Shepstone & Wylie Attorneys v De Witt NO

• Jurisdiction: South Africa
• Judge: Bezuidenhout AJ
• Judgment Date: 10 June 2021
• Docket Number: 5140/2019
• Hearing Date: 30 April 2021
• Court: KwaZulu-Natal Division, Pietermaritzburg
• Citation: 2021 JDR 1205 (KZP)

Bezuidenhout AJ:

Introduction:

[1]

The applicant, Shepstone & Wylie Attorneys, claims judgment against the four respondents in their capacities as trustees of the Penvaan Property Trust (IT No 5932/94) ('the trust') for payment of various sums of money, totalling R2 589 208.49, consisting mostly of legal fees and disbursements due to it, based on a deed of suretyship signed on 25 May 2013.

[2]

The respondents oppose the application. Various factual disputes emerge from the papers. The parties, through their respective counsel, have however agreed that I am at this stage only required to deal with and rule on one issue, raised as the first point in limine in the respondents' answering affidavit, namely whether the deed of suretyship signed on 23 May 2013 by the first respondent, Mr Abraham Johannes de Witt (Mr de Witt), in his capacity as a trustee, and Mrs Renata Mignon Volker (Mrs Volker), at the time also a trustee of the trust, was duly authorised by the trust, and hence legally competent. .

[3]

In terms of the deed of suretyship, which bears the heading 'Undertaking to pay fees and suretyship', the trust (referred to in the document as the surety) would bind itself jointly and severally in favour of the applicant (referred to as the creditor) as surety for and as co-principal debtor with Mrs Renata Mignon Volker, (referred to as the debtor), for

'the due payment of any and all amounts which are now or which at any time in the future may become due by the debtor to the creditor in respect of any indebtedness or obligation of the debtor to the creditor arising from any cause whatsoever, including but not limited to any

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and all legal costs or disbursements due by the debtor to the creditor on an attorney and own client basis.'

[4]

At the time the deed of suretyship was signed by Mr de Witt and Mrs Volker as trustees, the trust however also had a third trustee, namely Mr Thomas Volker (Mr Volker).

[5]

Mr Volker and Mrs Volker were married to each other in community of property, and were at the time in the process of getting divorced. Mrs Volker was being represented by Ms Estelle de Wet, employed as an attorney at the applicant. Both Mr Volker and Mrs Volker were also beneficiaries of the trust.

The Penvaan Property Trust Deed:

[6]

Most clauses in trust deed are preceded with a heading but I will only refer to particular headings when necessary to do so. In terms of clause 4 of the trust deed, '[t]here shall at all times be not less than three Trustees of the Trust'.

[7]

In terms of clause 11, the powers of the trustees are set out as follows:

'11.1 Any trustee shall have the power to deal with the Trust property and Trust income for the benefit and purpose of the Trust in their discretion for which purpose they are granted all necessary powers and authority including (but without limitation) the powers stated in the Appendix. The powers conferred upon the Trustees shall be complete and absolute and exercisable in the discretion of the Trustees;

11.2 The Trustees shall have the power to ratify, adopt or reject in their discretion, contracts made on behalf or for the benefit of the Trust, either before or after its formation.' (My emphasis.)

Attached to the trust deed is an appendix which sets out further powers of the trustees, which will be discussed below.

[8]

Clause 13 deals with the meetings of trustees, and reads as follows:

'13.1 The Trustees may meet together for the despatch of business, adjourn and otherwise regulate their meetings as they think fit. Any Trustee shall be entitled on reasonable written notice to the other Trustees to summon a meeting of the Trustees. All Trustees for the time being in the Republic of South Africa shall be given reasonable notice of any meeting of the Trustees.

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13.2 Subject to 5 above, the quorum necessary at any such meeting shall be three Trustees.

13.3 A Trustee may be represented at a meeting of Trustees by a proxy appointed as such in writing.

13.4 A written resolution signed by all Trustees for the time being or their respective alternates or proxies shall be as effective as a resolution taken at a meeting of Trustees.'

Clause 13.2 was amended in terms of an amendment to the trust deed signed on or about 26 June 1998, to require a quorum of only two trustees at a meeting of trustees.

[9]

In terms of clause 14, all negotiable instruments, contracts, deeds and other documents which are required to be signed on behalf of the trust, 'shall be signed by at least two Trustees'.

[10]

Clause 16, under the heading 'Disagreement between trustees' deals with the eventuality of a disagreement between trustees, and states as follows:

'16.1 At and for each meeting of Trustees, the Trustees present, in person or by proxy, shall elect a Chairperson, provided for as long as Thomas Wilhelm Volker is a Trustee, he shall be Chairperson.

16.2 In the event of any disagreements arising between the Trustees at any time the view of the majority shall prevail. Should there be an equality of votes, the Chairperson shall have a second or casting vote.'

[11]

In terms of clauses 23 and 24, under the heading 'Distribution of Income and Trust Property', the trustees were entitled to use, pay or apply the income of the trust or the whole or portion of the trust property for the 'welfare' of its beneficiaries. 'Welfare' was included to mean 'the benefit, comfort, maintenance, education, advancement and pleasure' of the beneficiaries, as well as all purposes which the trustees may consider to be in the interest or for the advantage of the beneficiaries.

[12]

The appendix attached to the trust deed sets out the powers of the trustees in detail. Its introduction reads as follows:

'Without prejudice to the generality of any of the provisions of the accompanying Deed constituting the above Trust the Trustees shall have the following powers which shall be

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exercisable in their sole and absolute discretion for the purpose and benefit of the Trust.' (My emphasis.)

[13]

In terms of clause 11 of the appendix, the trustees were given the power 'to defend, oppose, compromise or submit to arbitration all accounts, debts, claims, demands, disputes, legal proceedings and matters which may subsist or arise between the Trust and any person'.

[14]

Clause 19 of the appendix deals with the trustees' power to pay out of the funds of the trust all debts incurred on behalf of the trust by the trustees in the bona fide exercise of their powers.

[15]

Clause 25 of the appendix gives the trustees the power 'to contract on behalf of the Trust' and to ratify, adopt or reject contracts made on behalf of or for the benefit of the trust, either before or after its formation.

[16]

Clause 26 of the appendix does not set out a particular power, but rather appears to possibly prescribe how the powers set out in the preceding twenty five clauses should be exercised. It reads as follows:

'Provided the Trustees unanimously agree, to conduct business on behalf of and for the benefit of the Trust, and to employ Trust property in such business.'

The 2013 litigation

[17]

It is important to deal with the events that led to the signing of the deed of suretyship. In 2013, Firstrand Bank Ltd brought an application in this court under case no 4035/2013 for the sequestration of the trust. The three trustees at the time were Mr Volker, Mrs Volker and Mr de Witt.

[18]

Mr Volker was cited as first respondent in his capacity as trustee and did not oppose the application. Mrs Volker and Mr de Witt, cited as second and third respondents, opposed the application on behalf of the trust. Poyo Dlwati AJ, dealt with the question as to whether the second and third respondents had the authority to instruct Shepstone and Wylie to act for the trust and to oppose the application for

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sequestration. It was raised by Firstrand Bank Ltd as a point in limine, which point Poyo Dlwati AJ dismissed.

[19]

When dealing with her reasons for dismissing the point in limine, Poyo-Dlwati AJ referred in detail to a meeting of trustees held on 25 May 2013, at which meeting it was inter alia resolved to oppose the proceedings instituted by Firstrand Bank Ltd, appoint Shepstone and Wylie to represent the trust in those proceedings, and to sign the deed of surety which is the subject of the current proceedings.

[20]

It appears that around 16 May 2013, Mrs Volker gave notice of a meeting of trustees to be held on 23 May 2013 for the purpose of debating and passing three...