Estate Late Goolam Murtuza Hafiz and Others v Ahmed Zakir Hafiz and Others

Goolam Murtuza Hafiz was a prominent member of the Suni Islamic community in Sherwood, Durban. His grandfather took ownership of property on which the Sherwood Mosque was erected in 1904, held in trust with trusteeship passing to the eldest male descendant. In 1991, Goolam Hafiz purchased Property 1 adjacent to the mosque. On 6 September 1994, Goolam Hafiz (as settlor) and his eldest son Ahmed Hafiz (as First Trustee) entered into a written trust deed establishing the Goolam Murtuza Hafiz Trust (Hafiz Trust). Ahmed Hafiz was appointed trustee by the Master on 21 September 1994. Properties 1 and 2 were donated to the Hafiz Trust. In 2004, an amendment to the trust deed was signed by Goolam Hafiz and his three sons to enable registration as a public benefit organization. Two additional trustees (Akhmed Wahab and Sayed Mohamed) were appointed in 2005. In 2011, Goolam Hafiz attempted to appoint further trustees, leading to the Master withdrawing all letters of authority issued after 1994 and expressing the view that the 1994 deed only provided for appointment of a trustee upon the settlor's death. Another trust deed was executed in 2011 without Ahmed Hafiz's involvement. Goolam Hafiz (later substituted by his executor) then sought to declare the trust invalid and have Property 1 returned to his estate. Ahmed Hafiz and Akhmed Wahab counter-applied for a declaration that the trust was valid.

• Whether the Hafiz Trust was validly established in 1994
• Whether clause 4 of the 1994 trust deed meant that the First Trustee could only be appointed upon the death of the settlor, or whether a trustee could be appointed during the settlor's lifetime
• Whether the 1994 trust deed was validly amended by the 2004 deed of amendment
• The proper interpretation of clause 7.1 regarding amendment of the trust deed
• The identity of the validly appointed trustees of the Hafiz Trust
• Whether the court could exercise its discretion under section 13 of the Trust Property Control Act to vary clause 4.1 in the absence of an application to do so

The appeal was partially upheld. The order of the Full Court was varied to: (1) declare that the Goolam Murtuza Hafiz Trust is valid and shall be administered in accordance with the 1994 Memorandum of Trust Agreement; (2) declare that Ahmed Zakir Hafiz is the trustee for the time being of the trust; (3) order costs against the first, fifth and sixth respondents together with the Trust, jointly and severally. The appellants were ordered to pay the first and second respondents' costs of appeal.

An inter vivos trust is created by bilateral agreement between settlor and trustee, which may be oral or written. For a valid trust: (1) the settlor must intend to create a trust in his lifetime; (2) this intention must be expressed in a manner that creates an obligation upon the trustee, which obligation must be accepted; (3) the trust property must be defined with reasonable certainty; and (4) the objects must be lawful and set out with reasonable certainty. Where a trust deed is ambiguous, it must be interpreted by considering all relevant evidence including the declared intention of the settlor, assumption of trustee obligations, formal appointment, and transfer of control of trust property. The interpretation of trust instruments follows the unitary approach of considering text, context and purpose together. Where a trust deed prescribes the manner in which it may be amended (such as requiring agreement by named trustees), such provisions must be strictly complied with - persons named as potential future trustees who have not yet assumed office cannot validly agree to amendments as 'trustees'. A court cannot exercise discretion under section 13 of the Trust Property Control Act to vary a trust deed mero motu without proper application and without establishing the statutory grounds (that the provision hampers achievement of objects, is prejudicial to beneficiaries, or conflicts with public interest).

The Court noted that clause 4 of the trust deed reflected an intention on the part of the settlor to ensure that control of the trust would remain with his descendants. The Court observed that where a trust deed is silent about the appointment of additional trustees, the Master may appoint any person to act as trustee under section 7 of the Trust Property Control Act. The Court commented that for a court to make an order appointing trustees in substitution for the Master's discretion, the court would need to be placed in the same position as the Master to properly exercise that discretion. The Court noted that nothing was known about the basis upon which the Master exercised discretion to appoint the additional trustees in 2005. The Court observed that litigation costs should not automatically be borne by a trust simply because disputes relate to trustee appointments - the real nature of the dispute must be examined.

This case clarifies important principles of South African trust law regarding the requirements for valid constitution of an inter vivos trust and the interpretation of trust deeds. It establishes that where a trust deed is ambiguous, courts must examine the evidence as a whole to determine whether the essential requirements for a valid trust are met (expressed intention, acceptance of obligation by trustee, definition of trust property, and lawful objects). The judgment emphasizes that interpretation of trust instruments follows the same unitary approach as contract interpretation, considering text, context and purpose. It confirms that amendment provisions in trust deeds must be strictly complied with - persons named as potential future trustees cannot validly agree to amendments unless they are acting in their capacity as appointed trustees. The case also clarifies the limited circumstances in which courts may exercise powers under section 13 of the Trust Property Control Act to vary trust deeds, holding that such variation cannot be done mero motu without proper application and without establishing the statutory grounds. The judgment demonstrates the court's approach to resolving conflicts between literal textual interpretation and broader contextual evidence regarding the parties' actual intentions and conduct.