Hartmann and Others v Hacker N O and Others

In 1983, the late Mr and Ms Hartmann established the Hartmann Family Trust. Their children, Mark Keiser Hartmann (third appellant) and Inge Joanne Hacker (first respondent), are the trust's capital beneficiaries. Mark was removed as a trustee on 21 February 2020. Mark's sons, Tristan and Jean-Gabriel Hartmann (first and second appellants), are discretionary income and contingent capital beneficiaries. Inge, her husband Timothy James Hacker (second respondent), and Wendy Fiona Hay (third respondent) were the trustees. In terms of clause 12.1 of the Trust Deed, the trust capital was to be finally distributed six months after the death of the surviving founder—Faith (the last surviving founder) died on 22 July 2021—unless the trustees, in their absolute discretion, determined a later date before the expiry of that six-month period. Clause 6.1 disqualified Inge and Timothy from taking decisions relating to benefits to trustees or their spouses, meaning only Wendy could decide to postpone distribution. On 23 July 2021, the trustees allegedly discussed postponing distribution due to Mark's financial difficulties and the complexity of trust assets. On 26 September 2022, Tristan and Jean-Gabriel asked the trustees to confirm when distribution would occur. On 15 November 2022, Inge replied that the trustees had decided to postpone the distribution date. The appellants disputed that a valid decision had been taken, contending that Inge and Timothy had improperly participated and that any decision was taken after the six-month period expired on 22 January 2022. The Bloemfontein High Court dismissed the application on the basis that the applicants lacked locus standi. Leave to appeal was granted.

• Whether Tristan, Jean-Gabriel and Mark had locus standi to institute proceedings relating to the administration of the trust
• Whether the dispute was moot
• Whether a 'distribution event' occurred on 22 January 2022 or whether a valid decision was taken to extend the distribution date
• Whether clause 12.1 required a composite decision to extend and fix a new date, and whether that decision had to be taken within the initial six-month period
• Whether Wendy (the only trustee not disqualified under clause 6.1) took a valid decision to postpone the distribution event within the prescribed time
• Whether an invalid decision could be subsequently ratified
• Whether the high court should have granted declaratory relief under section 21(1)(c) of the Superior Courts Act 10 of 2013

The appeal was upheld with costs, the costs to be paid from the Trust estate. The high court's order was set aside and replaced with an order declaring that the 'distribution event' contemplated in clause 12.1 of the Hartmann Family Trust Deed (Reg No. TMP 679/1984) occurred on 22 January 2022, with the costs of suit to be paid from the Trust estate.

Upon acceptance of benefits under a trust, a beneficiary acquires rights under the trust deed and has locus standi to institute proceedings relating to the administration of the trust, irrespective of whether the right is contingent, conditional or subject to the trustees' discretion. The interpretation of clause 12.1 of the Trust Deed required a composite decision both to extend the distribution event and to determine a new date for distribution, which decision had to be taken before the expiry of the original six-month period following the death of the last surviving founder. In the absence of a valid decision taken by the only trustee authorised under clause 6.1 within the prescribed six-month period, the 'distribution event' occurred automatically on the expiry of that period. An act cannot be ratified after the time within which it could lawfully be performed has expired, and trustees disqualified from taking a decision lack authority to ratify it.

Ratification can only occur within the time that the act could lawfully be performed. If Inge and Timothy had participated in the decision to postpone the distribution event, such participation would have been irregular because neither was authorised to take that decision under clause 6.1 of the Trust Deed. Trustees should not readily be saddled with personal costs orders unless they have acted mala fide; mistaken interpretation of a trust deed does not, without more, constitute mala fides. The availability of other remedies does not bar the granting of declaratory relief.

The judgment confirms that contingent and discretionary beneficiaries who have accepted benefits have standing to challenge trust administration, following and applying *Potgieter v Potgieter NO*. It provides authoritative guidance on the interpretation of trust deed provisions governing distribution events, holding that a discretion to postpone distribution must be exercised within the stipulated time period and requires a composite decision both to extend and to fix a new date. The case also reinforces that trustees disqualified from participating in a decision under a trust deed cannot take or ratify that decision, and that ratification cannot occur after the period for lawful performance has expired. It further illustrates the suitability of declaratory relief under section 21(1)(c) of the Superior Courts Act for resolving trust administration disputes, and reaffirms that trustees should not face personal costs orders absent mala fides.