Munnikhuis v Melamed NO

• Jurisdiction: South Africa
• Judge: Wunsh J, Cameron J, Fevrier A J
• Judgment Date: 06 October 1997
• Citation: 1998 (3) SA 873 (W)
• Docket Number: A5019/96
• Hearing Date: 29 August 1997
• Counsel: J J Gauntlett SC (with him J C Butler) for the appellant N N Lazarus for the respondent
• Court: Witwatersrand Local Division

Wunsh J:

Introduction I

This is an appeal, with leave of the Court below, against a judgment of Van Schalkwyk J (Melamed NO v Munnikhuis 1996 (4) SA 126 (W)). The appellant applies for condonation for the late filing of her notice of appeal and other delays relating to the appeal. It is common cause that J

Wunsh J

the fate of the application depends on her prospects on the merits of the appeal (South African Allied Workers' A Union (in Liquidation) and Others v De Klerk NO and Another 1992 (3) SA 1 (A) at 4B--D). The appellant's contentions which were the subject of Van Schalkwyk J's decision were not pressed in argument before us. The focus of oral argument was whether the respondent's entitlement to relief, which Van Schalkwyk J B upheld, had become prescribed by the time the proceedings were instituted. I accordingly address that question.

Background

The proceedings have their origin in a dispute between a brother (to whom I shall refer as 'Nick') and a sister ('Joan'). The executor in Nick's deceased estate initiated the application. He is the respondent in the appeal (I C shall refer to him as 'Nick's executor'). Joan is the appellant. Nick during his lifetime was and Joan is resident within the jurisdiction of this Court. The relief Van Schalkwyk J granted was an order requiring Joan to implement an undertaking she had given in an agreement with Nick. That agreement constituted a settlement of D proceedings Nick had launched on 3 October 1986 against Joan and a company known as Joanick Properties (Pty) Ltd.

On 11 December 1986 Joan addressed a letter to Nick. This letter, on Nick's confirmation of its proposals, constituted a written agreement of settlement of those proceedings ('the December 1986 settlement'). Material to E this appeal are certain undertakings by Joan. These concerned principally the parties' respective interests in two family trusts, the Nicola Trust and the Jicola Trust. The trusts were both formed by Nick's and Joan's father, Nicholas ('Nicholas Senior'), in Jersey on 16 May 1983. After his parents, Nick was the primary beneficiary of F the Nicola Trust (previously called 'the Icola Trust (Nick's Fund)'). Joan was (and claims still to be) a beneficiary of the Nicola Trust. The Jicola Trust was a 'mirror' trust of the Nicola Trust. After her parents, Joan was or is the primary beneficiary of the Jicola Trust (previously called 'the Icola Trust (Joan's Fund)'). Nick was a secondary beneficiary. G

Included in the December 1986 settlement were undertakings in respect of a Panamanian corporation, Haddon Trust Corporation (the name of which at the time was 'Haddon Fidelity Corporation', and to which I shall refer as 'Haddon'). Haddon was in December 1986 a trustee of the Nicola Trust. So far as is material, Joan's letter read:

'15. We have further agreed that steps will be taken to procure the position that I shall no longer be a beneficiary in the H Nicola Trust and that you will cease to be a beneficiary in the Jicola Trust.

. . .

17. You have acknowledged that, save as set out in this letter, you will have no claims of whatsoever nature against me, Joanick, Jicola Trust, Gattinara, Sorbier Trust, Haddon Fidelity Corporation or our father or his estate. I

18. I have undertaken to procure that the Haddon Fidelity Corporation will no longer be a trustee of the Nicola Trust. [I shall call this "clause 18".]

19. I acknowledge that, save as referred to herein, I have no further claims of whatsoever nature against you, the Nicola Trust or any other trust or company of yours.

. . . J

Wunsh J

21. With regard to the action which you have instituted in the Witwatersrand Local Division of the Supreme Court of South A Africa against Joanick and myself, it has been agreed that you will forthwith withdraw such action.

22. It is the intention of both of us that all matters required to be done in order to give effect to this agreement shall, as far as possible, be completed before 31 March 1987.' B

In pursuance of this settlement, Nick withdrew the proceedings. This method of closure, in contrast to an indefinite postponement, or making the settlement an order of Court, entailed that he was unable later to utilise the provisions of Rule 41(4) to apply for judgment in terms of the settlement. In the events that have happened, C the settlement, and in particular clause 18 of it, bound Nick and Joan contractually only. The result is that in terms of s 11(a) of the Prescription Act 68 of 1969 ('the 1969 Act') a three-year period of prescription, and not 30 years, is applicable.

The Nicola Trust is a discretionary trust in conventional form for Jersey. Relevant provisions are the following. D Clause 1 provides that the rights of all parties and the construction and effect of its provisions shall be subject to the exclusive jurisdiction of and construed and regulated only according to the laws of the Island of Jersey. The beneficiaries were Nicholas Senior, his wife, Nick, Joan, their children and remoter issue (Nick has left none and E Joan has none) and certain spouses or surviving spouses of theirs (of whom there are none). A nominator was appointed whose consent is required for a number of acts of the trustees. The nominator has the power to remove and appoint a trustee. Nick was, after his father's death, the nominator. I shall refer to Joan's claim to this office later. By clause 6(d) the trustees were given the power F

'to pay or transfer any income or capital of the trust fund to the trustees of any other trust wherever established and subject to the laws of whatever jurisdiction under which any one or more of the beneficiaries is or are interested, provided that no interest thereunder is capable of vesting in interest later than the expiration of the trust period'.

Clause 6(e) provides that: G

'The trustees shall be discharged from any further liability in respect of any part of the trust fund which is transferred to any of the beneficiaries or to any such trustees pursuant to this clause.'

On the expiry of the trust period (which is defined in the trust deed) the trustees have to distribute the trust capital H to the beneficiaries in accordance with any determination previously made by them. In the absence of adetermination, they hold the capital

'for such of the beneficiaries as shall then be living in equal shares absolutely, and if there shall be no such beneficiaries then living, the trustees shall hold the trust fund and the income thereof (including all income (if any) arising during the I trust period which by operation of law or for any other reason does not fall to be dealt with pursuant to the foregoing trusts and powers) upon trust for the trustees of the Icola Trust (Joan's Fund) created by a settlement made of even date, but if such trust shall then no longer be in existence upon trust for such charitable purposes as the trustees shall, in their absolute discretion, determine'

(clause 8). J

Wunsh J

Clause 15(b) reads: A

'Any trustee may at any time resign the trusteeship on giving not less than 14 days' notice addressed to the nominator or the other trustees (if any) as the case may be or, if there is not a nominator and/or no other trustees, on appointing a new trustee or new trustees in the place of the retiring trustee.'

Section 1(1) of the Law of Evidence Amendment Act 45 of 1988 empowers a Court to take judicial notice of B the law of a foreign State in so far as such law can be ascertained readily and with sufficient certainty. We have access to the text of the Trusts (Jersey) Law of 1984, as updated to May 1997 (there having been three amending Acts). This statute applies to any trust whose proper law is the law of Jersey. It therefore applies to the C Nicola Trust. The following provisions of the law are relevant:

'Article 13

. . .

(3) A trustee having power to appoint a new trustee who fails to exercise such power may be removed from office by the Court. D

(4) . . .

. . .

Article 15

. . .

(3) A resignation (by a trustee) E

(a)

. . .

(b)

which would result in there being no trustee . . .

shall have no effect. [To this I refer as "article 15(3)".]

(4)

A trustee shall cease to be a trustee of the trust immediately upon

(a)

his removal from office by the Court or

(b)

his resignation becoming effective . . . F

. . . .'

Article 24 provides that a corporate trustee may act in connection with a trust by resolution of the trustee or of its board of directors or other governing body. The Court (which is defined as the inferior member of the Royal Court) has the power to appoint a trustee (article 47(2)) and to remove a trustee from office (apart from article G 15(4) also article 47(2)). Article 30(1A) entitles a trustee who resigns or is removed to require to be provided with reasonable security for liabilities, whether existing, future, contingent or otherwise, before surrendering trust property. (It should be borne in mind that according to English (and presumably Jersey) law a trustee has personal liability for the obligations of a trust subject to a right of indemnity from the trust assets. (See Tony H Honoré and Edwin Cameron Honoré's South African Law of Trusts 4th ed (1992) at 22.)

In pursuance of the December 1986 settlement, Nick transferred his shares in Haddon to Joan. She thus seems to be its only shareholder. Its present directors are said to be herself, as president, and two Panamanian lawyers, I P J Espino and J H Heim. We do not know what the Panamanian law is with regard to the appointment and removal of directors of a corporation or the rights of shareholders in that regard.

Haddon did, indeed, take steps to resign as a trustee. In purported compliance with her contractual obligations under clause 18, Joan procured a letter of resignation from Haddon. A...