Gowar v Gowar

The case involved a family dispute between two brothers, Francois Peter Gowar (second appellant) and Reginald David Gowar (first respondent), concerning the administration of four family trusts established by their deceased father. These trusts owned multiple farms in the Somerset East and Alexandria districts. The brothers were co-trustees of various trusts and had irreconcilable differences about the management of the trust properties and farming operations. The deceased father had established the trusts for estate planning purposes on the advice of the first respondent, initially with the second appellant managing farming operations. Over time, the first respondent became dissatisfied with the second appellant's management, alleging losses, poor maintenance, and breach of fiduciary duties. In 2010, the second appellant was removed as trustee of the Rietfontein Trust. This exacerbated tensions, leading to the appellants seeking removal of the respondents as trustees and termination of the trusts. The respondents counter-applied for the second appellant's removal as trustee.

• Whether the court has inherent common law power to remove a trustee in addition to the statutory power under section 20(1) of the Trust Property Control Act 57 of 1988
• What are the grounds and requirements for removing a trustee from office under common law and section 20(1) of the Act
• Whether the appellants established that the respondents' removal would be in the interests of the trust and its beneficiaries
• Whether the respondents established grounds for removal of the second appellant as trustee
• Whether the court had jurisdiction under section 13 of the Act to vary or terminate the trusts in the circumstances
• Whether there were material disputes of fact requiring referral to oral evidence

Both the appeal and cross-appeal were dismissed with costs, including costs of two counsel. The court a quo's dismissal of both the main application and counter-application was upheld.

The binding legal principles established are: (1) The common law power of the court to remove a trustee has not been abrogated by section 20(1) of the Trust Property Control Act 57 of 1988. (2) A trustee may be removed under section 20(1) only if such removal will be in the interests of the trust and its beneficiaries. (3) Neither mala fides nor misconduct are strictly required for removal; the essential test is whether the trustee's conduct imperils the trust property or its proper administration. (4) Mere friction, enmity between trustees and beneficiaries, or conflict amongst trustees is not sufficient ground for removal. (5) The power to remove trustees must be exercised with circumspection, particularly where the founder deliberately selected those trustees. (6) Trustees must observe the standard of care of a bonus et diligens paterfamilias and not expose trust property to business risks. (7) Section 13 of the Trust Property Control Act allows variation or termination only where specific jurisdictional criteria are met, namely that a trust provision brings about consequences which the founder did not contemplate or foresee and which hamper the trust objects, prejudice beneficiaries, or conflict with public interest. (8) Where material disputes of fact exist in motion proceedings concerning removal of trustees, the Plascon-Evans test applies and the matter should not proceed unless one party's version is far-fetched or clearly untenable.

The court made several non-binding observations: (1) It noted that the court's inherent common law jurisdiction to remove trustees is analogous to its power to remove executors or administrators of deceased estates. (2) The court observed that trustees who share a common fiduciary obligation must act jointly where more than one trustee is specified in the trust deed. (3) The court commented on the nature of a trust as not being a legal person but rather a legal relationship or accumulation of assets and liabilities that vests in trustees. (4) The court noted that it would be extremely unlikely that the balance of probabilities would be disturbed by hearing viva voce evidence given the comprehensive and reasonable nature of the answers to allegations in both applications. (5) The court observed that where applicants must have anticipated extensive disputes of fact but nevertheless proceeded by way of motion, the court would be loath to exercise its discretion to refer the matter for oral evidence, particularly given the protracted and expensive nature such a trial would entail. (6) The court noted that even if an administrator has acted incorrectly in their duties and not observed strict legal requirements, something more is required before removal is warranted. (7) Regarding acceptance of benefits under a trust, the court observed that trustees contracting for the benefit of third parties perform a different juristic act from accepting benefits under the contract for those third parties.

This case is significant for clarifying the law on removal of trustees in South Africa. It confirms that: (1) the court's inherent common law power to remove trustees has not been displaced by section 20(1) of the Trust Property Control Act; (2) neither mala fides nor misconduct are strictly required for removal, but the overriding consideration is whether removal will be in the interests of the trust and its beneficiaries; (3) mere friction, enmity or conflict between trustees and beneficiaries, or among trustees themselves, is insufficient grounds for removal; (4) the decisive consideration is whether the trustee's conduct imperils the trust property or its proper administration; (5) the power to remove trustees must be exercised with circumspection, particularly where the founder deliberately selected those trustees; (6) trustees must act with the standard of care of a bonus et diligens paterfamilias (prudent and diligent person), not merely as an ordinary person manages their own affairs; and (7) the court's power to vary or terminate a trust under section 13 of the Act is circumscribed by specific jurisdictional requirements relating to unforeseen consequences. The case provides important guidance on the proper approach to applications for removal of trustees and the circumstances in which courts will intervene in trust administration.