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# South Africa: South Gauteng High Court, Johannesburg
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[2025] ZAGPJHC 1243
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## Wypkema N.O and Another v Wypkema N.O and Others (37198/2021)
[2025] ZAGPJHC 1243 (26 November 2025)
Wypkema N.O and Another v Wypkema N.O and Others (37198/2021)
[2025] ZAGPJHC 1243 (26 November 2025)
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sino date 26 November 2025
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG LOCAL
DIVISION, JOHANESBURG
CASE
NO:
37198/2021
(1)
Reportable: No
(2)
Of interest to other Judges: Yes
(3)
Revised: No
Date: 26/11/2025
In the matter between
OTTO
FRIEDRICH ALBERT KRAUSE WYPKEMA N.O
First Applicant
OTTO
FRIEDRICH ALBERT KRAUSE WYPKEMA
Second Applicant
and
EMMA
MARY WYPKEMA N.O
First Respondent
AGATHA
JANE SMITH
N.O
Second Respondent
WYPKE
WYPKEMA (JUNIOR) N.O
Third Respondent
EMMA
MARY
WYPKEMA
Fourth Respondent
AGATHA
JANE
SMITH
Fifth Respondent
WYPKE
WYPKEMA (JUNIOR)
Sixth Respondent
JUDGMENT
Maier-Frawley J:
Introductory
background
1.
The
first applicant and the first to third respondents are siblings. They
are the appointed trustees of the
W
Wypkema Trust
with trust registration number T1943/84 (the ‘Trust’) as
well as the primary beneficiaries of the Trust.
[1]
They are cited in both their representative and personal capacities
in these proceedings.
2.
I will refer to the siblings individually
by their first names, in keeping with how they were mentioned in the
papers, namely ‘Otto’
(first and second applicant),
‘Emma’ (first and fourth respondent), ‘Agatha’
(second and fifth respondent,
and ‘Wypke Jr’ (third and
sixth respondent). Where I refer to Otto, Emma, Agatha and Wypke Jr
collectively, I will
either refer to them as ‘the trustees’
or ‘the primary beneficiaries’, or ‘the siblings’,
depending
on the context. Where I refer to the respondents
collectively, namely Emma, Agatha and Wypke Jr, I will refer to them
either as
the ‘respondent trustees’ or the ‘respondent
siblings’.
3.
Oral argument was presented at the hearing
of the matter by Adv S. Symon SC and Adv J. Blaau SC on behalf of
Otto. For Emma, Mr
A. Franklin SC presented oral argument. For
Agatha, Mr F. Snyckers presented oral argument. Wypke Jr was
unrepresented and chose
not to present oral argument, although heads
of argument were filed of record on his behalf by his erstwhile legal
representatives.
4.
The Trust was founded by the siblings’
father, Wypke Wypkema (Snr) (‘the founder’) in 1984. The
Trust is currently
regulated by an amended trust deed (‘the
trust deed’) which was executed by the founder and signed by
the trustees
on 1 March 1989. The Trust was established as a family
or
inter vivos
trust
in terms of which the trust assets were to be managed and controlled
by family members, as trustees, for their benefit, as
beneficiaries.
5.
The founder resigned as a trustee of the
Trust on 2 July 2014. He remained a limited income beneficiary of the
Trust until his death
on 19 December 2020. Prior to his resignation
as trustee, the founder together with the siblings were the named
trustees. Prior
to the founder’s death, the beneficiaries
included the founder, the siblings and their descendants.
6.
It is common cause that the trust’s
assets are worth somewhere between R1.5 billion and R1.7 billion.
Since all four primary
beneficiaries are still alive, they each stand
to benefit from any distribution that occurs upon vesting, to the
tune of hundreds
of millions of rands.
7.
Trust
assets include,
inter
alia
,
shareholding in various entities through which three private
hospitals established by the founder, are operated.
[2]
Approximately 80% of the net value of the Trust’s assets is
contained in the Arwyp Group of companies, one of which is AMC.
There
is no controversy about the fact that AMC
is
by far the most valuable company in the Arwyp Group in which the
Trust holds an indirect majority shareholding.
[3]
8.
Otto
was a director of Arwyp Holdings and AMC prior to the founder’s
death. On 5 May 2021, the siblings were appointed as
directors of all
the companies in which the trust is a shareholder. These include AMC,
Arwyp Properties, Arwyp Holdings, and Arwyp
Training Institute.
Thereafter,
inter
alia,
various
alleged corporate governance failures were uncovered through
investigations conducted by independent third parties into
the
affairs of AMC. There is a pending action against Otto (and other
defendants), which was instituted by AMC pursuant to such
investigations and findings.
[4]
9.
According to Otto, on 20 April 2023 his
siblings had him removed as a director of Arwyp Holdings and on 17
May 2023 his siblings
had him removed as a director of AMC. In June
2023, the AMC action was instituted against Otto, which he is
defending and in which
proceedings he denies all allegations of
misconduct levelled against him.
10.
After
the founder’s death, a dispute arose between the trustees as
regards the vesting date and the validity and enforceability
of
certain written ‘riglyne’ (also referred to as letters of
wishes [‘Lows’] or ‘guidelines’
in the
papers).
[5]
Otto contended that
the date of vesting was the date of the founder’s death - in
consequence of which vesting has occurred
- and that the founder’s
2020 riglyne (representing the founder’s wishes and made in
terms of clauses 14 and 16 of
the trust deed) are valid, binding and
enforceable vis-à-vis the trustees and the trust. Emma and
Agatha held the opposite
view – that the date of vesting had
not arrived (and is yet to be determined by the trustees in
conformance with the trust
deed) and that the riglyne are not valid,
binding or enforceable against the trustees and the Trust in law.
11.
Leaving aside questions of validity or
enforceability, in terms of the 2020 riglyne, Otto and Emma stand to
receive the lion’s
share of the trust assets that will be
distributable on vesting. In terms of the 2014 and 2018 riglyne, Otto
and Emma will also
receive more than Agatha and Wypke Jr on vesting.
In terms of the 2019 riglyne, the siblings will share equally in the
trust assets
on vesting.
12.
As the dispute remained unresolved, on 3
August 2021, Otto instituted an action in his capacity as trustee
against the Trust, citing
the trustees in their representative
capacity,
nomine officio
,
qua Trust. At that stage, he sought the following relief:
“
1.
An order declaring the 3 December 2019 guidelines
[6]
to be valid, binding, and enforceable vis-a-vis the trustees and the
Trust; and
2.
That the costs of suit be borne by the Trust, unless any
defence to the suit that might arise, is found to be vexatious
or
mala fide, in which event the costs of suit are to be ordered
de
bonis propriis
against any Defendant found to be defending the
action vexatiously or being mala fide, jointly and severally, the one
vexatious
defending party paying, the other to be absolved.”
13.
The action was defended by the trustees
(Emma, Agatha and Wypke Jr) and is pending adjudication. Emma and
Agatha and Wypke Jr are
each represented by their own attorneys in
the action although Wypke Jr’s attorneys withdrew shortly
before the hearing of
this matter. Wypke Jr nonetheless attended the
hearing in person but placed on record that he aligned himself with
the relief sought
by the respondents in their affidavits (the
dismissal of the application with costs) and that he would abide by
the arguments presented
on Emma and Agatha’s behalf at the
hearing.
14.
In December 2023 and January 2024, Agatha
and Emma each delivered a separation application. Issues
identified for separate and prior determination
were: (i) Otto's
locus standi
to represent the Trust in the main action (a
defence
pleaded by Emma only); (ii) whether the 2020 LOW
is valid, constitutes written guidelines as envisaged in clauses 14
and 16 of the
trust deed, is binding, and is to be given effect to by
the trustees in accordance with clause 16 of the trust deed; and
(iii)
whether the 2020 LOW determined the vesting date as the date of
Wypke Senior's death. Otto has opposed these applications.
15.
Pursuant to the delivery of the separation
applications, Otto gave notice that he intended to amend his
particulars of claim. In
September 2024, Otto obtained an order by
consent to join the beneficiaries named in the trust deed, being the
primary beneficiaries
and their descendants, to the action. The
particulars of claim were ultimately substantially amended by:
(i)
Citing all the beneficiaries of the Trust
in the proceedings;
(ii)
Introducing alternative claims within the
main claim (claim A) for declaratory relief as to the vesting date of
the trust and as
to the force and effect of the riglyne, aimed at
effecting distribution of trust assets to the primary beneficiaries
in terms of
the 2020 riglyne and in the alternative, in terms of the
2019 or the 2018 or the 2104 riglyne;
(iii)
Introducing claim B, which is a claim for a
statement and debatement of account and repayment to the Trust of
‘the Fees and
the Other Fees as may be found to be due to the
Trust’, together with interest thereon. The claim is ostensibly
for the siblings
to personally repay all legal fees they allegedly
unlawfully caused the Trust to pay on their behalf in defending the
action; and
(iv)
Introducing claim C, being a claim for the
removal of the siblings as trustees of the trust;
(v)
In respect of each of the three claims, a
cost order is sought against each party who opposed the relief (i.e.,
the respondent trustees
in their representative and personal
capacities) personally, payable jointly and severally on the attorney
and client scale.
16.
In respect of claims B and C, Otto has
alleged that
the use by the siblings of
trust funds to pay their legal fees in
defending
the action is wrongful and in breach of the
fiduciary duties owed by them as trustees in that they are not acting
in the best interests
of the Trust but in our own interests, and that
their personal interests as beneficiaries are in conflict with the
interests and
duties they owe to the Trust as trustees.
17.
Otto’s
amendments took effect on 11 October 2024,
[7]
being a period of three years after the institution of the action in
August 2021. In respect of the primary relief sought, being
claim A,
the
main issues essentially remained the same, namely (1) whether the
riglyne are valid, constitute written guidelines as envisaged
in
clauses 14 and 16 of the trust deed, are binding, and are to be given
effect to by the trustees in accordance with clause 16
of the trust
deed, and if so, which one of the four riglyne should be enforced and
(2) whether the trustees have determined the
vesting date as the date
of the founder’s death.
18.
The present
application was launched on 22 March 2024. In these proceedings, Otto
seeks the following relief:
“
1.
The first to sixth respondents are hereby interdicted and restrained
from, directly or indirectly procuring that the funds of
the W
Wypkema Trust with trust registration number T1943/84 ("the
Trust"), are used to pay for any further legal fees
or other
costs incurred by all or any of them for or in connection with the
defence against the action instituted by the first
applicant and/or
second applicant against them out of in this Court under case number
37198/2021 ("the Action" ), and
until such time as the
Action (including any appeals) has been finally determined.
2.
That those respondents who oppose this application, be ordered to pay
the costs of this application, jointly and severally, the
one paying
the others to be absolved, and on the attorney and own client scale
inclusive of the costs of two counsel.
“
19.
The issues arising for consideration in
these proceedings, include the following:
(i)
As regards the nature of the application,
whether this matter should be decided on ordinary and established
principles applicable
to interdicts and if so, whether Otto has made
out a case for interdictory relief; or
(ii)
whether the relief sought in the matter
should be viewed
not
as
a ‘true’ or ‘classic’ interdict, but as a
type of
sui generis
procedure or case that invokes this court’s supervisory power
to control the alleged unreasonable incurrence by the respondent
siblings of triplicated, uncontained and unrestrained legal costs, at
the Trust’s expense, in order to prevent the improper
use of
trust funds;
(iii)
The proper categorization of the capacity
in which the siblings are ‘truly’ acting in advancing
their opposition to
the action, i.e., whether they are acting in
their capacity as trustees or whether they are acting, ‘in
truth and in substance’
in their capacity as beneficiaries, in
procuring payment of their legal fees by the Trust;
(iv)
Whether the respondent siblings are
entitled and authorized to use trust funds to defend the action.
Otto’s pleaded
case in the founding affidavit
20.
Otto alleges as follows. In defending the
action, the siblings are
pursuing their
personal interests
as beneficiaries and
not the interests of the trust estate. They are therefore not
entitled to the indemnity usually afforded to
trustees who litigate
on behalf of a Trust.
21.
The siblings are also not acting jointly as
trustees in defending the action. They
are
not represented by the same legal teams, nor have they delivered a
single cohesive plea on behalf of and in the interests of
the Trust
in the action. The power afforded to trustees to institute or defend
litigation in clause 4.2.16 of the trust deed
is
an authorisation for the trustees (plural) to act jointly and does
not confer authority on each of the trustees to appoint their
own
attorneys to defend their interests as beneficiaries and to advance
separate defences and to procure that the Trust pay their
personal
legal fees.
22.
The 10 July 2024 resolution, purportedly
authorizing the payment of individual fees under the guise of
defending the Trust, is invalid.
It was passed in breach of the
fiduciary duties which the sibling trustees owe to the Trust in that
they are using the Trust as
their personal piggy bank to fund, what
is in truth and substance their personal litigation, on a luxurious
and triplicated scale,
whilst acting in their personal interests, not
those of the Trust, and in conflict with Trust interests.
23.
As beneficiaries, his siblings
personally stand to gain if the action fails, not the Trust.
24.
Regarding a
prima
facie
right to interdict and restrain
the siblings from using trust funds in the litigation going forward,
Otto alleges that such a right
arises arise
by virtue of the fiduciary duties he owes to the Trust as a trustee
(which fiduciary duties include the obligation
trustees have to act
in the trust’s best interest and not their own, and not to use
trust funds to pay for their personal
legal fees) and from his right
to protect the trust assets to which he has a claim as a beneficiary
of the Trust.
25.
As
to the requirement of a well-grounded apprehension of irreparable
harm, Otto alleges that “
It
is obvious that my siblings are the majority of the trustees and will
not act to protect the Trust against their own inappropriate
use of
Trust funds to pay their attorneys to protect their interests.
”
He
states that the siblings have managed to spend approximately R3.2
million
[8]
so far on legal fees.
Although
the Trust is asset rich, its liquidity is not boundless, and at the
rate of spending by the siblings, the continuing depletion
of the
Trust’s liquid reserves in paying their litigation costs is
prejudicial.
If
the action succeeds, he alleges that he is unsure whether his
siblings possess the financial ability to satisfy a costs order
made
in his
favour
or
to repay legal fees unlawfully paid from trust funds in terms of
claim B.
26.
As regards the balance of convenience, he
alleges that he has
been forced to fund the
action from his own resources. In circumstances, where the siblings
“
have obdurately insisted on having their
own legal teams and have boldly entered
defences
on entirely different grounds to each other (at
least insofar as the erstwhile Agatha and Wypke faction, versus the
Emma faction),
the balance of convenience falls against them.”
27.
As to the absence of an alternate
satisfactory remedy, he alleges that t
he
only way in which to protect the trust from “the unauthorized
use of its funds” and his rights as a beneficiary,
is to impose
an interim interdict restraining his siblings from paying their
separate legal fees in the action using trust funds.
28.
To avoid undue prolixity, I do not intend
to summarize the pleaded cases of the respondent siblings. Suffice it
to say, that the
arguments contained in the heads filed on their
behalf and advanced at the hearing, align with the factual
allegations contained
in their affidavits.
29.
I am unable to
do justice to all the detailed legal arguments presented on behalf of
the parties in this judgment. I have, however,
considered them
carefully together with the authorities cited.
Discussion
Nature
of the application
30.
Otto
relied on the remedy of an interdict, as it is known in our law, to
prevent the alleged improper and unauthorized use of trust
funds by
the respondent siblings in the litigation going forward. He dealt
with the requirements of an interim interdict in both
his founding
affidavit and his heads of argument.
[9]
31.
It was during oral argument advanced on his
behalf at the hearing that he relied, for the first time, on a
different basis, being
the court’s supervisory powers, for an
entitlement to the relief sought. This basis was neither pleaded nor
dealt with in
his heads of argument. It was simply invoked in the
course of oral argument.
32.
Even
if I were to accept that the court has supervisory powers to prevent
the abuse or improper use of trust funds to pay legal
fees,
[10]
I
am not convinced that this case provides the opportunity for
considering its application for several reasons.
33.
Firstly,
because such
causa
is
sought to be relied on belatedly without the requirements for its
invocation having been addressed or canvassed in the papers
or
heads.
[11]
Secondly, aside
from its late introduction as a
causa
for
the relief Otto seeks, without notice to opposing counsel, it appears
to me to be a last minute change of tack to in order to
overcome a
fundamental difficulty Otto faces in this case, namely, to create a
basis for the relief he seeks, which at its core
amounts to a
pre-emptive
de
bonis propriis
costs order in his favour, in advance of the trial, on the very
issues the trial court is yet to determine. Thirdly, the question
of
improper use of trust funds is an issue that ought properly to be
determined by the trial court after all evidence has been
led, tested
and evaluated, and not on paper. Fourthly, Mr Blaau argued that the
court in this case is not dealing with an ordinary
or classic
interdict involving ordinary contracting parties, but with a
sui
generis
procedure that ought to apply because the parties have an interest in
the trust assets and the Trust must be closely monitored
in dealing
with third parties and in its dealings between parties who are
interested in trust assets. This, however, begs the question:
if the
sui
generis
procedure now sought to be relied on (with a disavowal of reliance on
common law principles that govern interdicts) why was interdictory
relief sought based on requirements that govern ordinary interdicts
in notice of motion and founding affidavit? The notice of motion
has
never been amended to provide for any
sui
generis
supervision, which is designed to prevent abuses of the trust form by
persons occupying a fiduciary position.
[12]
It is common cause that all the trustees are the primary
beneficiaries in this case. It is thus inevitable that they will be
interested
parties.
[13]
The
trust deed itself envisages this. The fact that trustees are
interested parties does not in and of itself constitute abuse.
34.
Furthermore,
the court’s supervisory powers are employed in relation to the
conduct of persons occupying fiduciary positions,
such as trustees.
That in itself undermines Otto’s argument that the case is one
in which the respondent siblings are, in
truth and in substance, only
acting in their personal capacity, as beneficiaries, and are
advancing beneficiary positions rather
than trustee positions, their
purpose being to secure a fair and equal distribution, as Mr Symon
and Mr Blaau vociferously argued.
It becomes a self-defeating
argument where Otto seeks to invoke the court’s supervisory
powers over trustee conduct but at
the same time arguing that the
respondents are not acting as trustees. And, ironically, a
personal
cost order is sought against the respondent siblings, both in their
representative and personal capacities, in the action. As against
the
respondent trustees who act in their representative capacity, such an
order amounts to a
de
bonis propriis
order.
[14]
35.
I will therefore determine the matter based
on ordinary principles relating to interdicts in our law.
36.
Having heard argument by Mr Blaau in
relation to foreign law principles, which he submitted may assist the
court in its assessment,
and having the foreign judgments to which I
was referred, I am not convinced that the cases were helpful,
precisely because none
of them dealt with the same type of relief as
is sought in these proceedings. Peculiar if not extraordinary relief
is sought in
this matter is effectively for an anticipatory
de
bonis propriis
cost order by way of an
interdict aimed at stopping the use of trust funds by trustees in
litigation brought against the Trust and
defended by the trustees qua
Trust. Mr Snyckers is correct when he argued that the making of a
de
bonis propriis
cost order against the
respondent trustees right now - in respect of all future litigation
in this matter including any appeals
– “is something
no-one has ever seen before, not in the sphere of trusts or estates
or in any other type of litigation
- and for which no precedent has
been cited, whether in terms of our law or foreign law.”
I pause to mention that the
foreign law cases were not addressed in
the heads of argument prepared on behalf of Otto, and once again,
opposing counsel were
not given notice prior to the hearing that
foreign law cases would be relied on.
37.
There
was some dissensus between Mr Symon and Mr Blaau in oral argument. Mr
Snyman suggested that the common law may need to be
developed
[15]
to
cater for this type of relief, on the basis that “this matter
involves itself with what the law should be now with constitutional
guidance and with regard to the position of the court in supervising
costs”, whereas Mr Blaau argued that there is no such
need for
development, given that the court in
Stander
[16]
endorsed
the notion of pre-emptive cost applications and it thus forms part of
our law.
38.
Stander
set
out what the English law provides in respect of a pre-emptive
application known as a
Beddoe
application,
in which trustees come to court to seek directions when they either
sue or defend proceedings in their representative
capacity. In such
an application, the
trustees
are expected to make a full disclosure to the court of the strengths
and weaknesses of their case. If the court sanctions
the proceedings,
the trustees will enjoy an indemnity from the trust estate,
regardless of the outcome. The court’s directions
would
typically not be given once for all but would sanction certain steps,
where after
an
application for further judicial advice would be necessary.
[17]
A
Beddoe
application may thus involve in effect what is known as a pre-emptive
costs order.
[18]
39.
As
will be apparent from the aforegoing,
Beddoe
applications are concerned with litigation by or against trustees who
sue or are sued
nomine
officio
.
The argument that a
Beddoe
type application was available to the trustees in this matter, who
ought to have obtained permission from the court, in advance,
to use
trust funds to pay for their litigation costs, rather than to
arrogate to themselves the right to do so, is, with respect,
paradoxical. The main thrust of the argument presented by both
counsel representing Otto is that the litigation itself is not about
trust business, rather, it is a beneficiary dispute, because vesting
has occurred and all that is left is for a distribution of
trust
assets to be made to the beneficiaries. The litigation expenses have
been improperly incurred by the respondent siblings,
so the argument
went, because they are really acting and defending the main action in
their personal capacities irrespective of
how they have been cited.
40.
Stander
was
concerned with an application by the trustees for permission to use
trust funds to fund their defence in a pending main application
in
which the beneficiaries sought their removal from office
.
In the main application, they had been sued only in their personal
capacities and not in their representative capacities. The court
held
that
an
application for the removal of a trustee is a claim against the
trustee personally.
[19]
If the
trustee who is sued in his personal capacity is removed for
misconduct or other improper or unreasonable behaviour, his
opposition to the application for his removal would inevitably be
found to have been unreasonable, and he 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 his own
costs.
[20]
If the
trustee is vindicated at the end of the case, he would be entitled to
recoup any loss suffered by him from the trust
estate. This would be
the difference between his full reasonable expenditure in defending
himself on the one hand, and any amounts
recouped from the
unsuccessful complainant on the other.
[21]
41.
Whilst
Stander
concerned
a
Beddoe
type application,
[22]
far from
endorsing
Beddoe
type applications or importing them into our law, the court in
Stander
held
that:
“
It
is clear that on the approach reflected in the commonwealth cases the
current application would have to fail,
[23]
and that
this
conclusion accords with the
principles
of our own law
discussed earlier
.
..
As
a matter of basic principle, therefore, an application of the kind
now made by the trustees is fundamentally misconceived
.
They
ask in advance for an order that their defence of the application for
their removal be funded by the trust estate
.
Since 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 case. In effect, the trustees ask the court
to rule that regardless of whether or not they are acting
reasonably
in opposing the main application, they are entitled to an indemnity.
The making of such an order is contrary to all
authority, which is to
the effect that trustees enjoy an indemnity only if they oppose
proceedings properly and reasonably. The
trustees’ demand also
offends basic notions of justice and commonsense.”
[24]
(emphasis added; own n 23 included))
42.
At
par 22 of the judgment, the court set out the default position where
a trustee is sued personally – the trustee cannot
have his
costs paid out of the trust fund unless his opposition is found to be
reasonable, in which event, he would be entitled
to be reimbursed for
those costs. This is, as was held in par 31 of the judgment, is to be
decided at the end of the case, because
if it were to be decided
upfront, it would pre-empt the trial court’s decision.
[25]
43.
The
default position in terms of the common law is the opposite where
trustees are sued in their representative capacities. In that
scenario, the trustees are
entitled
to be indemnified out of the estate for their opposition subject to
the finding of the Court at the end of the case that
they acted
mala
fide
or unreasonably or negligently or improperly.
[26]
44.
In
Re
Estate Potgieter,
[27]
the
appeal court held that a trustee cannot approach a court for
directions as to whether he is entitled to defend proceedings against
him in his representative capacity, or to ask for directions from the
court or seek the court’s sanction with regard to his
defence,
as he must “take the responsibility upon himself.”
[28]
The
proper categorization of the capacity in which the respondent
siblings are ‘truly’ acting in advancing their opposition
in the action (and this application)
45.
The question is whether the trustees
are acting in their capacity as trustees in opposing the litigation
or whether they are, in
truth and in substance, acting in their
personal capacities as beneficiaries in furtherance of their personal
financial interests,
as beneficiaries, as Otto contends.
46.
On Otto’s version, vesting has
already occurred. Therefore, in terms of clause 16 of the deed, the
trust assets fall to be
distributed. Otto contends that assets must
be distributed in accordance with the founder’s wishes as
expressed in the 2020
riglyne (with reliance on the other riglyne in
the alternative). The respondent trustees contend for an equal
distribution amongst
the primary beneficiaries in accordance with the
founder’s wishes. Whether the date of vesting has been
determined by the
trustees, is in dispute, and falls for
determination at trial. How any distribution is to be effected is
also an issue that arises
for determination at trial, because the
validity, enforceability and binding nature of the riglyne, including
what the founder’s
wishes were, are in dispute. These issues
implicate a proper interpretation of the provisions of the trust
deed.
47.
The
action instituted by Otto against the Trust in 2021 was for relief
against the Trust. The trustees were cited qua Trust and
the action
was defended by the trustees, acting
nomine
officio
.
Otto sought, at that juncture, that the Trust be ordered to pay the
costs of the Trustees. It was only three years later that
the
trustees were joined to the action in their capacity as
beneficiaries, and that claims for their removal as trustees and for
the repayment of legal fees expended on their behalf to the Trust
were introduced.
48.
As pointed out by Mr Franklin, the relief
which Otto seeks in the action goes to the very heart of the trust
objects and its existence;
and how or in which manner the trust
assets are to be distributed, to whom, in what proportions and when.
With this submission
I am in agreement.
49.
Otto submits that the respondent siblings
are in in pursuance of their own personal interests as beneficiaries
in defending the
action, the premise being that the vesting date has
already arrived and so it is just a question of distribution of trust
assets
to the beneficiaries. On Otto’s version, the Trust is
effectively at an end because vesting already occurred on the date of
the founder’s death. The argument overlooks that, whether or
not the vesting date was determined by the trustees in terms
of the
provisions of the trust deed, and has arrived, is in dispute. That
the founder’s wishes are as set out in the 2020
riglyne is also
in dispute. And the validity and enforceability of the riglyne is
also in dispute.
50.
Otto’s
argument rests on the assumption that his version is the correct one,
which is certainly not a forgone conclusion.
It is an issue which the
trial court is yet to decide. Be that as it may, assuming for
purposes of argument, without finding, that
Otto’s version is
correct, it is indisputable that the
termination of a trust would result in the loss of office for the
trustees
[29]
and thus
implicates them directly. Otto’s declaratory relief
fundamentally impacts the continued existence of the Trust and
goes
to the heart of the trust objectives which is to protect and preserve
the Trust and its assets for the benefit of all the
beneficiaries.
[30]
51.
Moreover,
the basis on which the distribution is to be effected – whether
in accordance with the riglyne, or not - and when
- based on whether
or not vesting has occurred, are quintessentially issues that
implicate trustees in the performance of their
duties, one of which,
in relation to trust property, is to effect the distribution of
net
trust assets to the appropriate beneficiaries at the time(s)
stipulated in the trust deed. The argument that this is really
just a
fight amongst beneficiaries and that the respondent siblings do not
act as trustees in any genuine sense, cannot therefore
be sustained
on the facts of this case.
52.
It would be inappropriate for me to make
any findings on the merits of the matter and thereby-pre-empt the
trial court’s findings.
Otto’s approach in assuming the
correctness of his stance and then mounting his arguments based
thereon is fundamentally
flawed. It amounts to faulty reasoning in
the construction of an argument.
53.
Let me elaborate. Otto alleges that payment
of the respondent sibling’s legal fees, using trust funds, is
wrongful and their
conduct in doing so constitutes a breach of the
fiduciary duties owed by them to the Trust. As Mr Franklin puts it:
Otto uses the
very issues in dispute and which are yet to be
determined by the trial court as a basis for contending that the
payment of fees
by using trust funds is wrongful and in breach of the
respondent trustees’ fiduciary duties, which conduct must be
stopped
now to avert ongoing prejudice by depletion of the trust fund
to the Trust and himself as beneficiary. Whether their use of trust
funds amounts to a breach of their fiduciary duties or whether they
were conflicted in doing so, are issues yet to be determined
at
trial. The only basis on which Otto can contend, in these
proceedings, that his siblings are
not
acting in discharge of their duties is
by assuming that his version is correct. The logic of this contention
is irrefutable.
54.
Mr Franklin pointed out in oral argument
that the implementation of the 2020 riglyne would result in the
following distribution
to the primary beneficiaries:
(i)
Otto and Emma would each receive
approximately R680 million worth of trust assets; and
(ii)
Agatha
and Wypke Jr would each receive approximately R170 million worth of
trust assets.
[31]
55.
From Emma’s perspective, the action
seeks to impose upon the Trust the enforcement of the disputed 2020
riglyne, which would
fundamentally alter the structure and purpose of
the Trust and result in: (i) the dissolution of the Trust; and (ii) a
grossly
disproportionate distribution of the Trust assets with Emma
and Otto gaining 80% of the value of the Trust assets to the
exclusion
of the remaining beneficiaries; and (iii) Otto gaining a
significant stake in the ownership and control of AMC. This would
also
diminish both the value and the strategic direction of the trust
estate in that it would place a principal revenue generator for
the
Trust outside of the Trust's control. Opposing the action is
essential to prevent the erosion of the founder's legacy, to preserve
the trust assets for the benefit of all its beneficiaries, and to
safeguard the interests of all beneficiaries, by ensuring an
eventual
fair and equitable distribution of Trust assets. And that is why she
is opposing the relief sought in the action in her
capacity as
trustee.
56.
As
pointed out by Mr Snyckers, it is artificial for Otto to contend that
this is a dispute amongst siblings in their personal capacities.
If
there is a conflict between the trustees in their capacity as
trustees and beneficiaries, it is a conflict that is created and
which is inherent in the trust deed itself. It is not a conflict that
would disqualify them from acting in both capacities. These
submissions appear to me to be correct, having regard to the
provisions of clause 4.2.24 of the trust deed,
[32]
taken at face value.
57.
Mr
Snyckers further submits that the interpretation of the trust deed
and how it must be applied, irrespective of the consequences
of who
gets what or who gets more or who gets less, are issues that arise in
the action and are for the trial court to determine.
There can be no
qualm with that contention. What is at issue at trial are two
questions: (i) must the trustees follow the dictates
of law by way of
letters of wishes? In other words, are the letters of wishes
(riglyne) enforceable in law? and (ii) if they are
enforceable, does
it mean that the vesting date has occurred and has the trust come to
an end?
[33]
Both involve
interpretation and administration issues, irrespective of the
consequence that some will get less and others will
get more. If, on
the other hand, the riglyne are
not
enforceable, then it will be for the siblings, as trustees, to decide
on what is best for the siblings, as beneficiaries, and what
is fair
and . I agree.
58.
It
is
not
insignificant that the present application - to prevent the use of
trust funds for payment of legal fees - was launched by Otto
at a
time when he was in fact still seeking an order in the main action
that the Trust pay the legal fees incurred by trustees
in the action.
This was consistent with the general common law principle that legal
fees incurred by trustees in the course of
litigation instituted or
defended by them in their official capacity are payable by the Trust,
unless their conduct is found to
be
mala
fide
,
unreasonable or negligent.
[34]
The fact that claim C for the removal of the trustees was introduced
by later amendment, did not alter the fact that the main claim
A was
against the Trust. For approximately three years before he launched
this application, Otto was satisfied that the Trust was
liable for
the fees incurred by the trustees. It was only three months
after the institution of this application that the
amendments to
Otto’ particulars of claim were effected to include a removal
claim and the beneficiaries who had been joined
to the action. Thus,
when the application was launched, a cause of action necessary to
sustain the relief was missing.
[35]
59.
A
court will only allow an amendment to pleadings to introduce a new
cause of action that did not exist at the time of the institution
of
the proceedings in exceptional circumstances.
[36]
No
such exceptional circumstances have been demonstrated in this matter.
60.
It
is also
not
insignificant that initially, the action was instituted against the
respondents as trustees. The action was defended by the respondent
trustees, given that they contested Otto’s contentions
regarding vesting and the validity of the 2020 riglyne. They incurred
legal expenses using trust monies. Three years later, Otto alleged
that by using trust monies, his siblings were not acting in
the
interests of the trust, but personally, which constitutes grounds for
their removal. The tacking on of removal relief, given
the timing of
its introduction, supports an inference that it was used to bring the
case in line with the
Stander
principle
(referred to in par 22 of
Stander
).
[37]
61.
The
main import of the action instituted in 2021 was to establish the
date of vesting and validity of the 2020 riglyne. That main
relief
was subsumed in claim A of the amended particulars of claim and did
not change the capacity in which the trustees were acting
in relation
thereto. I agree with Mr Franklin and Mr Snyckers that claim C
(removal relief) is ancillary to the main claim, now
claim A. The
tacking on of the removal claim, although it is a claim against the
trustees personally, did not transform the entire
action into one in
which the trustees are acting in their personal capacities. It also
did not alter the fact that the main claim
lies against the Trust,
represented by the trustees. Claim B is also for relief against the
trustees and is directed at reimbursement
to the Trust of any fees
improperly incurred by the trustees, for example, because the
respondent trustees’ opposition in
the litigation was
unreasonably or unjustifiable or malea fide. As the Constitutional
Court affirmed in
Pheko
,
[38]
whether conduct warrants a
de
bonis propriis
order, is fact bound, and is decided on all the basis of all the
circumstances.
62.
The
costs of Emma, Agatha and Wypke Jr’s opposition to claim A (the
main claim) which they oppose in their representative
capacity, are
inextricably linked to the costs incurred in opposing claims B and C.
If Otto fails to obtain personal costs orders
against the trustees in
relation to claim A, then claim B falls away (personal reimbursement
by trustees to the Trust of all legal
fees improperly paid using
trust funds) and the main ground for the removal of the trustees in
claim C (wrongful use of trust funds
to fund litigation costs) falls
away. Even if the trial court grants personal costs orders against
the trustees in relation to
claim A, then it would not necessarily
follow that the trustees are to be removed from office.
[39]
63.
Otto relies on the fact that his siblings
are each represented by separate attorneys and have in some instances
pleaded additional
but disparate defences, in support of the
contention that they are ‘in truth and in substance’
acting in their personal
capacities.
64.
It is trite that the respondents owe
fiduciary duties to all of the beneficiaries of the Trust, and are
required to act with utmost
good faith and in the interests of all
beneficiaries of the Trust. This includes,
inter
alia
, the duty to: (i) preserve the
Trust assets and uphold the Trust Deed; (ii) exercise all powers in
such a manner that the beneficiaries
reap the benefits; (iii) treat
beneficiaries impartially; and (iv) act independently when
discharging their duties.
65.
The
fact that the respondent trustees have engaged their own attorneys
and have pleaded certain additional or different points does
not in
and of itself mean that they are thereby pursuing their personal
interests. They are, as I have indicated earlier, defending
qua Trust
on fundamental issues, namely, vesting and the validity of the
riglyne, and the interpretation of the trust deed, all
of which
affect the Trust and impact their duties as trustees.
[40]
The presence of separate defences does not detract from this. The
common thread that runs through all the defences is to ensure
that
the Trust is protected and that the Trust's assets are properly
distributed in accordance with the trust deed and in terms
of the
law.
66.
In terms of clause
4.1 of the trust deed, the trustees "shall be entitled to
perform any act whatsoever that is necessary and/or
conducive to the
preservation or growth of the assets of the trust and in the interest
of the beneficiaries." In terms of
clause 4.2.16, the trustees
are empowered to institute or defend legal proceedings and to sign
all deeds, powers of attorney or
documents that may be necessary for
this purpose. In terms of clause 7.4, the trustees "shall be
indemnified out of and from
the trust fund against all claims and
demands of whatsoever nature that may be brought against them arising
from the powers granted
to them under this trust deed." In terms
of clause 8.4, the trustees are,
inter
alia
,
entitled to appoint attorneys "to carry out all or any matters
of whatsoever nature that are required to be done under this
trust
deed."
67.
It is for the trial court to determine
whether, in engaging three sets of attorneys, the trustees acted
improperly or reasonably
and whether each trustee’s opposition
was justified. T
he
court could not make such a determination without deciding the main
case.
That is in accordance with the
general rule that costs are decided at the end of the matter. As
Stander
made plain, and it is not for this court to pre-empt that decision.
Whether the
respondents are entitled and have authority to defend and to use
trust funds
68.
In terms of the common law, t
he
general rule is that a trustee is entitled to an indemnity in respect
of expenses properly incurred, and this applies
inter
alia
in
respect of legal expenses incurred by the trustee when sued in his
representative capacity. However the trustee will be held
personally
liable for the costs if he acted
mala
fide
or
unreasonably or improperly in bringing or defending the proceedings.
69.
Otto disputes that there is a legal basis
for using trust funds to finance his siblings’ opposition to
the action on the basis
that neither the trust deed, properly
interpreted, nor any of the resolutions passed by the trustees
provide any entitlement or
authority for their “unchecked”
use of trust funds to pay for their legal fees and therefore his
siblings’ conduct
remains “patently unauthorised,
illegitimate and unlawful.” He submits in his heads that his
siblings “cannot
enable and authorise themselves to use Trust
funds for an improper purpose,” to sanction their “prolific
use of Trust
funds, and their election to separately oppose the
Action, in circumstances in which they should have done so jointly,
and in which
they are plainly not acting in good faith and in the
Trust’s interest but in their own interest, and particularly in
their
interest as beneficiaries.”
70.
In support of these contentions, Otto
relies on certain provisions of the trust deed:
(i)
Clause
2.10
(which provides that in the event of a dispute between the trustees
at any time, the decision of the majority would be binding,
with the
proviso that the founder had to be one of the majority trustees),
Otto’s contention being that once the founder
resigned as a
trustee, the trustees no longer had the right to overrule each other
by way of a majority vote in the event of a
dispute between them and
that they could then only make decisions unanimously;
and
(ii)
Clause
4.2.16
(which provides that the
trustee
s
(plural) “
shall
have the
power
to
institute or defend legal proceedings and to sign all deeds, powers
of attorney or documents that may be necessary for this purpose”),
Otto’s
contention being that the clause implies that
all
of the trustees would have to be in favour of instituting or
defending proceedings and act jointly in doing so;
71.
Otto disputes that certain clauses relied
on by Agatha (albeit not by Otto) assist his siblings, namely:
·
Clause
4.2.24
(which provides that trustees may execute all powers and discretions
granted to them in spite of the fact that they have a direct
or other
personal interest in the way or result of the execution of such
power, and that if they so choose, they can instead recuse
themselves
and allow their fellow trustees to act alone), Otto’s
contention being that all his siblings are conflicted in
opposing the
action (and this application) and that the ambit of this clause was
not intended to cover funding by the Trust of
their individual
personal defences. The expenditure of Trust funds for this purpose is
against the interests of the Trust, and
only serves their individual
interests;
·
Clause
7.4
(which provides that trustees are exempted by and out of the Trust
funds from all claims and claims for payment of whatever nature
that
might be instigated against them as a result of the powers granted to
them by the Trust), Otto’s contention being that
his siblings’
opposition to the action does not, and cannot, arise from any valid
exercise of the powers granted to them
by the trust deed. The
siblings cannot expect to be indemnified when they use trust funds
against the trust’s interests and
for the illegitimate purposes
of serving their own interests, as beneficiaries.
·
Clause 8.3
(which
provides that the trustees shall be authorised to settle and pay from
the Trust, and from any income of the fund, all expenses
incurred by
them in respect of executing the Trust and the powers granted to
them), Otto’s contention being that the clause
does not confer
authority upon his siblings to act as they have, in that, for the
same reasons given in respect of clause 7.4;.
·
Clause 10.1
(which
provides,
inter alia
,
that “All costs and expenses lawfully incurred by the trustees
in connection with the administration of the trust (including
trustees' remuneration and any income tax payable by them in their
representative capacity in respect of the income thereof) shall
be
paid by the trustees from the income of the trust fund...”),
Otto’s contention being that his siblings “have
not acted
“
wettiglik
”
in acting as they have” in incurring legal costs which “are
not in respect of compensation or income tax, or
any other analogous
expenditure. Rather, the expenditure is in the siblings’ own
interest and not in the interest of the
Trust.”
·
Clause 10
.
5
(which provides that subject to the
terms of clause 10.6 of the Amended Trust Deed (which provides for
the investment of the Trust’s
net income), the trustees may at
any time up to and including the vesting date, pay the net income of
the Trust or use the net
income of the Trust to the benefit of all or
such one or more of the beneficiaries in such a way and subject to
such conditions
and limitations that the trustees may from time to
time determine at their sole discretion, and that the net income on
which beneficiaries
receive vested rights by way of an income
distribution may be specifically credited by the trustees on loan
account without any
obligation to pay out such income), Otto’s
contention being that Agatha’s reliance on clause 10.5 of the
Amended Trust
Deed “unequivocally proves” that his
siblings are using their office as trustees not in furtherance of the
fiduciary
duties which they owe to the Trust but for their own
personal benefit. He also contends that his siblings have simply had
the Trust
pay their legal fees without conferring any benefit on
themselves as beneficiaries.
·
Clause 14
(which
provides that the discretion granted to trustees in paragraphs 10 to
12 of the trust deed shall be an absolute and unencumbered
discretion
and that the trustees shall not be expected to provide any
beneficiary any reason for the manner in which such discretion
has
been utilised and except in so far as relevant guidelines have been
laid down by the founder in a will or other document),
Otto’s
contention being that “the fact that the exercise of
discretions afforded to the trustees are said to be absolute
and
unencumbered does not permit the siblings to act in bad faith, or to
utilise trust funds for an improper purpose – the
trustees are
accountable to the Court, the Master and to the beneficiaries for the
administration of the Trust’s assets.
Unauthorised expenditure
of the Trust assets by the trustees, in their own interests and not
those of the Trust, are impermissible.”
72.
I will focus on those clauses which Otto
relies on for his submission that the respondent trustees are not
empowered by the trust
deed to act as they have. His opposition to
the clauses relied on by Agatha is based on the assumption that his
version is correct.
73.
In
Harvey
NO,
[41]
the
Supreme Court of Appeal confirmed that a trust deed must be construed
in accordance with the well-known and time honoured rules
regarding
the interpretation of written contracts. As with the interpretation
of a written contract, the point of departure in
interpreting a trust
deed is the grammatical or ordinary meaning of the words used, read
within the context of the trust deed as
I a whole.
74.
Clause
2.10 provides for decision making at a properly constituted meeting
of trustees by way of majority vote in the event of a
dispute between
trustees, subject to the founder being one of the majority. A
decision taken by majority vote shall have the same
force and effect
as if it were the unanimous decision of the trustees. On Otto’s
construction, after the founder resigned
as trustee, trustees lost
the right to overrule each other with the consequence that they could
only make decisions unanimously.
What then if a deadlock were to
arise between the trustees precisely because they held different
views and could therefore all
agree on an issue, bearing in mind that
each trustee is duty bound to apply an independent mind
[42]
to the affairs of the Trust? Otto does not say. This case itself
illustrates the fact that trustees cannot always agree on trust
matters.
75.
I am in agreement with the submissions made
by Mr Franklin and Mr Snyckers that Otto’s interpretation of
clause 2.10 cannot
be sustained, since it would not only render the
Trust incapable of functioning without the founder if trustees are
not all in
agreement (something the clause specifically envisages)
but it would frustrate the proper administration and functioning of
the
Trust, surely an absurd and unworkable result! Whilst the founder
remained in office during his lifetime, the provision that he
be one
of the majority would obviously apply. The founder formally resigned
in 2014 and passed away in December 2020. His resignation
meant that
he was no longer in office and could therefore not participate in
trustee meetings, meaning that provision could and
would no longer
apply. Otto does not say in his papers that all decisions taken by
trustees pursuant to the founder’s resignation
were unanimous.
76.
The clause expressly enshrines the
principle of majority vote and must be considered in the light of
other clauses. The issue of
majoritarianism is enshrined in clauses
2.7 - in relation to a quorum, being a majority of trustees; and 2.10
- in relation to
the requisite number of votes for a resolution to be
carried. If there was to be a requirement of unanimity, it would have
been
expressed in the trust deed. It was not.
77.
As regards clause 4.2.16, Otto’s
interpretation, namely that
all
of the trustees would have to be in favour of instituting or
defending proceedings (i.e., all would have to agree), and must act
jointly in doing so, is, with respect, self-defeating. If this
interpretation is correct, then one wonders on what basis Otto
instituted the action?
78.
Mr Franklin submits that the clause
identifies the persons who have the power to make decisions in
relation to legal proceedings,
i.e., the trustees. When the clause is
read together with clauses 2.8 and 2.10 (which enshrine the majority
principle); a requirement
of unanimity simply cannot be inferred. I
agree.
79.
Clause 4.2 of the
trust deed sets out specific powers that the trustees as a collective
organ have. Clause 4.2.4 of the trust deed
provides that "In
general, the trustees shall have such powers and authority in the
administration of the trust as is usually
vested in the Board of
Directors of a company.” Mr Franklin submits that t
he
plural term "
the trustees
"
is a functional reference to the Board of the trustees in the context
of describing what the Board of Trustees is allowed
to do. It cannot
be interpreted as also dealing with the manner of decision-making
within the Board. Clause 4.2 is not concerned
with the manner; only
the description of powers. That must be correct. The office of
trustees is held collectively, decisions are
taken by the body of
trustees acting as a single legal organ and that legal will is
expressed through resolutions taken at validly
constituted meetings.
80.
In
Parker,
[43]
the court held that
“
It
is a fundamental rule of trust law, which this Court recently
restated in
Nieuwoudt
NO v Vrystaat Mielies (Edms) Bpk
,
that
in
the absence of contrary provision in the trust deed
the trustees must act jointly if the trust estate is to be bound by
their acts.” (footnotes excluded; emphasis added).
81.
In the present case, the trust deed
empowered
the majority of the trustees to meet and to make decisions that bind
the Trust. To this extent the joint action requirement
was abrogated.
The principle that trustees must act jointly will be satisfied if
they act by way of majority if the deed allows
them to.
82.
As regards clause 4.2.24, it will be
recalled that Otto contends that all his siblings are conflicted in
opposing the action (and
this application) and that they are pursuing
their personal interests as beneficiaries and are not defending as
trustees and that
this clause does not permit the use of trust funds
to pay for personal costs. I agree with Mr Snyckers that Clause
4.2.24 contains
a broad recognition of the fact that the trustees are
also the beneficiaries in terms of the trust deed and that they
cannot be
disqualified from acting as trustees on the basis that they
are also beneficiaries. In effect, the clause envisages a conflict of
interest and precludes reliance on that fact as a basis to disqualify
the trustee from acting in such circumstances.
83.
On the face of it, clauses 4.2.16; 2.10;
7.4; 8.3; 10.1; 10.5 and 14, read together, contemplate that the
trustees would have the
power to defend any proceedings brought
against the Trust and to use trust funds to do so. Clause 14 gives
the trustees absolute
and unfettered discretion in the exercise of
their powers. Clause 7.4 affords them a full indemnification out of
the trust fund.
This is supported by the common law rule that
trustees who are sued in their representative capacity are
indemnified from personal
payment of legal expenses unless the court
decides at the end of the trial that they ought to be personally
liable
84.
In addition, the trustees passed two
resolutions to the effect that the Trust is to fund the opposition to
Otto’s claim. I
deal only with the July 2024 resolution given
that an interdict is forward looking.
85.
On
the face of it, the July 2024 resolution
[44]
authorized the trustees, acting in such capacity (including Otto), to
have the Trust pay for their legal fees in the action. The
resolution
contains a clawback provision which is consistent with the common
law, namely, that if the court makes a
de
bonis propriis
cost order against any trustee, then such costs as have already been
paid by the Trust must be reimbursed to the Trust by that
trustee, by
setting off the costs against any capital distribution that may be
made to that trustee. In other words, the clawback
provision allows
for reimbursement to be effected by set-off, given that on vesting,
the net assets will be distributed to the
beneficiaries. It will of
course be open to the trial court, when ordering costs, to decide how
reimbursement should be made.
86.
The resolution was passed at a duly
constituted trustees’ meeting in accordance with clauses 2.7
and 2.8 read with 2.10 of
the Trust Deed in circumstances where all
the trustees were present and voted. It was passed by majority vote.
Otto has not sought
to have the resolution set aside nor has he
brought proceedings declare it invalid. On the face of it, the
resolution is operative
and valid.
87.
Otto contends that the resolutions are
invalid based on his argument in relation to clauses 2.10 and 4.2.16,
which I have already
dealt with, and further based on his version
that in giving effect to the resolution, his siblings are acting in
breach of their
fiduciary duties and in breach of clause 15 of the
trust deed.
88.
At
common law, trustees who are also beneficiaries are not disqualified
from acting as trustees, even where their personal interests
are
implicated. In
Jowell,
[45]
Scott
JA held as follows:
"
A
trustee must generally speaking avoid as far as possible a conflict
between her personal interests and those of the beneficiaries
(see
Honoré’s
South
African Law of Trusts
4 ed 260). But in the present case such a conflict was created by the
will itself. Mrs Jowell is both income beneficiary and trustee
for
the capital beneficiaries. The mere fact that a particular
transaction may appear to favour her rather than the capital
beneficiaries
does not necessarily mean there was a breach of trust.
But such a transaction will be “narrowly scrutinized” “
89.
Mr Snyckers submitted that the need for
narrow scrutiny does not arise in the present case because the July
2024 resolution does
not favour any one of the trustees any more than
any other trustees. It confers exactly the same benefit to all
trustees, Otto
included. That appears to me to be correct.
90.
Otto alleges that clause 15 of the Amended
Trust Deed prohibits distributions after the vesting date of the
Trust and in the event
that the Trust has not vested, prevents
beneficiaries from purporting to deal with distributions that they
may become entitled
to prior to actually being paid those
distributions. Otto’s reliance on clause 15 of the trust deed
is misplaced. Clause
15, properly interpreted, means that until a
beneficiary has received payment of an income or capital distribution
that beneficiary
may not cede, assign or pledge the payment that the
beneficiary is due to receive. Otto’s case is in any event,
incongruous.
On his version, vesting has occurred, ie., precluding
the passing of resolutions. Yet reliance is placed on the passing of
a resolution
which is alleged to be in breach of clause 15.
91.
Aside from the common law, the provisions
of the trust deed
prima facie
empower the trustees to defend the action and to use trust funds
doing so. Likewise, the July 2024 resolution passed in accordance
with the provisions of the trust deed, expressly authorizes the use
of trust funds to pay the legal fees of each of the trustees
individually.
Requirements for an
interdict
92.
Mr Franklin argued that, despite how the
notice of motion is cast, the relief sought is, in substance, final
in effect. The interdict
against using trust funds applies the
instant it is granted and endures for the duration of the action
until all appeals are finalised.
If the interdict is granted,
the trustees’ ability to defend the Trust at its own expense is
irretrievably lost; the legal
costs will not be incurred by the Trust
and there is nothing for the trial court to revisit or modify in
relation thereto.
It would also render nugatory the July 2024
resolution. That immutability is the hallmark of finality. Further,
Mr Franklin submits
that the order Otto seeks would conclusively
declare at the time it is given that the respondents possess no right
to use the Trust
funds to defend the action, and that any reliance on
such a right was unlawful
ab initio
.
This is not the preservation of the
status
quo
; it is a distinct, self-contained,
and a final determination of substantive rights.
93.
Although
the above submissions are persuasive, I am prepared to decide the
matter on the basis of principles applicable to interim
interdicts,
for if Otto cannot satisfy the less onerous requirements of an
interim interdict, he would not have satisfied the requirements
of a
final interdict.
[46]
94.
The requirements of an interim interdict
are trite. An applicant must establish:
(i)
a
prima
facie
right which requires protection in the interim period. As the
Constitutional Court put it,
[47]
“
It
is a right to which, if not protected by an interdict, irreparable
harm would ensue
.
An interdict is meant to prevent future conduct and not decisions
already made... the applicant
must
demonstrate a prima facie right that is threatened by an impending or
imminent irreparable harm
.”
(emphasis
added
(ii)
a well-grounded apprehension of irreparable
harm if the interim relief is not granted and the ultimate relief is
eventually granted
(iii)
that the balance of convenience favours the
granting of an interim interdict; and
(iv)
that the applicant has no other
satisfactory remedy.
95.
The
harm that is protectable by an interdict must be irreparable in the
sense that it cannot be reversed.
[48]
In my view, Otto has failed to establish a right which is threatened
by impending irreparable harm, nor has he established
the remaining
requirements so as to entitle him to relief.
96.
It is irrefutable that the Trust has a
substantial income generating asset base. That is evident from the
organogram referred to
earlier in the judgment.
Otto’s
right to pursue the action remains fully intact if the interdict is
not granted. The clawback provision in the July
2024 resolution
provides a mechanism for repayment to the Trust of legal fees
wrongfully expended in the event that a trustee is
ordered to pay
costs
de bonis propriis.
There are also other methods for protecting the trust. Aside from the
Stander
rule, which allows the trial court to revisit the use of trust funds
for litigation, the very relief which Otto seeks in claim
B is aimed
at allowing the Trust to recoup trust monies found to have been
improperly spent by the respondent trustees.
97.
The trial court has the widest discretion
as to costs. Otto has not been able to establish
prima
facie
(or clearly) what the court is
going to be ordering at the end of the trial in relation to costs,
for the simple reason that he
cannot pre-empt the trial court’s
decision. He unquestionably cannot establish with any certainty that
the trustees will
not
get the costs out of the trust fund, precisely because the trial
court is yet to determine, based on all the circumstances, whether
the respondents were unreasonable,
mala
fide
or negligent in defending. Even if
it were to be found that the trustees were acting in a personal
capacity, if they were
bona fide
,
reasonable and not negligent in defending, they will still be allowed
to have their legal costs paid out of the trust fund. The
court in
Stander
pointed
out, in par 5, that letters of wishes are not binding –
prima
facie
, therefore, it cannot be said at
this juncture that the respondents are opposing unreasonably or
negligently.
98.
If Otto succeeds at trial, then the trust
fund would have vested in the primary beneficiaries on the date of
the founder’s
death and each one of the beneficiaries would
already have acquired vested rights in a substantial portion of the
trust fund. In
these circumstances, there can be no legitimate
apprehension that the trustee respondents would be unable to satisfy
a
de bonis propriis
cost order. There is therefore no prospect at all that, if the
litigation is funded out of the Trust, but a reckoning is ordered
at
the end of the trial (i.e. if Otto is correct that legal fees ought
not to have been funded by the Trust), any prejudice would
be
suffered by Otto or by the Trust in its administration. If Otto does
not succeed at trial, then the opposition would have been
justified
in any event.
99.
I agree with Mr Franklin submission that
the high value of the Trust's assets provides a significant financial
buffer. Even with
the legal fees incurred, the Trust's overall
financial stability remains, and will continue to remain robust, and
any depletion
of liquid reserves does not pose a threat to the
Trust's financial health.
100.
I therefore find that Otto has failed to
establish a right that is threatened by irreparable and imminent
harm.
101.
Otto contends that there are no alternative
remedies given that his siblings will not stop using trust funds
unless this application
is brought, and the interdict is granted. The
enquiry is not whether an interdict is the only way to stop payments
now; rather,
it is whether adequate, effective alternative remedies
exist to vindicate the underlying right. Claim B provides a
satisfactory
remedy in the event that the respondents are ordered to
personally repay amounts spent by the Trust in respect of their legal
fees.
In addition, Otto is also seeking personal costs orders against
the respondents in the action. The July 2024 resolution fortifies
this remedy. It recognises in its terms that the trial court has an
overriding discretion to make such costs orders as the court
deems
appropriate at the end of the trial. These remedies are both adequate
- they ensure complete restitution, and the remedies
are also
effective - they are already before the trial court and do not depend
on future proceedings.
102.
The balance of convenience also favours the
Trust paying the legal fees incurred by Emma, Agatha and Wypke Jr in
the main Action,
pending the final determination of the main action.
All the respondent trustees have said that they would, in effect, be
stymied
in continuing with the Trust’s defence if not funded by
the Trust. Otto has not established that he (or the Trust) will
suffer
any prejudice if the Trust continues to pay the legal fees. If
he succeeds at trial, the Trust would be able to recoup fees that
are
found to have been improperly spent as the distribution that the
beneficiaries will receive run into hundreds of millions of
rands. If
he does not succeed at trial then it is axiomatic that the fees would
not have been improperly incurred on behalf of
and for the benefit of
the Trust.
103.
Otto adopts mutually inconsistent
positions: He argues that future costs orders
de
bonis propriis
would not be sufficient
(he speculates that the respondents do not have the funds for this),
and that the costs incurred by the
respondents would be
"
irrecoverable by the Trust
".
On the other hand, he insists the respondents should finance the
entire defence from their own pockets now, given that they
each
previously received a R1 million donation from the Trust. His
assumption – that the respondent trustees do not personally
have funds - if correct, only serves to underscore the fact that the
balance of convenience lies in favour of the refusal of an
interdict.
104.
In all the circumstances, I am unable to
find that Otto has met the requirements for the grant of an
interdict.
Costs
105.
In the notice of motion, Otto seeks an
order that the respondents pay the costs of the application jointly
and severally, on the
attorney and
own
client scale, inclusive of the costs of two counsel.
106.
Emma seeks the dismissal of the application
with costs on Scale C inclusive of the costs of two counsel, in her
answering affidavit.
107.
Agatha seeks the dismissal of the
application with costs on the attorney and client scale inclusive of
the costs of two counsel,
in her answering affidavit.
108.
Wypke Jr seeks the dismissal of the
application with costs on the attorney and client scale in his
answering affidavit. In his heads,
a punitive costs order was not
pursued.
109.
Mr Snyckers submits that the application is
vexatious and an abuse of the process for reasons detailed below and
that this court
should mark its disapproval with the manner in which
Otto has prosecuted this application by awarding attorney and client
costs
against him in his personal capacity.
110.
First,
Otto originally sued the trustees only in their representative
capacity and sought that the legal costs of action (including
his own
costs) be paid by the Trust. He knew for a period of three years
before instituting the Costs Application that the Trust
was paying
Emma, Agatha and Wypke Junior’s legal fees, that they had
raised different defences and that they were separately
represented.
Otto’s sudden about-turn when he launched this application,
together with the amendments to his pleadings, were
clearly part of a
stratagem to prevent his fellow-trustees from having access to funds
to properly oppose the action.
[49]
111.
Second, Otto has used the removal claim
(claim C) as a basis to contend that from 2 May 2024, the trustees
are precluded from using
trust funds in opposing the action, in
circumstances where claim C did not even exist at the time the
application was launched.
112.
Third, the July 2024 resolution adopted by
majority vote provides for the Trust to pay all the trustees’
legal expenses, including
Otto’s. His refusal to avail himself
of this option is not only unreasonable but calls into doubt his
bona
fides
in launching and persisting with
this application. He certainly cannot contend that he will be worse
off if the costs are paid
by the Trust.
113.
Fourth, Otto accuses his siblings of
litigating on a luxurious scale that is excessive and wasteful,
whereas it is Otto that litigates
on a scale that is excessive,
wasteful, unreasonable and unnecessary, as further demonstrated in
heads of argument filed on behalf
of Agatha.
Inter
alia,
Otto referred to irrelevant and
extraneous matters in his affidavits, which served only to embarrass
his siblings; and produced
171 pages of duplicated documents in his
replies to the answering affidavit, repeating the same contents in
the first 23 pages
of each replying affidavit.
114.
In
Plastic
Converters
,
[50]
the court cautioned that the scale of attorney and client is one
which should be reserved for cases where it can be found that
a
litigant conducted itself in a clear and indubitably vexatious and
reprehensible matter. The term ‘vexatious’ was
considered
in the context of a punitive costs award in
Johannesburg
City Council
,
[51]
where the court expressed the view that proceedings may be regarded
as vexatious when a litigant puts the other side to unnecessary
trouble and expense which it ought not to bear. The Constitutional
Court affirmed this approach in
Public
Protector v SARB
,
[52]
stating that a punitive costs order is appropriate ‘in
circumstances where it would be unfair to expect a party to bear any
of the costs occasioned by the litigation’
[53]
and is designed ‘to mark the court’s displeasure at a
litigant’s conduct, which includes vexatious conduct and
conduct that amounts to an abuse of the process of court’.
[54]
115.
Without repeating what has been stated, I
am persuaded that Mr Snycker’s submissions have merit and that
a special costs order
is warranted in respect of Agatha’s
opposition. The timing of Otto’s amendments (
inter
alia
to introduce the removal claim)
and the launch of this application tends to support an inference that
this application was brought
as a stratagem to stifle the respondent
trustees’ ability to defend the action on behalf of the trust.
In effect, it amounts
to an attempt at paralysing the Trust’s
ability to defend itself against Otto’s claims in the action,
in that
a
trustee
cannot be compelled to pay a debt of the trust estate in the first
instance from personal funds. In these circumstances,
the application
cannot be said to be
bona fide
.
Otto sought an interim interdict, based on ordinary common law
principles relating to interdicts in this application, only to
change
course at the hearing of the matter, without notice to opposing
counsel, to rely on what was termed a
sui
generis
procedure in the quest to find
some other legally cognizable basis to put a stop to the use of trust
funds in the litigation. Had
this not been an afterthought, he would
have included this relief in his papers. He must have anticipated
that he could not satisfy
the requirements of an interdict. Moreover,
he launched this application prematurely at a time when a cause
of action did
not yet exist.
116.
The general rule is that costs follow the
result. I see no reason to depart therefrom.
117.
Accordingly, the following order is
granted:
ORDER
1.
The application is dismissed.
2.
The applicant is to pay the respondents’
costs as follows:
a.
In relation to the first and fourth
respondents, costs are payable on Scale C inclusive of the costs of
two counsel.
b.
In relation to the second and fifth
respondents, costs are payable on the attorney and client scale,
inclusive of the costs of two
counsel.
c.
In relation to the costs of the third and
sixth respondent, costs are payable on Scale C, to excluding the
dates of hearing on 5
th and 6
th
June 2024.
AVRILLE MAIER-FRAWLEY
JUDGE OF THE HIGH
COURT,
GAUTENG LOCAL
DIVISION, JOHANNESBURG
Date of
hearing:
5-6/6/2025
Judgment
delivered
26/11/2025
This judgment was
handed down electronically by circulation to the parties’ legal
representatives by email, publication on
Caselines and release to
SAFLII. The date and time for hand-down is deemed to be have been at
10h00 on 26 November 2025.
APPEARANCES:
Applicants’
Counsel
S. Symon SC assisted by J. Blaau SC, together with F. McAdam
Instructed
by
Cuthbertson & Palmeira Attorneys Inc
1
st
& 4
th
Respondents’ counsel
A. Franklin SC together with B. Manentsa
Instructed
by:
Webber Wentzel Attorneys
2
nd
&
fifth respondents’ counsel:
F. Snyckers SC together with T Prinsloo
Instructed
by:
Pinsent Masons South Africa Inc.
For the 3
rd
&
6
th
respondents:
Mr Wypke Jr in person
[1]
Other
beneficiaries include the children and grandchildren of the primary
beneficiaries, as well as the founder. In terms of clause
16 read
with clause 1.2.2.2 of the trust deed,
inter
alia
,
the descendants (children/grandchildren) of the primary
beneficiaries would only be entitled to their parents’ share
of the trust fund, upon distribution of the fund on the vesting
date, if such parent were to die before the date of vesting.
[2]
The
hospitals include t
he
Mayo Clinic of South Africa in Roodepoort ("
the
Mayo Clinic
"
), the Flora Clinic in Florida (“
the
Flora Clinic
"
), and the Arwyp Medical Centre ("
AMC
"
) in Kempton Park.
[3]
Otto
refers to AMC as the operating company of the Arwyp Group of
companies in his papers. Emma confirms in her answering affidavit
that the majority of the Trust's assets lie in the Arwyp Group of
Companies and, in turn, a substantial portion of the Arwyp
Group's
assets are housed in AMC. Wypke Jr states in his answering affidavit
that “It is common ground that the trust is
an indirect
majority shareholder of AMC. Arwyp Holdings (Pty) Ltd (Arwyp
Holdings) holds 78.6% of the issued shares in AMC. The
trust holds
all of the issued shares in Arwyp Holdings.” Agatha’s
Arwyp organogram, attached as annexure ‘AS8’
to her
answering affidavit, illustrates the position clearly.
[4]
According
to Emma, a report was obtained from Comello Forensic Group. She
states that “
That
report paints a disturbing picture of potential misappropriation of
hundreds of millions of rand and poor financial, operational
and
corporate governance at the instance of Otto. The report raised
several preliminary concerns relating to potential corporate
malfeasance, the potential misappropriation of hundreds of millions
in company funds, the apparent use of related and interrelated
entities as conduits to facilitate the misappropriation of company
assets and other unlawful transactions. These are reflected
in
reports which are compiled by third parties.”
[5]
Four
different riglyne were executed - they are referred to in the papers
as the 2014 Low/riglyne; the 2018 Low/riglyne; the 2019
Low/riglyne
and the 2020 Low/riglyne. At the time that the dispute arose, Otto
contended that the 2020 riglyne were to be enforced.
[6]
It
is common cause that the riglyne of 3 December 2019 is in fact what
the parties refer to as the 2020 Low/riglyne. The action
was
initially instituted by Otto to declare only the 2020 riglyne as
valid and binding and enforceable. Pursuant to an amendment
to the
particulars of claim, Otto relies on the 2020 riglyne and in the
alternative, on the 2019 riglyne, alternatively, the
2018 riglyne,
further alternatively, the 2014 riglyne
[7]
Proof
of electronic service of the amended summons and Particulars of
claim on 11 October 2024 is found at 02-130 of the papers.
Filing
thereof took place on even date (at 02-3). There is some mention in
the papers that the amendments to introduce claims
A,B & C were
effected in May 2024, however, I could not locate proof thereof in
the electronic file.
[8]
In
table A of his heads, Otto states that the siblings legal
expenditure has increased to approximately R6.48 million
[9]
The
requirements of an interim interdict are trite: the applicant is
required to establish (i) a
prima
facie
right though open to some doubt; (ii) a well-grounded apprehension
of irreparable harm if the interim relief is not granted and
the
ultimate relief is granted; (iii) a balance of convenience in favour
of the grant of interim relief; and (iv) the absence
of any other
satisfactory remedy. See:
Setlego
v Setlego
1914 AD.
[10]
See
Genesis
Medical Aid Scheme v Registrar, Medical Schemes and Another
2017
(6) SA 1
(CC) at par 30 where the following was said: “
Once
established, a trust creates a legal relation of fiduciary
obligation on the part of the trustee towards the beneficiary.
That
relation is distinct from a purely contractual or commercial
relationship. This is
because
a trustee occupies a fiduciary office that is subject to supervision
and regulation by the courts
.
Even in a consensual trust, the trustee is not simply a contracting
party, but assumes an office subject to court supervision
and public
control, as no contractant does.” See too
Land
and Agricultural Bank of South Africa v Parker
[2004]
ZASCA 56
;
2005
(2) SA 77
(SCA)
(
Parker
)
at paras 23, 34 &37.”
(emphasis added)
[11]
The
general rule that a litigant must make out its case in the founding
affidavit, is subject to the following exception, which
was set out
in
My
Vote Counts NPC v Speaker of the National Assembly
2016
(1) SA 132
(CC)
at para 177. There
the Constitutional Court said: “a point that has not been
raised in the affidavits may only be argued or determined by
a court
if it is legal in nature, foreshadowed in the pleaded case and does
not cause prejudice to the other party.”
The
invocation of the court’s supervisory power is not only legal
in nature, it is also fact dependant
.
[12]
See
Parker,
above
n 10, at paras 37 where the court referred to appropriate cases in
which the court’s supervisory powers may be invoked.
[13]
See
Rademeyer
v Jesseman and Others
[2021] JOL 50848
(GJ) at paras 66-70.
[14]
See
Cawood
N.O and Another v Claassen and Others
(1191/2022)
[2022] ZAFSHC 119
(18 May 2022)
at
paras 32-33;
Cilliers
et
al, Herbstein & van Winsen, The Civil Practice of the High
Courts of South Africa
,
vol 2, 982 – 987 where,
inter
alia
,
the following is stated: “
An
award of costs
de
bonis propriis
may be made only when a person acts or litigates in a representative
capacity
.
It is unusual to order a litigant in a fiduciary position to pay
costs
de
bonis propriis
,
and good reason for such a course should be shown, such
as
want of
bona
fides
,
negligent or unreasonable action, or improper conduct by a trustee
or
executor.”
(emphasis added)
[15]
Development
of the common law only occurs where there is a need for such
development.
The
requirements for development of the common law, as set out in
Oliver
NO v MEC for Health: Western Cape Provincial Department of Health
2025 (5) SA 384
(SCA) at paras 21-22, have in any event not been met
in the present case.
[16]
Stander
v Schultz
2008
(1) SA 81 (C)
[17]
Id
par 49.
[18]
Id
par 50.
[19]
Id,
par 34.4
[20]
Id
par 42.
[21]
Id,
p
ar
22
[22]
Stander
was
not dealing with an interdict to stop the trust from paying the
costs of the litigation. It concerned trustees requesting
the court
to allow them to have their costs paid like one encounters in
Beddoe
applications.
[23]
I.e.,
even in a world where
Beddoe
applies, this type of application would fail.
[24]
Stander,
above
n 16, at par 58.
[25]
In
paras 28, 30 and 31 of
Stander
,
the following was said:
“
[28]
the order which the trustees seek in
their interlocutory application
...
is unprecedented (at least, no authority has been cited in favour of
it) and it runs counter to principle
.
Furthermore, if granted, it would have the effect of pre-empting any
future decision on the costs of the removal application.
Specifically, it would preclude the court seized with the matter
from ordering the trustees to bear their own costs thereby depriving
the court hearing the removal application of a significant part of
its discretion, specifically as regards costs.
[30]
If the removal application succeeds and some or all of the
applicant’s allegations are proven, it would be unfair for
the
Trust to be saddled with the trustees’ costs on the basis of
this interlocutory application. The court removing the
trustees –
if that is the ultimate outcome – ought to have the discretion
to order that the Trust not bear the trustees’
costs. The
order sought by the trustees could result in the (otherwise
avoidable) depletion of the Trust’s estate.
[31]
It is further submitted that
there
is no warrant for interfering with the
usual
rule that the question of costs be decided at the end of the matter.
To order that the trustees be indemnified for their legal costs at
the outset of the litigation and even before the issue of
their
fitness for office has been assessed could result in prejudice to
the Trust
.”
(emphasis added)
[26]
Stander,
above
n 16, at paras 19 & 29.
[27]
Re
Estate Potgieter
1908
TS 982
, a decision of a Full bench, which is binding on me. The case
involved an appeal against a
de
bonis propriss
order that had been made against the trustee. Dispute had arisen
about whether or not a trustee in insolvency was favouring certain
creditors in defending proceedings. There was a finding up front
ordering
de
bonis propriss
costs
against the trustee which led to an appeal against that order.
The
principle set out in
Potgieter
was the following: “
“…
That
is an exceptional order to make in a case where a trustee of an
insolvent estate, or any other person in a similar fiduciary
position, is an unsuccessful litigant.
The
usual order in such a case is to give costs against him in his
representative capacity, that is, in the capacity in which
he is
sued; and when an order is made that a trustee should pay the costs,
it is understood that he is to pay them out of the
estate.
When it is desired that a trustee should pay costs personally, the
order is made in the form in which it was made in this case
--- that
he pay the
costs de
bonis propriis.
But
that, as I have said, is an
exceptional
order
,
and it
usually
indicates
that there is in the mind of the court soiree
(sic)
disapproval
of the trustee's conduct in connection with the matter in dispute;
and I think that before making an order of that kind against a
trustee there should be some good ground shown for departing from
the usual rule in such cases.”
:
(at 1000-1001).(emphasis added)
At
1002, the
general rule
was expressed thus:”
“
So
that I think as the result of the authorities we may lay down
as
a general rule
in
these cases that a trustee should not be ordered to pay the costs of
unsuccessful litigation de bonis propriis, whether
he is a
plaintiff or defendant, unless it appears that there was a want of
bona fides on his part or that he acted negligently
or
unreasonably
.”
(emphasis added).
These
principles have since been endorsed by higher court in
Grobelaar
and Grobelaar
1959 (4) SA 719
(A) at
725 B-C; and
Pheko
and
Others v Ekurhuleni Metropolitan Municipality
2015
(5) SA 600
(CC) at par 51.
These
principles were also endorsed in
Stander
(above n 16) at paras 38 & 39.
[28]
Id,
at 1004 (per Soloman J) & 1008
[29]
Snyman
v De Kooker NO and Others
2024 (6) SA 136
(SCA) at [21]
[30]
In
Jooste
NO and Another v Pretorius and Others
2025
(3) SA 95
(SCA) at par 42, the Supreme Court of Appeal stated that
the
removal of a trustee is a decision of considerable importance for
the governance of a trust because a trustee will have no
claim of
right to hold the office of trusteeship. In par 60 of the judgment,
the court held that “Trustees must act honestly
and
reasonably. They have a duty to protect the assets of the trust for
the benefit of the beneficiaries. For these reasons,
as a general
rule a trustee should not be ordered to pay costs
de
bonis propriis
(out
of own pocket), whether as an applicant or respondent, unless she
has acted in bad faith, negligently or unreasonably.”
[31]
As
I understood matters, there was not contention about these figures.
[32]
Clause
4.2.24 reads; “
“
Any
trustee may exercise, and consent to the exercise, of all powers and
discretions granted to them under this deed or by law,
notwithstanding that the trustee has a direct or other personal
interest in the manner or outcome of the exercise of such power
or
discretion. However, any trustee may, notwithstanding this, but
without any obligation, choose to refrain from acting other
than as
a formal party in any matter in which they have such a personal
interest and may allow their co- trustees to act alone
in exercising
the aforementioned powers and discretions in relation to such
matter. Each trustee who has such an interest in
the action
affecting trust funds will, however, be obliged to disclose the
nature and extent of their interest to the co-trustees
in advance.”
[33]
Vesting has two components.
As
was recognised in
Wilkinson
and Another v Crawford N.O. and Others
2021
(4) SA 323
(CC) at par 62 (albeit in the context of a deceased
estate), v
esting
comprises of “two sub-moments, namely
dies
cedit
,
the time when a beneficiary obtains a vested right to claim delivery
of the bequeathed benefit unconditionally, and
dies
venit
,
the time at which the beneficiary’s right to claim delivery of
the benefit becomes enforceable.
In
fn 76 of the judgment, the court referred to
De
Leef
Family Trust v Commissioner for Inland Revenue
[1993] ZASCA 46
;
1993
(3) SA 345
(A) at 356 where it was stated that
dies
cedit
was
described as the moment the right is due and owing;
dies
venit
on the other hand is when ‘the time for enjoyment has arrived
and delivery or transfer of its subject matter may be claimed’,
in other words: when the right becomes enforceable
.
The
trust deed in the present matter empowers the Trustees to determine
the vesting date. In terms of clause 1.2.3 “
"The
Vesting Date" shall be the date determined at any time by the
trustees as the vesting date, and shall indicate
the point in time
at which beneficiaries shall acquire vested rights in respect of the
net trust assets in terms of sub-paragraph
16, or sub-paragraph 11.3
in relation to that beneficiary or group of beneficiaries for whom
the Vesting Date has been so determined
earlier.”
[34]
The
right to indemnification for a trustee acting in their
representative capacity, is an ongoing right. A trustee is
thus entitled to rely on that right from the outset, and may use the
trust funds on an ongoing basis to pay for the legal costs
incurred
in the opposition of proceedings.
By
way of example, a
trustee
cannot be compelled to pay a debt of the trust estate in the first
instance from personal funds. See
Ehrlich
v Rand Cold Storage & Supply Co Ltd
1911 TPD 170
;
Burnett
NO v Kohlberg
1984
(2) SA 137 (E)
141D–G. When acting properly in
the course of trust administration, a trustee renders only the trust
estate
liable to others. Trust funds may therefore be used to settle
the liability in the first instance in which case no question of
indemnity will arise. A trustee who chooses to pay out of personal
funds can claim to be indemnified from the trust fund.
[35]
In
Evins
v Shield Insurance Co Ltd
1980
2 All SA 40
(A)
the
court defined "cause of action" as every fact which it
would be necessary for the plaintiff to prove, if traversed,
in
order to support his right to judgment of the Court. It does not
compromise every piece of evidence which is necessary to
prove each
fact, but every fact which is necessary to be proved. At p 57, the
court stated that a cause of action does not materialise
unless and
until the occurrence of the last fact that constitutes a cause of
action.
[36]
Erasmus
Superior
Court Practice
Part D1 Rule 28-10 and the authorities in footnote 54.
[37]
Stander
affirmed
the principle that a trustee who defends the trust estate ordinarily
enjoys the right to funding from the estate to pay
for that defence;
withholding that funding is the exception, not the rule, and this
occurs when the merits of the main proceedings
are heard and decided
(see paras 38 & 39 of
Stander
).
Stander
also underscored that a court will not
pre-emptively rule
[ie decide in
advance]
on trustees’ litigation
costs where they are sued in their personal capacities; the trial
court must first decide—on
the merits—whether their
defence was
bona fide
and reasonable. The same logic defeats Otto’s present
application. Otto seeks that this Court should compel
the
respondent siblings to fund the defence personally on the premise
that their conduct is vexatious, yet that allegation is
precisely
what the trial court must in due course determine after hearing all
the evidence at trial. It follows, as a matter
of pure logic,
that until the merits have been adjudicated, no court can (or
should) pronounce upon the trustees’ entitlement
to an
indemnity. W
hether there is a proper basis
for the removal is also an issue that is to be determined by the
trial court
[38]
Pheko
and Others v Ekurhuleni Metropolitan Municipality
2015 (5) SA 600
(CC) at par 51, where the following was said:
“
Costs
de
bonis propriis
are
costs which a representative is ordered to pay out of his or
her own pocket as a penalty for some improper conduct,
for example,
if he or she acted negligently or unreasonably.
Whether
a person acted negligently or unreasonably must be decided in the
light of the particular circumstances of each and every
case.
”
(emphasis added; footnotes excluded)
[39]
The
requirements for removal are discussed in, inter alia,
Sackville
West v Nourse and Another
1925 AD 516
;
Volkuyn
NO v Clarke and Damant
1946 WLD 456
;
Dlhomo
and Others v Chalwa NO and Another
2024
(4) SA 161
(KZP); and
Hoppen
and Others v Shub and Others
1987
(3) SA 201
(C);
Mirchandani
v
Unica
Iron
&
Steel
(Pty)
Ltd
and
Unica
Iron
&
Steel
(Pty)
Ltd
v
Mirchandani
(802/2020 & 813/2020)
[2022] ZASCA 58
[40]
In
Parker,
above
n 10 at par 10, the following was said: “
Except
where statute provides otherwise, a trust is not a legal person. It
is an accumulation of assets and liabilities. These
constitute the
trust estate, which is a separate entity. But though separate, the
accumulation of rights and obligations comprising
the trust estate
does not have legal personality. It vests in the trustees, and must
be administered by them – and it is
only through the trustees,
specified as in the trust instrument, that the trust can act. Who
the trustees are, their number,
how they are appointed, and under
what circumstances they have power to bind the trust estate are
matters defined in the trust
deed, which is the trust’s
constitutive charter. Outside its provisions the trust estate cannot
be bound.”
[41]
Harvey
NO and Others v Crawford NO And Others
2019 (2) SA 153
(SCA) at par 45.
In
Natal
Joint Municipal Pension Fund v Endumeni
2012
(4) SA 593
(SCA)
(
Endumeni
)
at par 18, the court set out what the process entails:
“
Whatever
the nature of the document, consideration must be given to the
language used in the light of the ordinary rules of grammar
and
syntax; the context in which the provision appears; the apparent
purpose to which it is directed and the material known to
those
responsible for its production. Where more than one meaning is
possible each possibility must be weighed in the light
of all these
factors. The process is objective, not subjective. A
sensible meaning is to be preferred to one that
leads to insensible
or unbusinesslike results or undermines the apparent purpose of the
document. Judges must be alert
to, and guard against, the
temptation to substitute what they regard as reasonable, sensible or
businesslike for the words actually
used. To do so ... in a
contractual context it is to make a contract for the parties other
than the one they in fact made.
The ‘inevitable point of
departure is the language of the provision itself’, read in
context and having regard to
the purpose of the provision and the
background to the preparation and production of the document.”
[42]
See:
Wiid
and Others v Wiid and Others
(1571
/ 2006)
[2012] ZANCHC 62
(13 January 2012); See too
Parker
,
above n 10 at par 22, where the court held that “
Independence
of judgment on the part of a trustee is an indispensable requisite
of office [
Honoré
pages 89-91 (§ 52), 264 (§ 160).”
[43]
Above
n 10 at par 15.
[44]
The
resolution reads as follows:
“
1.
The Trustees are entitled to have their legal expenses in relation
to the legal proceedings under case number: 2021/37198 paid
by the
Trust subject to any costs orders that are made against a trustee de
bonis propriis.
2. The legal expenses
payable by the Trust shall include the fees and disbursements
payable to each trustee’s attorneys
of record, counsels’
fees and the fees payable to expert witnesses.
3.
In the event that the court in the legal proceedings under case
number 2021/37198 makes a cost order against a trustee de bonis
propriis, then such costs as have already been paid by the Trust
shall be reimbursed to the Trust by that trustee by setting
off the
costs against any capital distribution that may be made to that
trustee.”
[45]
Jowell
v Bramwell-Jones and others
2000(3)SA
274 (SCA) at par 16. See too: Cameron et al Honore’s South
African law of Trusts, 6
th
ed at 369-370, where the following is stated:
“
A
trustee must as far as possible avoid a position where his or her
private interest conflicts with his or her duty as trustee.
In other
words, the trustee should avoid a position where his or her private
interests conflict with those of trust beneficiaries.
This cannot of
course apply where the trust instrument itself creates a conflict,
as by appointing the trustee for the capital
beneficiary and income
beneficiary, even though in such situations if the trustee is also a
beneficiary and acts in such a way
as to benefit him or herself at
the expense of the other beneficiaries, the trustee’s acts
will be narrowly scrutinized.”
[46]
The
requirement for obtaining a final interdict were discussed
In
Equistock
Properties 8 (Pty) Ltd and Another v Oosthuizen and Others
(738/2023
and 739/2023)
[2025]
ZASCA 06
(29
January 2025) at par 17, where the following was said:
“
...the
requirements for obtaining a final interdict are trite. The
following must be shown: (a) a clear right on the part of the
applicant; (b) an injury actually committed or reasonably
apprehended; and (c) the absence of any other satisfactory remedy.
As for a clear right, it is established that an applicant must prove
the right it seeks to protect on a balance of probabilities.
Whether
an applicant has such a right is a substantive law question, but
whether it has been established is an evidential question.
Where the
point is genuinely in dispute in opposed application proceedings,
the applicant can only succeed if the facts averred
by the
respondent, together with the facts in the applicant’s
affidavits, which the respondent admits, establishes that
right.”
(footnote excluded)
[47]
National
Treasury and Others vs Opposition to Urban Tolling Alliance and
Others
2012
(6) SA 223
(CC),
para [50].
[48]
City
of Tshwane Metropolitan Municipality v Afriforum and Another
2016
(6) SA 279
(CC) para [59].
[49]
Mr
Franklin too argues that
true
aim
of
this costs application is to paralyse the Trust’s ability to
defend itself against Otto’s claims in the action.
The
introduction of removal relief by way of amendment was an
orchestrated and a contrived attempt to create a basis for
contending
that the respondent trustees are acting personally,in
conflict with their fiduciary duties, by using trust funds to
finance their
litigation. Mr Franklin therefore submits that to the
extent that there is such conflict (which is denied) then “Otto
has
deliberately engineered the conflict by the belated inclusion of
the removal relief, over 2 years after the 28 April Resolution
was
passed. That relief is plainly entirely ancillary to the purpose of
the action and is inextricably linked to the merits of
the action
and whether the action fell to be defended by the Trust in the first
place.” I find this submission persuasive.
[50]
Plastic
Converters Association of South Africa on behalf of Members v
National Union of Metalworkers of SA
[2016]
ZALAC 39
; [2016] 37 ILJ 2815 (LAC) at para 46.
[51]
Johannesburg
City Council v Television & Electrical Distributors (pty) Ltd
and Another
1997
(1) SA 157
(A) at 177D-E.
[52]
Public
Protector v SARB
[2019]
ZACC 29
;
2019 (9) BCLR 1113
(CC) at para 144.
[53]
Public
Protector v SARB,
para
221
.
[54]
Public
Protector v SARB,
para
223.
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