Breetzke and Others NNO v Alexander NO and Others

The Sleepy Hollow Trust owned a portfolio of commercial properties. One trustee, Mr Robert Alexander, nominated a company owned and controlled by him, Ziningi Properties (Pty) Ltd, to purchase the Trust’s property portfolio in May 2013. At the time, Delta Property Fund Ltd was interested in purchasing one of the properties (the SARS property). Mr Alexander allegedly failed to disclose this opportunity to his fellow trustees. Shortly after the sale to Ziningi, Ziningi sold the SARS property to Delta at a substantial profit. One beneficiary of the Trust, the St Francis Trust, represented by the appellants, sued Mr Alexander for breach of fiduciary duty and Ziningi on the basis that it knowingly participated in that breach. Ziningi excepted to the particulars of claim, contending that no actionable wrongdoing was pleaded against it. The High Court upheld the exception, striking out the claim against Ziningi, and the matter came on appeal to the Supreme Court of Appeal.

The appeal was upheld with costs, including the costs of two counsel. The High Court’s order was set aside and replaced with an order dismissing the exception with costs.

The case reaffirms and clarifies South African law on the liability of third parties who knowingly participate in breaches of fiduciary duty by trustees. It confirms that such liability is well established in Roman-Dutch law and is not dependent on piercing the corporate veil or on the existence of a fiduciary duty owed directly by the third party. The judgment is significant for trust administration, fiduciary accountability, and pleading standards in exception proceedings.