Curators, Emma Smith Educational Fund v University of KwaZulu-Natal and Others

• Jurisdiction: South Africa
• Court: Supreme Court of Appeal
• Judge: Navsa JA, Cloete JA, Shongwe JA, Ebrahim AJA and Bertelsmann AJA
• Judgment Date: 01 October 2010
• Citation: 2010 (6) SA 518 (SCA)
• Hearing Date: 23 August 2010
• Docket Number: 510/09
• Counsel: DJ Shaw QC (with AA Gabriel) as curators ad litem for the appellant. AM Stewart SC (with S Mahabeer) for the respondents. CJ Pammenter SC for the amicus curiae.

Bertelsmann AJA (Navsa JA, Cloete JA, Shongwe JA and Ebrahim AJA concurring):

[1] At the centre of this appeal, which is before us with the leave of the court below, are the provisions of a will creating a charitable trust, the Emma Smith Educational Fund (the Fund). It is administered by I the first respondent, the University of KwaZulu-Natal. Its benefits are, in the original terms of the will, reserved solely for white South African women who need financial support for a tertiary education. Applicants for a bursary must have lived in 'Durban' for at least three years to qualify. The question is whether this bequest, to be administered by the university, can be allowed to stand in its racially exclusive form. J

Bertelsmann AJA

A [2] The court below granted an order in favour of the respondents, the university and the members of its council, who are the trustees of the Fund, deleting the racially restrictive provisions of the bequest and substituting 'the Ethekwini Municipality' for 'Durban'. In doing so Nicholson J relied upon the provisions of s 13 of the Trust Property B Control Act 57 of 1988 (the Act). I shall refer to the first respondent as the university.

[3] The appellants are the curators ad litem for potential beneficiaries of the Fund.

C [4] More than seven decades ago, on 21 July 1938, Sir Charles George Smith executed his last will and testament (the will) to dispose of his considerable estate. Sir Charles had arrived in South Africa in his youth and lived in Durban until his death in 1941. He was the founder of CG Smith and Company, a major member of the sugar industry, and the founder of a shipping line that later became part of Unicorn Shipping. D He became a prominent industrialist and politician.

[5] Sir Charles was a great admirer and friend of General JC Smuts. He was a member of the latter's political party and served as a nominated senator for the then province of Natal for ten years. Sir Charles shared General Smuts' vision of a united white South African nation.

E [6] Sir Charles was known as an exceptionally generous man who took a keen interest in education, which interest was stimulated by his mother, Emma Smith. She was his inspiration.

[7] In 1920, during his lifetime, Sir Charles instituted a scholarship in F his mother's name, for the funding of overseas studies of intending painters, sculptors, architects or art teachers. In the will, a similar scholarship was instituted at the Durban Technical College. In terms of a further provision of the will, the Fund was bestowed upon the then Natal University College, a predecessor of the first respondent. The terms of the will in relation to the Fund are the focus of the present G appeal.

[8] The relevant clauses of the bequest, contained in clause 26(f) of the will, read as follows:

'(f)

As to three tenths thereof [of the residue of his estate] to the Council of the Natal University College (hereinafter with H their Successors in Office called the Council) to be taken and held by the Council in trust to the intent that the same shall be dedicated in perpetuity for the promotion and encouragement of education in manner hereinafter appearing, namely:

1.

The proceeds of this bequest shall form a fund to be called the Emma Smith Educational Fund in memory of my Mother.

2.

I The Council shall stand possessed of the said Fund and the investments from time to time representing the same upon trust to apply the income thereof in and towards the higher education of European girls born of British South African or Dutch South African parents, who have been resident in Durban for a period of at least three years immediately preceding the J grant, payment or allowance hereby authorised.

Bertelsmann AJA

3.

The income shall be applied at the discretion of the Council: A

(a)

In the maintenance of Exhibitions for the benefit of poor girls who but for such assistance would be unable to pursue their studies of such value and for such period as the Council may determine in each case, tenable to any institution of higher education or of technical professional or industrial instruction approved by the Council; B

(b)

In payment at the discretion of the Council of an Allowance for the maintenance of such Exhibitioners for such period as the Council may determine in each case to their parents so long as the Exhibitioners reside with them or to some other person with whom the Exhibitioners may reside with the approval of the Council; C

. . .

(f)

In the event of the Council of the Natal University College being unable or unwilling to undertake the office conferred upon them hereunder I nominate, constitute and appoint the Town Council of the City of Durban, to be the Trustees of the said Fund with the same powers D and authority as are hereby conferred upon the Council of the Natal University College.' [Own emphasis.]

[9] The Council of the Natal University College accepted the bequest and it and its successors in title administered the Fund.

[10] The Natal University College later became a constituent college of E the University of South Africa and thereafter became autonomous as the University of Natal. The latter was amalgamated with the University of Durban-Westville in 2001 by a decision of the Minister of Education, in terms of s 23 of the Higher Education Act 101 of 1997, to form the university.

[11] When Sir Charles passed away in 1941, the Fund was established F with an initial capital base of 42 000 pounds sterling, representing three-tenths of the residue of his estate. Today it is one of the largest administered by the university. At the time the proceedings were launched in the court below, its assets had increased in value to about R27 million, of which about R4 million was available for distribution to G potential bursars.

[12] Because of the racially exclusive nature of the bequest, the Fund, instead of being depleted, has grown exponentially. Over the years the amount that has been paid out to successful applicants for funding has H consistently been lower than what the Fund could afford. This was due, not only to the racially exclusive nature of the bequest, but also because of the difficulties attendant upon determining who qualified as 'European girls born of British South African or Dutch South African parents'. This is due to dramatically changed circumstances from the time that the will was made. The parties are ad idem that 'European' is an obsolete I reference to white South Africans.

[13] The university's principal and vice-chancellor, Prof Malegapuru William Makgoba, was the principal deponent in support of its case. He recorded that the university has experienced considerable embarrassment in performing its function as trustee of the Fund, because J

Bertelsmann AJA

A of the racially exclusive basis upon which bursaries have to be awarded. The university argued that such discrimination is self-evidently unfair. It is common cause that the first respondent is a public institution largely funded by government. The university is committed to non-racialism, yet the majority of its students do not qualify for an Emma Smith B bursary.

[14] Over and above the embarrassment caused by administering a fund that is racially exclusive, the university is concerned that it might be challenged in the Equality Court under the provisions of the Promotion of Equality and Prevention of Unfair Discrimination Act 4 of 2000, C because it administers a fund exclusively reserved for whites.

[15] Similarly, the reference to 'Durban' has given rise to possible challenges in the interpretation of the bequest. The city by that name, that existed in 1938, has expanded to a large metropolitan municipality now known as the Ethekwini Municipality. It has incorporated formerly D outlying boroughs and townships, with the result that uncertainty might exist in respect of the neighbourhood in which a potential beneficiary has to reside in order to qualify for a bursary.

[16] During 1999 the university launched an application in the Durban High Court to vary the provisions of the will - creating the Fund in terms E of s 13 of the Act - the provisions of which will be dealt with in due course. That application, intended to obtain the same result that is now sought to be brought about, was withdrawn when evidence showed that the availability of the bursaries had not been widely advertised and that the bursaries that were awarded had been restricted to studies at the university.

F [17] The position has since improved, both in respect of the number of bursaries awarded and the range of institutions at which such bursaries may be taken up, but...