TRUST LITIGATION: WHO DECIDES WHAT?

This article deals with the questions of who can institute litigation on behalf of a trust, as well as with the question of how jurisdiction is determined with regards to trusts.

Who can institute a claim?

A trust is not a legal person and cannot litigate in its own name. The trustees play a vital role in any litigation in which a trust might be involved. There are three overriding principles regarding trust administration:

  1. The trustees are obliged to give effect to the provisions of the trust deed.
  2. The trustees must perform their duties with the necessary “care, diligence and skill which can be expected of a person who manages the affairs of another”.
  3. Any person acting as a trustee must exercise discretion, where allowed, with the necessary objectivity and independence.

Section 6(1) of the Trust Property Control Act (the Act) determines the following: “any person whose appointment as trustee in terms of a trust instrument, section 7 or a court order comes into force after the commencement of the Act, shall act in that capacity only if authorised in writing by the Master”. In Watt v Sea Plant Products Bpk, Judge Conradie interpreted this section to mean that a trustee may not, prior to authorisation, acquire rights for, or contractually incur liabilities on behalf of the trust”. Thus, a trustee can only contract and institute legal proceedings in his/her capacity as trustee once a letter of authority has been issued by the Master of the High Court.

In Nieuwoudt v Vrystaat Mielies (Edms) Bpk), an agreement was held to be invalid and unenforceable because the trustees had not acted jointly nor reached a unanimous decision. The conclusion to be drawn from this is that trustees must act jointly when entering into contracts or when instituting litigation.

A trustee has a duty to vindicate trust property and to collect due debts. This duty goes hand in hand with the duty to conserve trust property and ensures that the trustee is in control of the property which forms part of the trust fund. A trustee further has locus standi to defend actions instituted against the trustee to ensure that the trust property is conserved.

Should all the trustees be joined in an action to enforce a right of the trust?

Judge Cameron held in the Goolam Ally Family Trust case that all the trustees must be joined in suing and all must be sued. Therefore, all the trustees will be joined in their official capacity when instituting legal proceedings.

In Khabola NO v Ralithabo NO, the court quoted the general rule regarding locus standi as follows: Any person who has a direct or substantial interest in the matter has the required locus standi to institute legal proceedings. The learned judge found that the underlying contractual relationship between trustees could be equated to a partnership.

Jurisdiction:

For jurisdictional purposes, a partnership “resides” at the place where its principal place of business is situated, and if the principle set out in abovementioned case is followed – a trust also “resides” where its principal place of business is situated.

In Bonugli v The Standard Bank of South Africa Limited, the court referred to section 5 of the Act  which determines that a person whose appointment as trustee comes into effect after the commencement of this act, shall furnish the Master with an address for the service upon him of notices and process and shall, in case of change of address, within 14 days notify the Master by registered post of the new address. The cause of action arose in Johannesburg, and one of the defendants (a trustee in his representative capacity) was resident in Australia. The address which was used in the summons was the address given to the Master in terms of section 5 of the Act. A special plea with regards to lack of jurisdiction was raised, but the Cape Town High Court found that it had the necessary jurisdiction to hear the matter.

There are considerable differences between a partnership and a trust, but with regards to jurisdiction the general principles applicable to a partnership can also be applied to a trust – namely considerations of convenience and common sense for its conclusion to entertain a claim. The Cape Town High Court had jurisdiction to hear the Bonugli matter because the first defendant was resident within its jurisdiction, and because the address listed in terms of section 5 of the Act was within the jurisdiction. Considerations of common sense and convenience also required that the court should adjudicate the issue between the plaintiff and all the defendants.  It would have been impractical to institute a claim based on the same set of facts in two different courts, because the trustees were resident in different courts’ jurisdictions.

There remains some uncertainty regarding which court should have jurisdiction to hear a claim instituted by a trust or a claim against a trust. There appears to be three possibilities in this regard: Firstly, if the Bonugli judgment was followed, the residency of one trustee should be sufficient to establish jurisdiction. Secondly, the address provided in terms of Section 5 of the Act could be used to establish jurisdiction. Thirdly, the court where the trust’s principle place of business is situated could have jurisdiction. Hopefully the position regarding which court has jurisdiction to hear claims instituted by a trust or against a trust will be properly aired in the courts soon, to provide more certainty regarding this aspect.

Reference List:

Books:

  • Lexisnexis Trust Law and Practice, P A Olivier, S Strydom, GPJ van den Berg, October 2017
  • Civil Procedure: A Practical Guide, Petè, Hulme, Du Plessis, Palmer, Sibanda, Oxford University Press.

Acts:

  • Trust Property Control Act 57 of 1988

Cases:

  • Watt v Sea Plant Products Bpk (1998) 4 All SA 109 (C)
  • Nieuwoudt v Vrystaat Mielies (Edms) Bpk)
  • Goolam Ally Family Trust t/a Textile, Curtaining and Trimming v Textile, Curtaining and Trimming (Pty) Ltd 1989 (4) SA 985 (C) at 988D-E
  • Khabola NO v Ralithabo NO (5512/2010) (2011) ZAFSHC 62 (24 March 2011)
  • Bonugli v The Standard Bank of South Africa Limited 266/2011) (2012) ZASCA 48 (30 March 2012)

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

HOW CAN I LAWFULLY EVICT MY TENANT?

You’ve discovered that the tenant renting your apartment has damaged several appliances, including the floor tiles due to irresponsible behaviour. Therefore, you have decided to terminate the lease contract and evict the tenant. Are you allowed to do that and how do you get started?

Firstly, there has to be valid reasons to evict a tenant, such as the example above. Even if you do have a valid reason to pursue eviction, a legal process has to be followed if you want to stay within the law. The first step is to cancel the lease contract with the tenant and let the tenant know that it’s cancelled and the reasons why. After the contract is terminated, the tenant would be occupying the premises illegally. You can then go to a court with an eviction application or “ejectment order”. When you do this you will be required to prove that the contract with the tenant was properly terminated and that the reasons for doing so were valid.

It’s important to make sure the reasons you want to evict the tenant are valid. This is because tenants are protected by the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act, No. 19 of 1998. You cannot just evict a tenant because you don’t like them.

Other grounds for an eviction

Besides a tenant causing serious damage to a property there are two other grounds for an eviction. The obvious one is the tenant not paying his/her rent after having been told to do so. Another reason is the tenant using the property for anything other than was agreed upon in the contract. A tenant who opens a business in the apartment they are renting would be in breach of their contract if it was agreed to be rented for residential purposes only.

What happens at the court?

The eviction application can be taken to the Magistrate’s Court or the High Court. Court proceedings will follow, which the tenant should be notified about. It’s very likely that the tenant will deny any wrongdoing and say the eviction doesn’t have good grounds. If this is the case, they can inform the court. A dispute and court case may ensue, the outcome of which would depend on the evidence of what happened. Therefore, if you are considering evicting a tenant, make sure your reasons are clear and that there is evidence for the eviction. If the tenant broke property on your premises because of being irresponsible, then that could be solid evidence.

Dealing with the tenant

The tenant may agree that they have done something wrong or simply decided not to oppose the eviction, in which case the court would issue an ejectment order. The ejectment order will force the tenant to leave the property, which will be carried out by the Sheriff of the Court. It’s important to remember that the landlord is not allowed to personally remove tenants from their premises. Leave that to the authorities. Furthermore, the court may order the tenant to pay the legal costs of the landlord.

Reference:

Anderson, AM. Dodd, A. Roos, MC. 2012. “Everyone’s Guide to South African Law. Third Edition”. Zebra Press.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

CAN SOMEBODY TAKE THE LAW INTO HIS/HER OWN HANDS?

The mandament van spolie is a summary remedy, usually issued upon urgent application, aimed at restoring control of property to the applicant from whom it was taken through unlawful self-help, without investigating the merits of the parties’ rights to control.

From the definition above it is evident that this remedy is unique, because it is not used to protect rights at all. The mandament van spolie is a unique remedy aimed at undoing the results of the taking of property by means of self-help. The idea is that people should enforce and protect their property rights by legal means and procedure, and not by self-help and force, because self-help eventually results in chaos and anarchy. For this reason it is usually said that this remedy is based upon the principle that nobody is allowed to take the law into his/her own hands. Due to its aim of restoring peace and order and discouraging self-help, the spoliation remedy does not investigate the merits of any of the parties’ interest in the property and neither of the parties is allowed to raise the question of rights. The court is simply concerned with the factual investigation, namely whether there is proof of existing control and proof of unlawful spoliation of that control. If there was in fact existing control and unlawful spoliation the court will order the spoliator to restore the spoliated control to the applicant immediately, regardless of whether that control was in fact unlawful or even legal.

The spoliation remedy is aimed at preserving peace and order in the community. People cannot be permitted to circumvent the remedy by contract. Parties to a contract cannot agree that one of them will be permitted to take property from the other without proper legal procedure. The requirements for this remedy were set out in two classic decisions that are still the most important authorities in this regard, namely Nino Bonino v De Lange 1906(T) and Yeko v Qana 1973(A).

  1. Proof that the applicant was in peaceful and undisturbed control of the property. The first requirement means that the applicant had control over the property in question. For purposes of the spoliation remedy this control must have existed “peacefully and undisturbed” for a period long enough, and in a manner stable enough, to qualify any unlawful disturbance of the peace. The requirement that the control must have been peaceful and undisturbed does not refer to its legal merits, but simply to the fact that it must have been relatively stable and enduring. If not, there can hardly be a question of disturbance of the situation.
  2. Proof that the respondent took or destroyed that control by means of unlawful self-help or spoliation. The second requirement for the spoliation remedy is that the existing peaceful and undisturbed control must have been unlawfully spoliated by the respondent.

One can, therefore, safely say that possession is 90% of the law. The reason for this is that spoliation is not permitted in our law. The person must use the legal processes at his disposal and cannot take the law into his own hands.

References:
A J van der Walt & G J Pienaar: Introduction to property law, 5th edition, pg 218-223.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted. (E&OE)

DIFFERENCES BETWEEN THE DOMESTIC VIOLENCE ACT AND THE HARASSMENT ACT

There are people who suffer emotional and physical abuse on a daily basis but are not quite sure what they can do to prevent it. There are two options available to them. They can either apply for a Protection Order or apply for a Harassment Order. However, many people do not know the difference between the two and which Order would suit their situation.

A Protection Order is described as being a form of court order that requires a party to do or to refrain from doing certain acts. These orders flow from the court’s injunction power to grant equitable remedies in these situations. The following is required to be present when applying for a Protection Order:

  • Needs to show a pattern of abuse.
  • It has to be a form of domestic violence which includes:
      • Physical violence
      • Sexual violence
      • Financial violence
      • Emotional/verbal violence
  • The violence needs to be directed at the person who wants to make the application.

A Protection Order forms part of the Domestic Violence Act. This means that the abuse needs to be between persons that live in the same house, like brother and sister, or mother and father, etc. An application is made for a Protection Order and thereafter a return date is set. At the return date the Applicant can change their mind and ask that the order be removed. If not, the Order is granted, and it is binding for life. If the Respondent breaches the Protection Order, he/she may receive up to 5 years imprisonment. If the Applicant applies for a Protection Order under false pretences the Applicant may receive up to 2 years imprisonment.

The application for a Protection Order is an ex-parte application, which means that the application can be made without having the Respondent at Court. This can cause problems in the instance where the Respondent is innocent, but does not have a chance to defend himself/herself.

If you’ve been the victim of abusive or threatening behaviour by someone other than a person living with you, or with whom you have a domestic relationship, it may be harassment. There are different things you can do if you’re being harassed, such as applying for a Harassment Order. The following is important to know about Harassment Orders:

  • No pattern is needed, and a first offence can be sufficient for a Harassment Order.
  • No relationship is required, and it can be against someone you don’t even know.
  • No violence is required.
  • Harassment includes: following, messaging, unwanted packages, letters, psychological harm, physical harm, financial harm, etc.

If you decide to apply for a Harassment Order without knowing who it is against, the Court has the power to order a police official to investigate the matter. The application for a Harassment Order takes place in open court, which means that it is not private, which can sometimes prevent victims from making the application. Once a Harassment Order is granted, it is binding for 5 years. If the Applicant wants to withdraw the Order, the Court must be satisfied that the conditions have changed. Breach of a Harassment Order can result in 5 years imprisonment, which is the same punishment for Applicants who make the application under false pretences.

It is important to know that there are remedies available to victims who are in abusive relationships. Whether it is emotional, physical or financial abuse by someone you know or stalking and harassment by someone you don’t know, it is time to take a stand against abuse.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.