Snyman v De Kooker N O and Others

The appellant, Mrs Ruanda Snyman, was injured in a motor vehicle accident and instituted an action for damages against the Road Accident Fund (RAF). The action was settled, and a court order of 27 February 2015 directed that the capital amount of R4,973,922.00 be paid to an inter vivos trust to be created for her exclusive benefit. Ms Tonya Ehlers was appointed as the court-appointed founder, and she created the Stapelberg Investment Trust on 15 July 2015 with the three respondents as trustees and the appellant as the sole beneficiary. Shortly after creation, the appellant expressed concerns about the trust's financial management and the trustees' accounting. The trustees provided bank statements and investment reports, which the appellant considered inadequate. Her attorneys requested proper financial statements, including balance sheets, profit and loss statements, and properly vouched accounts. When the trustees' accounting remained insufficient and other concerns arose about the trust deed provisions, the appellant launched an application in the high court seeking: (a) an order that the trustees account properly; (b) termination of the trust and creation of a new trust; and (c) alternatively, amendment of the trust deed and appointment of additional trustees.

• Whether the trustees had adequately fulfilled their fiduciary duty to account to the beneficiary
• Whether the trust deed contained provisions that were unforeseen or not contemplated by the court when ordering the trust's creation
• Whether such provisions prejudiced the beneficiary's interests, hampered the achievement of the trust's objects, or conflicted with public interest
• Whether the trust should be terminated under section 13 of the Trust Property Control Act 57 of 1988
• Whether the distinction between termination of a trust (section 13) and removal of trustees (section 20) was properly understood and applied
• Whether costs should be paid de bonis propriis by the trustees

The appeal was upheld with costs to be paid by the respondents de bonis propriis jointly and severally. The full court's order was set aside and replaced. The trustees were directed to account fully to the appellant within 30 days, with each entry supported by vouchers, for the period 15 July 2015 to 31 August 2018. The account must include comprehensive financial information, records of all funds received and owed, and details of all expenses. A process was established for debating the account and resolving disputed items. The appellant's attorney was directed to prepare a proposed deed of trust for a new trust, to be approved by the Master and a Judge in Chambers. Upon registration of the new trust and issuance of letters of administration, the order would serve as an order terminating the Stapelberg Investment Trust under section 13 of the Act. The trustees were ordered to transfer the trust's assets to the new trust within 10 days of termination and to account for the period after 31 August 2018 until termination. Costs were ordered to be paid by the trustees de bonis propriis, jointly and severally.

1. Sections 13 and 20 of the Trust Property Control Act 57 of 1988 are distinct provisions serving different purposes. Section 13 deals with variation or termination of trusts based on defective trust deed provisions, while section 20 deals with removal of trustees based on their conduct. The two are not interdependent and must not be conflated. Termination of a trust under section 13 does not require consideration of whether trustees should be removed under section 20. 2. Trustees owe a fiduciary duty to account to beneficiaries. This duty requires trustees to keep regular, up-to-date accounts of all transactions, receipts and disbursements, and to render such accounts to beneficiaries at all reasonable times with full supporting documentation. Mere provision of bank statements and investment reports without explanatory notes is insufficient to discharge this duty. 3. A beneficiary who has received an insufficient account is entitled to press a claim for a proper and complete account. 4. For section 13 to apply, there must be: (a) an anchor jurisdictional factor - a provision in the trust deed that brings about consequences the founder did not contemplate or foresee; and (b) such provision must hamper achievement of the founder's objects, prejudice beneficiaries' interests, or conflict with public interest. Once these requirements are satisfied, the court has wide discretion to delete or vary provisions, or terminate the trust. 5. When a trust is created pursuant to a court order, the terms of the trust deed must align with the purpose and objects contemplated in the court order. Where numerous material provisions of a trust deed conflict with the court order, prejudice the beneficiary, and create potential conflicts of interest for trustees, termination and creation of a new trust may be the appropriate remedy. 6. Trustees who grossly disregard their fiduciary duties may be ordered to pay costs de bonis propriis rather than being permitted to recover costs from the trust funds.

The Court observed that when a court orders the creation of a trust, it is inadvisable for the order to be made in the absence of a proposed trust deed. If the final terms of the trust deed are not circumscribed by a court order, the object of the court order could be defeated. Had the court seen the draft trust deed prior to registration in this case, it would be unlikely to have approved it in its current form. The Court noted that the appellant was not declared incapable of managing her affairs - a neuropsychologist found she was capable of managing day-to-day financial affairs but would need assistance with large amounts. Yet the trust deed treated her as if she were unable to manage her affairs and made no provision for the trustees to consult her on any decision. This was at odds with what was contemplated in the court order. The Court emphasized the importance of courts identifying the correct basis on which a matter must be decided, cautioning that courts should not decide matters on a wrong basis simply because parties have relied on it. The task of properly identifying the true issue for determination should never be left solely to the parties or their legal representatives.

This case provides important clarification on the distinction between termination of a trust under section 13 and removal of trustees under section 20 of the Trust Property Control Act. It establishes that these are separate, independent remedies serving different purposes that must not be conflated. The judgment comprehensively addresses the fiduciary duties of trustees to account to beneficiaries, establishing that mere provision of bank statements and investment reports is insufficient - proper accounting requires explanatory notes, supporting vouchers, regular preparation of financial statements, and accessibility to beneficiaries. The case demonstrates how section 13 operates: the court must identify provisions in a trust deed that create unforeseen consequences that prejudice beneficiaries' interests, hamper the trust's objects, or conflict with public interest. It illustrates the court's wide discretion under section 13, including the power to terminate a trust where the offending provisions are so numerous and material that amendment would be inadequate. The judgment emphasizes the importance of court approval of trust deeds when trusts are created by court order, particularly in the context of RAF settlements for beneficiaries who may need assistance managing funds. It also reinforces that trustees who grossly disregard their fiduciary duties may be ordered to pay costs de bonis propriis rather than from trust funds.