Samuel Alfred Schoonhoven N O and Others v Pieter Cornelius Antonius Schoonhoven and Others

In 2006 Johannes Bernardus Alphonsus Schoonhoven established a discretionary trust, the Schoonies Family Trust. The trust deed defined a broad class of potential capital beneficiaries and reserved to the founder, in clause 27, a testamentary right to determine the vesting date and to prescribe the formula for distribution of the trust fund on termination. In a joint will executed in 2010, the founder fixed the vesting date as 15 years after his death and provided that the capital beneficiaries would receive the net proceeds of the trust in equal shares. After the founder’s death in 2015, a dispute arose between the trustees (three of the founder’s sons and another trustee) and one son, Pieter Schoonhoven, as to whether the trustees retained a discretion to designate the capital beneficiaries on termination of the trust, or whether the founder had already exercised his testamentary power to identify the beneficiaries. The trustees sought declaratory relief that they could determine the capital beneficiaries from the class listed in the trust deed. The High Court dismissed the application, holding that the will had not designated beneficiaries and that rectification of the trust deed would be required. The trustees appealed to the Supreme Court of Appeal.

The appeal was dismissed with costs, including the costs of two counsel where employed.

The judgment clarifies the scope of a founder’s testamentary reservation in a discretionary trust and confirms that a power to prescribe a distribution formula may encompass the power to identify beneficiaries. It provides authoritative guidance on the interpretation of trust deeds and wills together, particularly where broad and potentially indeterminate classes of beneficiaries are involved, and limits trustees’ residual discretion where the founder has exercised an overriding testamentary power.