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IN THE HIGH COURT OF SOUTH AFRICA

KWAZULU-NATAL DIVISION, DURBAN

CASE NO: 9220/2015

In the matter between:

HIMAL TUGH N.O.                                                                                          First Applicant

PRAVIN RAMJATHAN N.O.                                                                       Second Applicant

and

SHAMEEN THAKUR RAJBANSI                                                               First Respondent

THE MASTER OF THE HIGH COURT,

PIETERMARITZBURG                                                                          Second Respondent

VIMLESH AMICHAND RAJBANSI                                                           Third Respondent

VIMAL RAJBANSI                                                                                  Fourth Respondent

VIMLEKHA AMICHAND RAJBANSI                                                          Fifth Respondent

VIMSHANA DEVI AMICHAND RAJBANSI                                               Sixth Respondent

VIMTHA AMICHAND RAJBANSI                                                         Seventh Respondent

 

Coram: Koen J

Heard: 19 APRIL 2018

Delivered: 15 May 2018

O R D E R

 

An order is granted in the following terms:

(a) The First Respondent is hereby removed as a trustee of the A. Rajbansi Family Trust with registration number IT 1918/2000;

(b) The Second Respondent is directed to endorse its records accordingly;

(c) The First Respondent is directed to hand over to the Applicants all documents, banking and administrative instruments relating to the administration of the Trust within 3 days of the grant of this order;

(d) In the event of the First Respondent failing to comply with paragraph (c) above the Sheriff or his Deputy be and is hereby authorised to do all things necessary to give effect to paragraph (c) above;

(e) The First Respondent is directed pay the costs of the application.

 

JUDGMENT

KOEN J

[1] The Applicants, in their representative capacity as two of the three trustees of the A. Rajbansi Family Trust (‘the Trust’), apply on motion for the following relief against the First Respondent, third trustee of the Trust, in her personal capacity:[1]

‘1.That this matter be afforded urgency …

2. That the First Respondent be and is hereby removed as a Trustee of the A. Rajbansi Family Trust with registration number IT 1918/2000 (THE TRUST);

3. That the Second Respondent[2] is directed to endorse its records accordingly in respect of paragraph 2 above;

4. That the First Respondent is directed to hand over to the Applicants all documents, banking and administrative instruments relating to the administration of the Trust within 3 days of the grant of this order;

5. In the event of the First Respondent failing to comply with paragraph 4 above that the Sheriff or his Deputy be and is hereby authorised to do all things necessary to give effect to paragraph 4 above;

6. The First Respondent pay the costs of this application on an attorney and client scale including the costs of two counsel;

7. Further and/or alternative relief as this Honourable Court may deem necessary.’

[2] The following facts are either common cause or not seriously in dispute on the papers:

(a) Apart from being a duly appointed trustee to the Trust pursuant to letters of authority issued by the Master of the High Court on 26 September 2013, the First Respondent is also the executrix[3] to the estate of her late husband, A Rajbansi (hereinafter referred to as the ‘deceased’);

(b) In case no. 9787/2013, the First Respondent in her capacity as executrix in the estate of the deceased and as duly appointed trustee of the Trust launched an application against inter alia the First Applicant and Second Applicant[4] as Seven and Eighth Respondents. She claimed an order that the decision by the Master of the High Court to uphold objections to the First and Final Liquidation and Distribution account in the estate of the deceased be set aside, together with certain ancillary relief. Part of the objection related to whether shares in Manog Investments (Pty) Limited (‘Manog’) held by Hewawathie Devjeith (‘Devjeith’) are held by her as a nominee of the deceased. Another part of the objection related to whether shares in respect of Phoenix North Properties (Pty) Limited (‘Phoenix’), Gahana Enterprise (Pty) Limited (‘Gahana’); Footwin Investments (Pty) Limited (‘Footwin’), and Snapshot Investments 1359 (Pty) Ltd (‘Snapshot’) held by Vimlesh Amichand Rajbansi (‘Vimlesh Rajbansi’) as nominee, and which in terms of the will of the deceased were to be ‘transferred to the (Trust)’, were to be transferred to the deceased estate or directly to the Trust. 

(c) In case no. 10429/2013 the First Respondent in her capacity as executrix in the estate of the deceased in an action prayed for an order against Devjeith[5] that she do all things necessary and take all necessary steps to transfer the shareholding and any cash assets in Manog to the estate of the deceased, and that Vimlesh Rajbansi[6] do all things necessary and take all necessary steps to transfer the shareholding and any cash assets in Gahana, Phoenix, Footwin and Snapshot to the deceased estate. The First and Second Applicants in this application were not cited as parties to that action but subsequently applied successfully for leave to intervene as Defendants.[7] Vimlesh Rajbansi defended the action on the basis that she holds the shares as nominee for and on behalf of the Trust and that she had tendered transfer of the shares to the Trust in or around May 2014. Ex facie an affidavit filed under that case number by the First Applicant the Trust resolved by resolution signed by all three trustees (including the First Respondent) of the Trust on 6 November 2014, to institute action against Vimlesh Rajbansi to do all things necessary in order to take effective control of the companies in respect of which holds the shares.

(d) In case no. 12226/2014, following Vimlesh Rajbansi having indicated in May 2014 that she tendered transfer of the shares to the Trust, the First Respondent applied for an urgent interdict pending the final determination of the action under Case No. 10429/2013, citing Vimlesh Rajbansi as First Respondent and the Applicants in their representative capacity as the Second and Third Respondents, interdicting the transfer of the shares in Gahana, Phoenix, Footwin and Snapshot to the Trust and the Applicants from accepting transfer of the shares into the Trust. An order was granted on 27 October 2014 but part thereof discharged on 7 November 2014.

(e) The litigation under case numbers case No. 9787/2013, 10429/2013 and 12226/2014 has not been decided finally.[8]

[3] The Applicants’ prayer for relief is premised on inter alia the following grounds namely:

(a) That the First Respondent has failed to act in good faith and in the best interest of the Trust;

(b) That the First Respondent finds herself in an irreconcilable position of conflict between her interests as the executrix in the estate of the deceased and her fiduciary duties as trustee of the Trust;

(c) That the First Respondent’s conduct has jeopardised trust assets;

(d) That the First Respondent‘s continuation in office as trustee will impede or frustrate the proper administration of the trust and be detrimental to the welfare of the trust beneficiaries and trust estate.

[4] There are a number of factual disputes arising on the papers, the materiality of which differs depending on which ground for the removal of the First Respondent is sought to be invoked. No such dispute of material fact however arises in respect of the ground for removal referred to in paragraph 3(b) above, which issue can be decided on the papers in the respects set out below.[9]

[5] It is well established in our law that:

(a) A trustee must administer a Trust estate with the utmost good faith and in the best interest of the trust beneficiaries;[10]

(b) A trustee must act with impartiality, which implies the avoidance of a conflict between the trustees personal interest and those of the beneficiaries;[11]

(c) A Trustee is obliged to conserve Trust property;

(d) A conflict between interest and duty, whether arising from an act of the Trustee, such as a claim made against the Trust estate, or from independent causes, is a ground for removal, such principle similarly being applicable to executors;[12]

(e) A trustee can be removed from office by the court if continuance in office would prevent the proper administration of a Trust or be detrimental to the welfare of the trust beneficiaries and the Trust Estate;[13]

(f) Although this court has the power in terms of s 20 of the Trust Property Control Act 57 of 1988 or using its inherent power to remove a trustee where continuous occupation of the office of the trustee will prevent the Trust from being properly administered or be to the detriment of the beneficiaries, such power must be exercised with circumspection and only where the removal of the Trustee will be in the interest of the Trust and its beneficiaries. The First Respondent in this regard relied on the decision in Gowar and another v Gowar and others (‘Gowar’).[14]

[6] In Gowar attention was inter alia drawn to the following:

(a) In Land and Agriculture Bank of South Africa v Parker and others[15] Cameron JA held that:

‘[A Trust] 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’;[16]

(b) 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;[17]

(c) In terms of s 9(1) of the Trust Property Control Act:

‘(1) A trustee shall in the performance of his duties and the exercise of his powers act with the care, diligence and skill which can reasonably be expected of a person who manages the affairs of another’;

(d) Kotze JA in Sackville West[18] said that:

‘a tutor must observe greater care in dealing with his ward's money than he does with his own, for, while a man may act as he pleases with his own property, he is not at liberty to do so with that of his ward. The standard of care to be observed is accordingly not that which an ordinary man generally observes in the management of his own affairs, but that of the prudent and careful man; or, to use the technical expression of the Roman law, that of the bonus et diligens paterfamilias.’

(e) This was reaffirmed in the context of trusts in Administrators Estate Richards vs Nichol and another.[19]

[7] Section 20(1) of the Trust Property Control Act provides that:

‘A trustee may, on the application of the Master or any person having an interest in the trust property, at any time be removed from his office by the court if the court is satisfied that such removal will be in the interests of the trust and its beneficiaries.’

[8] Proof of misconduct, dishonesty or mala fides is not essential for the removal of executers or administrators.[20] In Volkwyn N.O. v Clarke and Damant[21] Murray J held:

‘the essential test is whether such disharmony as exists imperils the Trust estate or its proper administration’.

Mere friction or enmity between the trustee and beneficiaries will not in itself be adequate reason for the removal of a trustee. Nor would mere conflict amongst trustees be a sufficient reason. Ultimately the question is whether the removal will, as required by s 20(1) of the Act, be ‘in the interest of the Trust and its beneficiaries’.

[9] In Grobbelaar,[22] Van Blerk JA concluded:

‘Dit is duidelik dat hier 'n wesenlike botsing bestaan tussen die persoonlike belange van die respondent en die van die boedel waardeur 'n toestand geskep is wat respondent se posisie as eksekuteur vir hom onhoudbaar maak. Hy bevind hom in die onmoontlike posisie dat hy enersyds as skuldeiser van die boedel sal moet veg vir sy eis en andersyds in sy hoedanigheid as eksekuteur die boedel sal moet verdedig teen dieselfde eis. In hierdie rol sal hy genoodsaak wees om kant te kies. Hy kan nie onsydig of onpartydig bly nie.’[23]

[10] The present position in which the First Respondent finds herself is little different to the scenario which prevailed in Grobbelaar. That position of conflict arises irrespective of the ultimate de jure conclusion a court may reach in the pending litigation.

[11] The founder of the Trust required that three trustees be appointed to the Trust in order to contribute their individual expertise and judgment to a collective pool of wisdom for the benefit of the Trust and its beneficiaries. The present is not just simply a situation where the First Respondent and the Applicants may disagree as trustees. It has gone beyond that.

[12] The First Respondent finds herself in the invidious position of laying claims to the shares as executrix whilst in the proper discharge of her fiduciary duties as trustee she might also be required to pursue those shares on behalf of and for the benefit of the Trust directly.  That places her in a position where she has to choose sides.  Whether she is correct in having chosen the side of the deceased estate is not the issue.  By placing herself in a position where she has to choose sides results in a situation where she cannot remain impartial and non-partisan.

[13] No proof of mala fides or dishonesty is required. Her positions as executrix and as trustee in relation to the transfer of the shares simply involve two positions which are mutually destructive, with conflicting duties.

[14] In the light of that conclusion, it is not necessary to decide any of the further grounds, and in particular to refer the application for the hearing of oral evidence on any disputed factual issues.

[15] As regards costs, I am not persuaded that a punitive order of costs on the attorney and client scale is warranted.  The First Respondent was entitled to place her views before this court. It was reasonable for her to do so. It is however clear to me that she finds herself in an irreconcilable position of conflict and that the application must be granted. That she has been unsuccessful does not per se justify a punitive order. There are no further circumstances which would justify such an award

[16] Although both parties asked for the costs to include the costs of two counsel (the heads of argument having been signed by both senior and junior counsel on each side) the parties were represented at the hearing by respectively Mr Tugh and Ms Singh only. In the exercise of my discretion I am disposed to allowing only the costs of one counsel. The matter was not in my view of such complexity as to justify the costs of two counsel.

[17] In the circumstances an order is granted in the following terms:

(a) The First Respondent is hereby removed as a trustee of the A. Rajbansi Family Trust with registration number IT 1918/2000;

(b) The Second Respondent is directed to endorse its records accordingly;

(c) The First Respondent is directed to hand over to the Applicants all documents, banking and administrative instruments relating to the administration of the Trust within 3 days of the grant of this order;

(d) In the event of the First Respondent failing to comply with sub-paragraph (c) above the Sheriff or his Deputy be and is hereby authorised to do all things necessary to give effect to paragraph (c) above;

(e) The First Respondent is directed pay the costs of the application.

 

 

____________________________

 

 

Appearances

For the Applicant: MR E.H. TUGH

Instructed by: Govender Mchunu & Associates

Tel.:  031-3098338 / 8445

Ref.:  LG/DN/06T0101001

For the First Respondent: MS R SINGH

Instructed by: Anesh Maharaj Attorneys

Salmon Grove Chambers

Tel.:  031- 301 3105

Ref.:  Mr Maharaj

 

[1] Despite some initial objection to the First Respondent being cited in her personal capacity, such citation is plainly correct in the light of the decision in Mcnamee and others v Executors Estate Mcnamee (1913) 34 NPD 428.

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