dwp eNewsletter
Vol 2 : Ed 3 - August 2008
| in short |
| can you trust your trustee? |
Trustees are generally understood to be individuals of sound moral character, fit and proper…the list goes on. In a recent case heard by Judge Erasmus (in Stander and Others v Schwulst and Others 2008(1) SA 81 (C)) the Cape High Court was subjected to a few somewhat trying characters who were dead set on keeping the majority of a trust’s funds “safe” in their own hands. More simply put, the trustees adopted a rather irrational approach towards the beneficiaries of the trust, saying that they should only look to the trust for additional support “where circumstances make it absolutely necessary”. They even went so far as telling the beneficiaries that the trust's resources should not be “free money” for their benefit but rather that this money should be protected “for as long as it was possible”.
The trustees in this matter refused to supply any form of accounting to substantiate how they were managing the trust’s funds, despite regular demands by the beneficiaries. Their actions were grounded in dishonesty and bad faith, bullying the beneficiaries and even threatening them in an attempt to prevent them from pursuing their legal rights. The trustees’ primary goal was to earn remuneration from the trust’s capital.
At the pinnacle of these on goings the beneficiaries made application against the trustees in their personal capacities to be removed from their administrative position. It was hardly a surprise when the trustees laid claim to further of the trust’s funds as reimbursement for their legal costs and this developed the issue to be decided by the court.
The principal issue was whether a trustee after having been sued would be entitled to recoup any loss suffered by him from the trust estate. The court maintained that where a trustee finds himself in the midst of legal proceedings and comes out unscathed, that is the court decides the matter in his favour, the legal proceedings would be regarded as expenses properly incurred and a consequence or incident of his having agreed to act as a trustee and as such his costs may be recouped.
However, where a trustee is sued in his personal capacity for breach of trust where he has acted in bad faith and unreasonably in defending the proceedings, he will be held personally liable for these costs.
| contact us |
delport ward & pienaar
attorneys,
notaries & conveyancers
1st floor - cornerstone house
16 loop street
cape town
8001
telephone, cape town
+27-21-419.3733
telefax, general
+27-21-419.3743
telefax, conveyancing
+27-21-425.6782
telefax, collections
dept
+27-21-421.6625
telephone, london
+44-20-8133.0337
telephone, washington
dc
+1-202-657.6733
telephone, hong kong
+852-8139.7374
| info@dwp.co.za |
1st floor - cornerstone house, 16 loop street, cape town | docex 600, cpt | t, +27-21-4193733 | f, +27-21-4193743