Stander and Others v Schwulst and Others

• Jurisdiction: South Africa
• Citation: 2008 (1) SA 81 (C)

Stander and Others v Schwulst and Others
2008 (1) SA 81 (C)

2008 (1) SA p81

Citation	2008 (1) SA 81 (C)
Case No	Case Nos 6375/07 and 12461/07
Court	Cape Provincial Division
Judge	NC Erasmus J
Heard	September 11, 2007; September 14, 2007
Judgment	September 21, 2007
Counsel	O Rogers SC (with JA Rogers) for the applicants; LM Olivier for the first, second and third respondents; No appearances for the fourth and fifth respondents; D Melunsky for the sixth respondent

Flynote : Sleutelwoorde E

Trust and trustee — Trustee — Application for removal of — Where trustee sued for breach of trust (removal or damages), claim against trustee in personal capacity. F

Trust and trustee — Trustee — Personal liability of — Removal of trustee on grounds of unreasonable conduct, negligence or breach of trust — If trustee opposing application for removal, personally liable for costs.

Trust and trustee — Trustee — Application for removal of — Removal of trustee on grounds of unreasonable conduct, negligence or breach of trust — If trustee opposing application for removal, personally liable for costs. G

Trust and trustee — Trustee — Personal liability of — Trustee party to legal proceedings in representative capacity — Personally liable for costs if acting mala fide, unreasonably or improperly in bringing or defending proceedings.

Headnote : Kopnota

The living adult beneficiaries of a trust (the applicants) sought the removal of the current trustees of the trust (the first to third H respondents) on grounds including dishonesty and a lack of good faith (the main application). This application was brought against the trustees in their personal capacities. The trustees contended that they should rather have been cited in their representative capacities and brought an application seeking that their defence of the removal application be funded by the trust estate (the costs application). I

Held, that where a trustee was sued for breach of trust (for removal or damages), the claim was against the trustee in her personal capacity. (Paragraphs [32] and [34.3] at 92C and 92H - 93A.)

Held, further, that, even where the trustee was properly a party to legal proceedings in her representative capacity, she would be held personally J

2008 (1) SA p82

liable for the costs if she acted mala fide or unreasonably or improperly in bringing or defending the proceedings. A (Paragraph [39] at 94D - E.)

Held, further, that if a trustee were removed for misconduct or other improper or unreasonable behaviour, her opposition to the application for her removal would inevitably be found to have been unreasonable and she could not only be ordered to pay the other side's costs personally but would have no entitlement to an indemnity from the trust in respect of her own costs. If opposition to removal of a B trustee was not proper in all the circumstances, there would be no indemnity. Opposition would be improper where removal was sought, inter alia on grounds of unreasonable conduct, negligence or breach of trust. (Paragraphs [43] and [47.1] at 95D and 97C.)

Held, accordingly, on the facts, that the costs application was fundamentally misconceived as the trustees sought an order in C advance that their defence of the removal application be funded by the trust estate. Because they would only be entitled to such an indemnity if their opposition were justified, the court could not make such an order without deciding the main application. (Paragraph [58] at 102I.) D

Cases Considered

Annotations

Reported cases

Southern African cases

Boyce NO v Bloem and Others 1960 (3) SA 855 (T): referred to E

Chetty v Tamil Protective Association 1951 (3) SA 34 (N): dictum at 39D applied

Cooper NO v First National Bank of SA Ltd 2001 (3) SA 705 (SCA) ([2000] 4 All SA 597): followed

Die Meester v Meyer en Andere 1975 (2) SA 1 (T): referred to

Du Plooy v Answes Motors (Edms) Bpk 1983 (4) SA 212 (O): applied F

Ehrlich v Rand Cold Storage & Supply Co Ltd 1911 TPD 170: referred to

Ex parte Hiddingh 1935 OPD 92: referred to

Ex parte Suleman 1950 (2) SA 373 (C): referred to

Gory v Kolver NO and Others 2006 (5) SA 145 (T) ([2006] 2 All SA 640): referred to

Grobbelaar v Grobbelaar 1959 (4) SA 719 (A): followed G

Jakins v Burton 1971 (3) SA 735 (C): followed

Katz, NO v Segal and Others 1977 (2) SA 1038 (C): referred to

Land and Agricultural Bank of South Africa v Parker and Others 2005 (2) SA 77 (SCA): referred to

McNamee and Others v Executors Estate McNamee 1913 NPD 428: dictum at 432 applied H

Mooljee v Mooljee 1958 (4) SA 192 (D): dictum at 194C - D applied

Port Elizabeth Assurance Agency & Trust Co Ltd v Estate Richardson 1965 (2) SA 936 (C): followed

Rampersadh v Pillay 1963 (3) SA 320 (D): dictum at 321A - D applied

Re Estate Potgieter 1908 TS 982: followed

SA Commercial Catering and Allied Workers Union and Another v Letlapa NO and Another (Mostert NO I Intervening) 2005 (6) SA 354 (W): referred to

Sackville West v Nourse and Another 1925 AD 516: referred to

Spiros v Spiros 1932 WLD 207: referred to

The Master v Deedat and Others 2000 (3) SA 1076 (N): referred to

Tijmstra NO v Blunt-MacKenzie NO and Others 2002 (1) SA 459 (T): referred to. J

2008 (1) SA p83

Foreign cases A

Alsop Wilkinson (a firm) v Neary and Others [1995] 1 All ER 431 (Ch): dictum at 437b - d applied

Gomba Holdings UK Ltd and Others v Minories Finance Ltd and Others (No 2) [1992] 4 All ER 588 (CA): dictum at 599c - f applied

Holding and Management Ltd v Property Holding and Investment Trust plc and Others [1990] 1 All ER 938 (CA): dictum at 943a - h applied B

McDonald and Others v Horn and Others [1995] 1 All ER 961 (CA): referred to

Miller v Cameron [1936] HCA 13 ((1936) 54 CLR 527): referred to

Re Beddoe, Downes v Cottam [1893] 1 Ch 547 (CA): referred to

Re Biddencare Ltd [1994] 2 BCLC 160: referred to

Re Buckton, Buckton v Buckton [1907] 2 Ch 406: referred to. C

Unreported cases

Bank of Nova Scotia Trust Co v Powlik 2003 BCSC 1382 (9 September 2003): referred to

Dimos v Skaftouros and Others [2004] VSCA 141 (20 August 2004): referred to D

Hargreaves v Telford and Haining [2006] NZHC 1476 (case No HC AK CIV - 2006 - 404 - 780; 27 November 2006): referred to

Kordyban v Kordyban et al 2003 BCSC 1302 (22 August 2003): referred to

Leung May Chow Karen and Others v Leung May Chun Alison Alliance [2006] HKCFI 159, HCMP 148/2005 (21 February 2006): applied

Lloyd v Imperial Oil Ltd 2001 ABQB 407 (9 May 2001): referred to E

Pope v Pope and Others [2001] SASC 26 (Case No SCGRG - 96 - 1003, 14 February 2001): dicta in paras [27] & [33] applied

RMBL Investments Pty Ltd v Salvus Quen Nominees Pty Ltd & Others [1999] VSC 44 (2 March 1999): referred to

Skaftouros and Others v Dimos [2002] VSC 198 (29 May 2002): referred to F

Sons of Gwalia Ltd (Subject to Deed of Company Arrangement) v Margaretic [2006] FCAFC 92 (15 June 2006): dictum in para [3] applied

Turner v Andrews 2001 BCCA 76 (6 February 2001): referred to.

Case Information

Application by trustees for indemnity from the trust in respect of their costs of opposing an application for their removal. The facts appear from the judgment of NC Erasmus J. G

O Rogers SC (with JA Rogers) for the applicants.

LM Olivier for the first, second and third respondents.

No appearances for the fourth and fifth respondents.

D Melunsky for the sixth respondent. H

Cur adv vult.

Postea (September 21).

Judgment

NC Erasmus J:

An order as set out at the end of this judgment was handed down on 14 September 2007, the reasons follow. I

Introduction

[1] The applicants are the living adult beneficiaries of the Jilelf Edwards Trust (hereinafter referred to as the trust). Luke and Jessica Miramadi are the only minor beneficiaries of the trust, being the children of the J

2008 (1) SA p84

NC Erasmus J

fourth applicant and fifth respondent. The terms of the trust are such that as yet unborn descendants of the applicants could A become beneficiaries. Such possible future beneficiaries are represented by the sixth respondent herein.

[2] First to third respondents are the current trustees of the abovementioned trust. B

[3] In the main case, launched on 18 May 2007 (hereinafter referred to as the removal application), the applicants seek the removal of the current trustees of the trust.

[4] No opposing affidavits have as yet been filed in the main case. They were due by 27 July 2007. The applicants granted the C trustees an extension to 31 August 2007 and subsequently to 11 September 2007, the date of hearing in this application.

[5] The first to third respondents on 7 August 2007 brought this application (hereinafter referred to as the costs application) in which the following relief is sought: D

1.

That the trustees of the Jilelf Edwards Trust, Trust No T166/80 be authorised to withdraw funds from the said Trust in order to fund the defence of an application brought under the aforementioned case not against the trustees in their personal capacities, conditional upon the following: E

1.1

That a proper fee arrangement between the trustees and the attorney representing them, be entered into prior to further defending the matter;

1.2

That the funds may only be withdrawn from the Trust for payment of a properly submitted account by the attorneys to the trustees from time to time; F

1.3

That all such payments be incorporated in the financial statements of the Trust for the specific fiscal year during which such withdrawals were made.

2.

That the filing of opposing affidavits to the application brought on behalf of the aforementioned applicants, be stayed pending the final order to be made in this application. G

3.

That the respondents in the main application be ordered to file their opposing...