FISA

The Fiduciary Institute of Southern Africa (FISA) has developed an extensive archive of court case summaries relating to fiduciary matters. The summaries are written by FISA CEO, Louis van Vuren. 

Below are two summaries. You can visit the archive at https://www.fisa.net.za/category/court-cases

1.     Court case about beneficiaries in a trust – N and Others v Maluleke N.O and Others

N and Others v Maluleke N.O and Others [2022] ZAGPPHC 911

Two trusts were set up, the Trading Trust and the Legacy Trust. The Legacy Trust is the only beneficiary of the Trading Trust.

The beneficiary clause of the Legacy Trust reads:

“1.1.2 the beneficiaries” means that person or other persons who may from time to time be selected by the Trustees in their entire and absolute discretion to be a beneficiary in respect of the income or capital profits or capital gains or capital or either under the Trust, from amongst the members of the classes consisting of:”

A list of 9 names then followed, and the descendants of any of these, as well as any trust set up for the benefit of any of these. If none of the persons mentioned or the alternatives are the available, the nearest relatives of the founder are included.

The 1st and 2nd applicants were included in the list of nine names. They brought an application, inter alia, for the joinder of 5th and 6th respondents, in their capacity as trustees, as well as 9th respondent (FNB) and for the freezing of the bank accounts of the trust with FNB, pending an account by the trustees to the Master under section 16 of the Trust Property Control Act (the TPCA).

The application was interlocutory. In the main application the applicants asked for the removal of the trustees on grounds of breach of trust.

The applicants argued that they, as members of a class from which beneficiaries could be drawn, had an interest in the trust property, while the respondents argued that, until they as trustees selected beneficiaries from the class, such persons were not beneficiaries and had no interest in the trust property.

The court (Millar J) set the questions for decision out as follows:

Whether the joinder should be granted, and whether the applicants had locus standi to bring the application.

The court held that, on a pure reading of the beneficiary clause and until a resolution was taken by the trustees in 2022, no person had any right to be a beneficiary.

The court held further that the fact that the trustees did not select beneficiaries before February 2022 (the trust was set up in 2016) did not “… transmute the persons named within the category of those who could be selected as beneficiaries, into beneficiaries.” The court distinguished Potgieter v Potgieter on the basis that there was no attempt in the present case to amend the trust deed.

Therefore the applicants had no locus standi as they had no interest in the trust property because they were not selected as beneficiaries.

Comment:

The judgement, once again, highlights the importance of careful wording in a trust instrument.

2.         Court case on wills and divorce – W v Williams-Ashman N O and Others

W v Williams-Ashman N O and Others [2023] ZASCA 44

The Supreme Court of Appeals (SCA) dismissed an appeal by a divorced husband who attacked the provisions of section 2B of the Wills Act, 7 of 1953 of the grounds that it infringed the right to property under section 25 of the Constitution, 1996. The Western Cape High Court (WCHC) ruled in 2020 that the provision did not infringe the right to property nor did it deny access to the courts, a right guaranteed under section 34 of the Constitution. Click here for our summary of the judgement of the WCHC.

In the SCA the appellant argued that the provisions of section 2B deprived him of his right to inherit from his erstwhile spouse in conflict with what her real intention was, just because she died within the three month period after divorce as envisaged by section 2B. The appellant urged the court to take extraneous evidence into consideration and argued that the provision that the testatrix who died within three months after the divorce is deemed to have intended to disinherit the divorced spouse is arbitrary and with no rational basis.

The court (Unterhalter AJA, with Saldulker, Mbatha and Molefe JJA and Kathree-Setiloane AJA concurring) held that the provision has a rational purpose as it can safely be assumed that divorcees would not want to carry on benefiting their ex-spouses and that the fact that the deceased testatrix did not give any indication in her will that she wanted to continue to benefit her divorced spouse is the only indication of her real intention that can be considered. There are no reasons to deviate from the settled legal principle that the will of a deceased is the ultimate expression of such a deceased’s intention with regard to succession. The appeal was dismissed with costs.

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