no longer trustees of the trust (which in the court’s view did not exist anymore), it is unclear what right they had to sign any resolution authorising one of their number (R) to distribute the trust capital.
The judgement raises some further pertinent points:
• The wording of trust clauses creating and determining the details of a testamentary trust is of crucial importance.  It is advisable to describe very clearly who the beneficiaries are and what rights they acquire under the trust, when the trust is to terminate and what the trustees’ duties are when that happens;
• Fiduciary practitioners acting as trustees or trust administrators on behalf of trustees should take great care when obtaining banking details of beneficiaries or creditors of the trust.  It is advisable not to rely solely on emailed details when making a first payment to a beneficiary or new creditor.

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