REMOVAL OF TRUSTEE

Gowar and another v Gowar and others [2016] 3 All SA 382 (SCA)

Trusts – Trust provisions – Variation of – Court’s powers – Section 13 of the Trust Property Control Act 57 of 1988 – A court’s power may be exercised where the trust instrument contains any provision which brings about consequences which in the opinion of the court the founder of a trust did not contemplate or foresee and which hampers the achievement of the objects of the founder; prejudices the interests of beneficiaries; or is in conflict with the public interest.

Trusts – Trustees of trust – Removal of – Section 20(1) of the Trust Property Control Act 57 of 1988 – Court having inherent power to remove a trustee from office if the court is satisfied that such removal will be in the interests of the trust and its beneficiaries – A trustee will be removed from office when continuance in office will prevent the trust being properly administered or will be detrimental to the welfare of the beneficiaries.

The first appellant was the mother of the second appellant and the first respondent. All three parties had an interest as trustee or beneficiary in four family trusts. The chief protagonists in the dispute were the two brothers. Their conflict largely stemmed from their irreconcilable differences about how the affairs of the various trusts could be best served in the interests of the beneficiaries. The ongoing dispute led to the appellants bringing an application for the removal of the first and second respondents as trustees of the relevant trusts, and replacing them with two other individuals.

Apart from opposing the application, the first and second respondents (hereinafter referred to as “the respondents”) brought a counter-application for the removal from the relevant trusts of the second appellant as trustee.

The application and counter-application were dismissed, resulting in an appeal and cross-appeal before the present Court.

Held – The judgment would address the law relating to the nature of a trust, the duties of trustees, their removal from office and the statutory power of a court to vary any provision of a trust or to terminate a trust. A trust is not a legal person. In its strictly technical sense the trust is a legal institution sui generis. The trustee is the owner of the trust property for purposes of administration of the trust but qua trustee he has no beneficial interests therein. Where more than one trustee has been specified in the trust deed they share a common fiduciary obligation towards the fulfilment of the objects of the trust and must act jointly.

In terms of section 20(1) of the Trust Property Control Act 57 of 1988, the court has the inherent power to remove a trustee from office if the court is satisfied that such removal will be in the interests of the trust and its beneficiaries. A trustee will be removed from office when continuance in office will prevent the trust being properly administered or will be detrimental to the welfare of the beneficiaries. The power of the court to remove a trustee must be exercised with circumspection. Neither mala fides nor even misconduct is required for the removal of a trustee. The overriding question is always whether or not the conduct of the trustee imperils the trust property or its proper administration. Consequently, mere friction or enmity between the trustee and the beneficiaries will not in itself be adequate reason for the removal of the trustee from office. Nor would mere conflict amongst trustees themselves be a sufficient reason for the removal of a trustee at the suit of another. Whilst a trustee is in law required to act with care and diligence, the decisive consideration is the welfare of the beneficiaries and the proper administration of the trust and the trust property. Crucially, the court may order the removal of a trustee only if such removal will, as required by section 20(1) of the Act, be in the interests of the trust and its beneficiaries.

Section 13 of the Act deals with the power of the court to vary trust provisions. That power may be exercised where the trust instrument contains any provision which brings about consequences which in the opinion of the court the founder of a trust did not contemplate or foresee and which hampers the achievement of the objects of the founder; prejudices the interests of beneficiaries; or is in conflict with the public interest. Therefore, the appellants had to establish on a balance of probabilities that any provision of the trust deed had brought about any one of the consequences mentioned above and that the founder of the trust did not, at the time the trust was established, contemplate or foresee such a result. Examining each of the grounds upon which the appellants had based their application, the Court found that they had failed to bring their case within the purview of section 13 of the Act.

Turning to the cross-appeal, in which it was contended that the court a quo should have found that an overwhelming case of misconduct against the second appellant had been established, the present Court found that the conclusion reached by the court a quo could not be faulted.

Both the appeal and cross-appeal were thus dismissed.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s