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IN THE HIGH COURT OF SOUTH AFRICA

EASTERN CAPE DIVISION, GRAHAMSTOWN

CASE NO: 773/2020

                                                                                                DATE HEARD: 11/02/2021

                                                                                    DATE DELIVERED: 30/03/2021

In the matter between

HUGH ANTHONY WORMALD N.O.                                FIRST APPLICANT

GREGORY STAFFORD WEBB N.O.                              SECOND APPLICANT

MALCOLM BARRIE WEBB N.O.                                     THIRD APPLICANT

and

BEVERLEY WOOLLGAR                                                  FIRST RESPONDENT

BARRY WOOLLGAR                                                         SECOND RESPONDENT

SHARON RABE                                                                  THIRD RESPONDENT

THE MASTER OF THE HIGH COURT,

EASTERN CAPE DIVISION                                              FOURTH RESPONDENT 

JUDGMENT

ROBERSON J:-

[1]    This application concerns the interpretation of a clause in a trust deed.  The applicants are the trustees of the Neville Woollgar Family Trust (the Trust) which was established on 1 March 1995.  The founder of the Trust was the late Neville Errol Woollgar (the deceased) who died on 28 July 2018.  The deceased was also a trustee of the Trust from its establishment until his death.

[2]    At the date of the establishment of the Trust, the deceased was 56 years old and was married to the late Lynette Woollgar (Lynette).  The couple were married in 1962.  The second and third respondents (referred to collectively as the respondents) are the only children born of that marriage.  They are beneficiaries of the Trust and have accepted that status.  The deceased and Lynette were divorced in November 2000 and on 6 December 2008 the deceased married the first respondent (Beverley).  Lynette died on 2 September 2014.  I mean no disrespect when I refer to Lynette and Beverley by their first names.

[3]    Clause 2.7 of the Trust deed provides:

“2.7  “The term “BENEFICIARIES”, CHILD/CHILDREN shall mean:

2.7.1  THE FOUNDER, NEVILLE ERROL WOOLLGAR and/or,

2.7.2  The lawfully wedded spouse of the FOUNDER NEVILLE ERROL WOOLLGAR and/or,

2.7.3  The children of the FOUNDER NEVILLE ERROL WOOLLGAR or any of them.”

[4]    Clause 5.2 of the Trust deed provides:    

“In the event of the death or inability to act at any time of the founder, his lawfully wedded spouse shall take his place as Trustee.”

[5]    Clause 7 of the Trust deed provides:

“Until the termination date of this Trust, the TRUSTEES may in their absolute discretion pay to, or utilise for the benefit of (whether by actual payment, allocation of funds, or crediting of accounts or otherwise) NEVILLE ERROL WOOLLGAR or his lawfully wedded spouse, or the children of the FOUNDER NEVILLE ERROL WOOLLGAR, or the descendants of such children, or any of them, in whatsoever proportion and even to the exclusion of any such beneficiary as the Trustees may in their absolute discretion determine, any Trust fund income, and such payment or use shall be made in such form and at such times as the TRUSTEES may in their sole and absolute discretion determine.”

[6]    Clause 8 provides that on termination of the Trust the funds would be distributed among the children of the deceased alive at the date of termination, or if deceased, to their issue, the proportion of such distribution to be in the absolute discretion of the trustees.

[7]    In this application the applicants seek an order declaring Beverley to be an income beneficiary of the Trust.  The application is opposed by the respondents.  Beverley has not participated.  The applicants rely on an interpretation of clause 2.7.2 of the Trust deed to the effect that the phrase “the lawfully wedded spouse” includes Beverley.  The respondents contend that properly interpreted the phrase “the lawfully wedded spouse” only means Lynette.

[8]    The founding affidavit was deposed to by the first applicant (Wormald), a chartered accountant.  He stated that at a meeting on 27 June 2016 the deceased and the then trustees adopted a resolution which was recorded as follows in a document annexed to the founding affidavit:

“THE NEVILLE WOOLLGAR FAMILY TRUST

TRUST NO IT373/95

MEETING OF THE FOUNDER AND TRUSTEES OF THE TRUST HELD AT THE OFFICES OF CHARTERIS & BARNES, KING WILLIAMS TOWN ON 27 JUNE 2016

REASON FOR MEETING

Clarification of Trust Deed Naming of Beneficiaries

DECISION

The Founder wishes to advise the Trustees that in order to avoid any disputes, litigation or misunderstanding in future years, it is his intention TO CLARIFY the wording used in paragraph 2.6.  The term BENEFICIARIES, CHILD, CHILDREN of the Trust Deed namely that:

2.6.2  “the lawful wedded spouse of the FOUNDER, NEVILLE ERROL WOOLLGAR” referred to his late wife LYNETTE ANN WOOLLGAR who passed away on 2 September 2014 (as evidenced by the attached death certificate) and the wording “lawful wedded spouse of the founder NEVILLE ERROL WOOLLGAR

Now means and refers to

His current wife, BEVERLEY WOOLLGAR, nee STEWART, born FOORD (as evidenced by the attached marriage certificate).

The Trustees acknowledge and accept that this is the correct interpretation of the wording of the Trust Deed.”

This document was signed by the deceased in his capacity as founder and trustee, and was signed by MJH Anderson, HA Wormald and MB Webb as trustees.

[9]    According to Wormald the resolution was registered with the fourth respondent (the Master) who in a letter addressed to the Trust’s accountants stated:

“I herewith acknowledge receipt of the amendment(s) as per resolution dated 27 June 2016 lodged by you in terms of Section 4 (2) of the Trust Property Control Act, Act 57 of 1988.[1]

The said amendments have been filed of record.”

[10]   Wormald said that since this resolution the Trust has been administered in accordance with the resolution and discretionary income payments have been made to Beverley.  Wormald contended that the phrase “the lawfully wedded spouse” means whoever may from time to time be the lawfully wedded spouse of the deceased.  By virtue of her marriage to the deceased, so he contended, Beverley Woollgar became a “lawfully wedded spouse” and accordingly an income beneficiary.

[11]   The respondents having protested against an interpretation of the Trust deed to include Beverley as an income beneficiary, so Wormald stated, it was necessary to have the dispute resolved by way of declaratory relief.

[12]   The second respondent deposed to the answering affidavit.  He said that his parents were divorced after Lynette found out that the deceased was having an affair with Beverley.  Despite this, the deceased and Lynette maintained a close relationship, the deceased regularly telephoning her.  Lynette relied on the deceased’s legal and financial advice (the deceased was an attorney) and the deceased administered a close corporation on behalf of Lynette and her brother.

[13]   According to the second respondent, during his lifetime the deceased established a number of trusts and at the date of his death there were four trusts which owned assets.  Besides the Trust, which owns a number of income-generating assets, there was the Lorre Investment Trust, the Troldhaugen Trust and the Neville Woollgar Property Trust (the Property Trust).  The respondents are beneficiaries of all four trusts.

[14]   The second respondent said that at the time of the divorce Lynette was financially self-sufficient but wanted an assurance from the deceased that the assets in the trusts of which she was a beneficiary would be untouched and passed on to the respondents and their descendants. The deceased confirmed to the second respondent that this would remain the position. The deceased also told the second respondent that he was making separate financial provision for Beverley.  The Property Trust was established in 2001 and owns one asset, an immovable property in Port Alfred, which was purchased in 2015.  The beneficiaries of the Property Trust were the deceased and Beverley.

[15]   The second respondent said that he and the third respondent were unaware of the resolution of 27 June 2016 until the death of their father.  He pointed out that Lynette had ceased to be the deceased’s “lawfully wedded spouse” on divorce, and not at the time of her death. He also pointed out that at the time of the signing of the resolution Wormald and the third applicant were not trustees.

[16]   The second respondent alleged that payments totalling some R1 219 800 were made to Lynette on various dates from the Trust after she and the deceased were divorced.  His understanding was that the payments were made to Lynette as an income beneficiary.  He requested documents from the trustees which would explain these payments and any other payments he suspected she had received.  Access to these documents was refused by the applicants on the grounds that they were not relevant and that discovery was not applicable to these proceedings.

[17]   The second respondent referred to an unsigned document entitled “Letter of Wishes” addressed by the deceased to all the trusts, in which he, inter alia, expressed the wish that the Neville Woollgar Trust (it was not disputed that this should be the Property Trust) was to pay certain amounts to Beverley after his death.  He also instructed the trustees of the Trust and other related trusts to ensure on a monthly basis that there was sufficient cash flow in the Property Trust to allow for those payments to Beverley.  The second respondent pointed out that if Beverley was indeed an income beneficiary of the Trust, there was no need for the instruction that funds be transferred from the Trust to the Property Trust.  He further mentioned that the Property Trust has no income and is insolvent.  With regard to Beverley’s maintenance, the second respondent said that she was the named beneficiary of two of the deceased’s annuities.

[18]   With regard to clause 5.2 of the Trust deed the second respondent said that Beverley is not and has never been a trustee of the Trust.

[19]   Wormald deposed to a replying affidavit.  With regard to the date of his appointment as a trustee of the Trust, he said that as at 27 June 2016 the Trust had resolved that he was to be a trustee but the resolution had not yet been approved by the Master.

[20]   With regard to payments to Lynette after divorce, he said that he had made a search of all the financial statements of the Trust for the relevant period from which he found that payments had been made to Lynette as loans from the Trust and that repayments had been made by Lynette ultimately settling the loan account.  He said that there was no record in the financial statements of any of the payments referred to by the second respondent and that there was no record in the financial statements of payments to Lynette as a beneficiary.  He attached various annual financial statements of the Trust in support of his averments.

[21]   These financial statements led to a supplementary affidavit filed on behalf of the respondents, deposed to by Mr Shaun Murphy, a chartered accountant of sixteen years’ experience.  He stated that the financial statements did not support Wormald’s contentions regarding payments to Lynette and that the opposite was true.  He said the various amounts mentioned by Wormald as loans were in fact amounts owed by the Trust to Lynette.  The payments in reduction of the amount owing to Lynette were payments made by the Trust to Lynette.  Murphy could not say with certainty what the underlying transactions were which gave rise to the Trust owing money to Lynette and that the documents requested by the respondents would have shed light on this question.  He concluded that Lynette loaned money to the Trust over a period of time or made cash contributions to related entities on behalf of the Trust, alternatively that the Trust or one of its related entities made distributions to Lynette, the payment of which was not made to her but credited to her loan account.

[22]   The second respondent deposed to a further affidavit in which he stated that at the time of the payments made to Lynette as recorded in the financial statements, the deceased was working and the second respondent understood that the Trust was in a strong financial position at the time.  It was therefore unlikely, so he contended, that Lynette would have been asked to lend money to the Trust and that the alternative scenario proposed by Murphy was more likely.

[23]   Wormald deposed to a further affidavit in which he agreed that the amounts he referred to as loans to Lynette were payments made by the Trust to Lynette to discharge a liability of the Trust.  He regretted his error and apologised.  He nonetheless said that the source of the Trust’s liability to Lynette was irrelevant to the application and that he could say “with confidence” that no distributions were made by the Trust to Lynette in her capacity as an income beneficiary, whether before or after the divorce from the deceased. He did not disclose the source of the payments to Lynette.

The Law

[24]   In Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] 2 All SA 262 (SCA) Wallis JA, at paragraphs [18] and [19] stated as follows (footnotes omitted):

“[18] Over the last century there have been significant developments in the law relating to the interpretation of documents, both in this country and in others that follow similar rules to our own.  It is unnecessary to add unduly to the burden of annotations by trawling through the case law on the construction of documents in order to trace those developments. The relevant authorities are collected and summarised in Bastian Financial Services (Pty) Ltd v General Hendrik Schoeman Primary School.  The present state of the law can be expressed as follows. Interpretation is the process of attributing meaning to the words used in a document, be it legislation, some other statutory instrument, or contract, having regard to the context provided by reading the particular provision or provisions in the light of the document as a whole and the circumstances attendant upon its coming into existence. 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 regard to a statute or statutory instrument is to cross the divide between interpretation and legislation. 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.

[19] All this is consistent with the ‘emerging trend in statutory construction’.  It clearly adopts as the proper approach to the interpretation of documents the second of the two possible approaches mentioned by Schreiner JA in Jaga v Dönges NO and another, namely that from the outset one considers the context and the language together, with neither predominating over the other. This is the approach that courts in South Africa should now follow, without the need to cite authorities from an earlier era that are not necessarily consistent and frequently reflect an approach to interpretation that is no longer appropriate. The path that Schreiner JA pointed to is now received wisdom elsewhere. Thus Sir Anthony Mason CJ said:

‘Problems of legal interpretation are not solved satisfactorily by ritual incantations which emphasise the clarity of meaning which words have when viewed in isolation, divorced from their context. The modern approach to interpretation insists that context be considered in the first instance, especially in the case of general words, and not merely at some later stage when ambiguity might be thought to arise.’

More recently Lord Clarke SCJ said ‘the exercise of construction is essentially one unitary exercise’.”

[25]   This statement of the present state of the law has been endorsed in several judgments of the Supreme Court of Appeal.  For example in Bothma-Batho Transport (Edms) Bpk v S Bothma & Seun Transport (Edms) Bpk [2014] 1 All SA 517 (SCA) Wallis JA, after referring to the summary of the earlier approach to the interpretation of contracts in Coopers & Lybrand and Others v Bryant [1995] 2 All SA 635 (A) at 768A-E, stated at paragraph [12] (footnotes omitted):

“That summary is no longer consistent with the approach to interpretation now adopted by South African courts in relation to contracts or other documents, such as statutory instruments or patents.  Whilst the starting point remains the words of the document, which are the only relevant medium through which the parties have expressed their contractual intentions, the process of interpretation does not stop at a perceived literal meaning of those words, but considers them in the light of all relevant and admissible context, including the circumstances in which the document came into being. The former distinction between permissible background and surrounding circumstances, never very clear, has fallen away. Interpretation is no longer a process that occurs in stages but is ‘essentially one unitary exercise’. Accordingly it is no longer helpful to refer to the earlier approach.”

[26]   In Novartis SA (Pty) Ltd v Maphil Trading (Pty) Ltd 2016 (1) SA 518 (SCA) at paragraph [28] Lewis JA stated:

“The passage cited from the judgment of Wallis JA in Endumeni summarises the state of the law as it was in 2012. This Court did not change the law, and it certainly did not introduce an objective approach in the sense argued by Novartis, which was to have regard only to the words on the paper. That much was made clear in a subsequent judgment of Wallis JA in Bothma-Botha Transport (Edms) Bpk v S Bothma & Seun Transport (Edms) Bpk  [2013] ZASCA 176; 2014 (2) SA 494 (SCA) at paragraphs 10–12 and in North East Finance (Pty) Ltd v Standard Bank of South Africa Ltd  [2013] ZASCA 76; 2013 (5) SA 1 (SCA) at paragraphs 24 and 25.  A court must examine all the facts – the context – in order to determine what the parties intended. And it must do that whether or not the words of the contract are ambiguous or lack clarity. Words without context mean nothing.”

[27]   In City of Tshwane Metropolitan Municipality v Blair Atholl Homeowners Association 2019 (3) SA 398 (SCA) Navsa JA and Mothle AJA stated at paragraph [61] (footnotes omitted):

“It is fair to say that this court has navigated away from a narrow peering at words in an agreement and has repeatedly stated that words in a document must not be considered in isolation. It has repeatedly been emphatic that a restrictive consideration of words without regard to context has to be avoided.  It is also correct that the distinction between context and background circumstances has been jettisoned.  This court, in Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA) ([2012] 2 All SA 262; [2012] ZASCA 13), stated that the purpose of the provision being interpreted is also encompassed in the enquiry. The words have to be interpreted sensibly and not have an unbusinesslike result. These factors have to be considered holistically, akin to the unitary approach.”

[28]   The learned judges went on to say at paragraph [62] (footnote omitted):

“Since this court's decision in Endumeni, we are seeing a spate of cases in which evidence is allowed to be led in trial courts beyond the ambit of what is set out in the preceding paragraph. We are increasingly seeing witnesses testifying about the meaning to be attributed to words in legislation and in written agreements.  That is true of the present case in which, in addition, evidence was led about negotiations leading up to the conclusions of the ESA.”

[29]   The learned judges expanded on this occurrence in subsequent paragraphs by stating that in that court’s recent experience “the written text is being relegated and extensive inadmissible evidence has been led” and that the criticism of the idea expressed in Delmas Milling Co Ltd v Du Plessis 1955 (3) SA 447 (A) and KPMG Chartered Accountants (SA) v Securefin Ltd and Another 2009 (4) SA 399 (SCA) that extrinsic evidence should be used as conservatively as possible, was unjustified.

[30]   I do not interpret these views as in any way restricting the expression by Wallis JA in Endumeni of the state of the law, as I understood to be submitted on behalf of the applicants.  They do not exclude “relevant and admissible context” and “one unitary exercise”.  I also agree with the submission on behalf of the respondents that what was of concern to the court in City of Tshwane was the conduct of practitioners after Endumeni in introducing evidence which was beyond the ambit of that permitted in accordance with the Endumeni statement of the law.

[31]   In Iveco South Africa (Pty) Ltd v Centurion Bus Manufacturers (Pty) Ltd [2020] ZASCA 58 (3 June 2020), Koen AJA summarised the law dealing with interpretation of a contract, with reference inter alia to Endumeni, Bothma-Batho, Novartis and City of Tshwane.  In paragraph [7] he went on to state (footnotes omitted):

“The contextual setting for interpretation might furthermore include subsequent conduct of the parties which indicates how they understood their agreement.  Recourse to such evidence is permissible where the evidence indicates a common understanding of the terms of the agreement, and does not alter the meaning of the words used, provided such evidence is used as conservatively as possible.”

[32]   With regard to the subsequent conduct of parties being included in the contextual setting for interpretation, I refer to the judgment in Comwezi Security Services (Pty) Ltd v Cape Empowerment Trust Ltd  [2012] ZASCA 126 where Wallis JA, after referring to the appellant’s conduct in regard to the implementation of the agreement, stated at paragraph [15] (footnotes omitted):

“It was suggested that for us to place reliance on this conduct is impermissible in the light of the exposition of the law in Natal Joint Municipal Pension Fund v Endumeni Municipality, (supra).  However, that is incorrect. In the past, where there was perceived ambiguity in a contract, the courts held that the subsequent conduct of the parties in implementing their agreement was a factor that could be taken into account in preferring one interpretation to another.  Now that regard is had to all relevant context, irrespective of whether there is a perceived ambiguity, there is no reason not to look at the conduct of the parties in implementing the agreement. Where it is clear that they have both taken the same approach to its implementation, and hence the meaning of the provision in dispute, their conduct provides clear evidence of how reasonable business people situated as they were and knowing what they knew, would construe the disputed provision. It is therefore relevant to an objective determination of the meaning of the words they have used and the selection of the appropriate meaning from among those postulated by the parties. This does not mean that, if the parties have implemented their agreement in a manner that is inconsistent with any possible meaning of the language used, the court can use their conduct to give that language an otherwise impermissible meaning. In that situation their conduct may be relevant to a claim for rectification of the agreement or may found an estoppel, but it does not affect the proper construction of the provision under consideration.”

[33]   Further on this aspect, I refer to the judgment in Potgieter v Potgieter NO and Others 2012 (1) SA 637 (SCA) at paragraph [24] where Brand JA stated:

“The respondents’ answers to the appellants’ reliance on these minutes are twofold. The first is founded is law and the second based on fact. For their answer founded in law, the respondents relied on the parol evidence rule. If Wessels’ evidence with regard to the contents of the trust deed is inadmissible for non-compliance with the parol evidence rule, so the respondents argued, the same must hold true for the minutes of the August meeting. I do not believe, however, that the comparison is valid. Unlike the evidence of Wessels, the minutes of the meeting are not introduced as evidence of direct intent, aimed at the avoidance or the variation of the express terms of the pronouncement in the preamble to the trust deed. On the contrary, the minutes are plainly introduced to demonstrate that the meaning of the pronouncement contended for by the appellants is supported by the subsequent conduct of the parties to the trust deed which is a well-recognised and admissible way of interpreting an ambiguous document (see eg Coopers & Lybrand v Bryant  [1995] ZASCA 64;  1995 (3) SA 761 (A) at 768A-E).”

[34]   Before considering the different contentions of the parties, it is convenient to mention a few underlying points.    The Trust deed is a contract and the principles of interpretation of contracts apply.   The Trust deed is to be interpreted as at the time of its execution.  (See Mohamed and Others NNO v Ally 1999 (2) SA 42 (SCA) at 49I-J).  The parties are in agreement that the resolution of the 27 June 2016 did not amount to an amendment to the Trust deed. 

Submissions and discussion

[35]   As indicated above, the parties differed on the interpretation of the phrase “the lawfully wedded spouse”.  The deceased was twice lawfully married and, as submitted on behalf of the respondents, the phrase provides for two potential interpretations of the language used.

[36]   It was submitted on behalf of the applicants that the word “spouse” is a term of relation and not identification.  The deceased, so it was submitted, could have identified Lynette by name.  The same applied to the children.  The description of the beneficiaries was therefore open ended and the phrase could be interpreted so as to include the possibility of divorce from Lynette and a second spouse in the future, the death of Lynette or more children born to the deceased.  It was further submitted that the purpose of creating a trust is to escape death duties and cater for a family which will extend into the future.    Thus, as submitted, the meaning of the disputed phrase was capable of resolution without reliance on any other factors to be regarded as context.

[37]   In my view these submissions invite an interpretation of the phrase in isolation, as opposed to a unitary approach and the consideration of the phrase in its context.  One must look at the factors mentioned by Wallis JA in Endumeni , namely the circumstances attendant on the document coming into existence, the material known to the deceased, who was the founder of the trust deed, the background to the preparation of the Trust deed, and the purpose towards which the deed was directed.  In this matter these factors include the fact that the deceased was 56 years old at the time of the establishment of the deed, he had been married to Lynette for 33 years, and the respondents were adults.  The deceased, Lynette and the respondents formed the only family unit at the time of the establishment of the Trust.  The purpose of the Trust was to benefit that family unit which was in existence at the time of the establishment of the Trust.  In my view these are compelling factors in support of the contentions of the respondents.  An intention to include the possibility of a further lawfully wedded spouse and more children does not in my view fit in such a context.  The fact that Lynette and the respondents were not mentioned by name does not detract from my view.  As was submitted on behalf of the respondents, there was no evidence contributing to context to the effect that the deceased contemplated a divorce from Lynette or considered having more children.

[38]   Counsel for the applicants referred to the following statement of Wallis JA in Endumeni at paragraph [33]:

“The fact that something was not contemplated may occasionally be a factor that may affect ascertaining the meaning of the words used.  It cannot, however, operate as a bar to the application of a statutory provision to new or altered circumstances.”

Relying on this statement, it was submitted on behalf of the applicants that in the present case the phrase in the Trust deed should be interpreted so as to be applicable to altered circumstances.  In my view the context and purpose of the Trust deed differ radically from the context and purpose of the proviso which was the subject of interpretation in Endumeni and a comparison between the two sets of circumstances is inappropriate.

[39]   In support of the argument that no further evidence of context was admissible, reference was made to the judgment of Schreiner JA in Delmas Milling Co Ltd v Du Plessis (supra) at 454E-455C in which the learned judge identified three classes of evidence which were usable in different kinds of cases.  A distinction was drawn between cases of “uncertainty” where recourse could be had to surrounding circumstances, and cases of “true ambiguity” where recourse could be had to what passed between the parties on the subject of the contract.  It was submitted that the present matter was a case of uncertainty and not true ambiguity and, as I understood the submission, the scope for extrinsic evidence was limited.

[40]   In response to this submission, it was submitted on behalf of the respondents, in my view correctly, that the judgment in Endumeni makes it clear that this distinction is no longer part of our law, with reference to the following statement by Wallis JA at paragraph [26]:

“……………………………… in most cases the court is faced with two or more possible meanings that are to a greater or lesser degree available on the language used.  Here, it is usually said that the language is ambiguous although the only ambiguity lies in selecting the proper meaning (on which views may legitimately differ). In resolving the problem, the apparent purpose of the provision and the context in which it occurs will be important guides to the correct interpretation An interpretation will not be given that leads to impractical, unbusinesslike or oppressive consequences or that will stultify the broader operation of the legislation or contract under consideration.”

[41]   As was further submitted on behalf of the respondents, a requirement of strict ambiguity would be to follow the three stage approach which is no longer part of our law.  As Wallis JA said in Bothma-Bato (see paragraph [25] above):

“Interpretation is no longer a process that occurs in stages but is ‘essentially one unitary exercise’.  Accordingly it is no longer helpful to refer to the earlier approach.”

[42]   It was further submitted on behalf of the applicants that what was said by Wallis JA in Comwezi (see paragraph [32] above) was obiter because, as I understand the submission, Wallis JA had already decided on an interpretation of the disputed clause before he referred to subsequent conduct as reinforcing his construction of the disputed clause.  Even if what was said was obiter, it was nonetheless a statement of the Supreme Court of Appeal of what may form part of relevant context in the process of interpretation and is of persuasive force.

[43]   In any event in Commissioner, South African Revenue Service v Bosch and Another 2015 (2) SA 174 (SCA) at paragraph [17] Wallis JA said:

“There is authority that in any marginal question of statutory interpretation, evidence that it has been interpreted in a consistent way for a substantial period of time by those responsible for the administration of the legislation is admissible and may be relevant to tip the balance in favour of that interpretation.  This is entirely consistent with the approach to statutory interpretation that examines the words in context and seeks to determine the meaning that should reasonably be placed upon those words. The conduct of those who administer the legislation provides clear evidence of how reasonable persons in their position would understand and construe the provision in question.  As such it may be a valuable pointer to the correct interpretation. In the present case the clear evidence that for at least eight years the revenue authorities accepted that in a DDS scheme the exercise of the option and not the delivery of the shares was the taxable event, fortifies the taxpayers' contentions.”

In a footnote to this paragraph Wallis JA said

“The same point was made in a contractual context in Comwezi Security Services (Pty) Ltd v Cape Empowerment Trust Ltd  [2012] ZASCA 126 para 15.”

[44]   I am therefore of the view that in the present matter the subsequent conduct of the deceased may be considered as part of the relevant context.  It is not, to paraphrase Potgieter, aimed at the avoidance or the variation of the express terms of the Trust deed but is introduced to demonstrate that the meaning contended for by the respondents is supported by the subsequent conduct of the deceased and the trustees of the Trust.

[45]   The subsequent conduct relied upon by the respondents was firstly the resolution of 27 June 2016 initiated by the deceased.  The resolution was inadmissible insofar as it was evidence of the deceased’s subjective intention at the time the Trust was established.  It was an indication however that the deceased, the founder of the Trust and a trustee, and the trustees at the time, considered Lynette to be a beneficiary of the Trust after she and the deceased were divorced.  As pointed out on behalf of the respondents, the deceased did not mention the date of his divorce from Lynette in the resolution.  If the applicants’ contention was correct, so it was submitted, it was the date of divorce which would have changed the status of Lynette as a beneficiary. 

[46]   It was further submitted that the fact that the deceased felt it necessary to clarify his intentions and avoid or vary the objective meaning of the Trust deed, was supportive of the respondents’ contention, in that the acceptance by the trustees that this was the correct interpretation of the wording of the Trust deed, suggests that the clarification changed or varied their own previous understanding.  This subsequent conduct of the deceased is an indication of how he, the founder of the Trust, understood the phrase “the lawfully wedded spouse” and implemented it, which was conduct supportive of the respondents’ interpretation of the phrase. 

[47]   As was further pertinently pointed out, the resolution was taken when the deceased had been married to Beverley for eight years and had been divorced from Lynette for sixteen years.  Yet the resolution recorded that “now” Beverley was to be regarded as a beneficiary, rather than from the date of her marriage to the deceased, when she became a “lawfully wedded spouse”.  This belated conduct in regarding Beverley as a beneficiary again indicates how the deceased understood the phrase and implemented it, and is again supportive of the respondents’ contentions.   

[48]   The next instance of subsequent conduct relied upon was the evidence that payments were made by the Trust to Lynette as a beneficiary after the divorce.   In this regard it is important to remember that initially the applicants refused to provide documents.  Only after the second respondent raised the matter of payments by the Trust to Lynette did the applicants produce some financial statements.  Even then Wormald, a chartered accountant, misinterpreted payments reflected in the financial statements and had to acknowledge that he had done so after the affidavit of Murphy was filed.  Yet he still would not disclose the documents relating to the source of those payments.  By saying that they were not relevant, it can be inferred that he had access to those source documents in order to give an opinion on their relevance.  By not disclosing them he did not properly respond to the second respondent’s allegations that the payments were made to Lynette as a beneficiary.  Effectively, as was submitted, he put up a bare denial of the allegations, when he had the knowledge to respond with evidence to show that the allegations were not true or accurate.  (See Wightman t/a JW Construction v Headfour (Pty) Ltd and Another [2008] All SA 512 (SCA) at paragraph [13]).

[49]   Thus, so it was submitted, the second respondent’s evidence of payments by the Trust to Lynette as a beneficiary after her divorce from the deceased was unchallenged.  These payments in my view accorded with the deceased’s conduct in bringing about the resolution of 27 June 2016 and are an indication of how he, as the founder and a trustee from inception, understood and implemented the disputed phrase. I am also of the view that in not disclosing the source documents for the admitted payments to Lynette, it can be inferred that they were not favourable to the applicants’ case.

[50]   The next leg of subsequent conduct was the “Letter of Wishes”.  It was submitted on behalf of the respondents that this letter demonstrated that the deceased did not know that payments could be made to Beverley by the Trust. This wish of the deceased was a further indication of how he understood and implemented the disputed phrase.

[51]   Lastly, with reference to clause 5.2 of the Trust deed (see paragraph [4] above), the point was made that Beverley had never been appointed as a trustee.  If the disputed phrase was to be interpreted as contended for by the applicants, she would have been appointed as a trustee on the death of the deceased.   

[52]   It follows from the above, that by the application of the present state of the law on the interpretation of contracts, the phrase “the lawfully wedded spouse” contained in the Trust deed, must be interpreted to mean only Lynette Woollgar. 

[53]   In the result the application is dismissed with costs, such costs to include the costs of two counsel.

_______________________

J M ROBERSON

JUDGE OF THE HIGH COURT

Appearances:

Applicants:  Adv TJM Paterson SC, instructed by Whitesides Attorneys, Makhanda.

Second and third respondents: Adv AR Sholto-Douglas SC, with Adv G Brown, instructed by Huxtable Attorneys, Makhanda.

[1] This subsection provides: “When a trust instrument which has been lodged with the Master is varied, the trustee shall lodge the amendment or a copy thereof so certified with the Master.”

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