Lenette Janse De Wit & Others v Toerien De Wit N O & Others

Elbert De Wit Snr established the De Wit Family Trust in 1995 as a discretionary trust. The trust held shares in companies (the De Wit Group) which held business and property assets. Before his death in February 2019, Elbert Snr expressed wishes for eventual equal distribution of trust capital among beneficiaries, but took no formal steps to vary the trust deed. After his death, conflict arose between family members: the surviving spouse Lenette (also a trustee) and daughters Maryke and Karmien wanted the trust terminated and assets distributed, while the majority trustees (son Toerien and Philip Rall) wished to continue the trust to allow businesses to grow and generate optimal value. The trust deed gave trustees sole discretion to determine the vesting date and continue the trust indefinitely. The appellants applied under section 13 of the Trust Property Control Act for an order terminating the trust and appointing a receiver to distribute assets, arguing that provisions giving trustees discretion to continue the trust indefinitely brought about unforeseen consequences (family breakdown) that hampered trust objectives.

• Whether the provisions of the trust deed giving trustees discretion to continue the trust indefinitely brought about consequences the founder did not contemplate or foresee (first jurisdictional requirement of section 13 of the Trust Property Control Act)
• Whether the impugned provisions hampered the achievement of the trust objectives or prejudiced the interests of beneficiaries (second jurisdictional requirement under section 13(a) or (b))
• Whether termination of the trust was an appropriate exercise of the court's discretion under section 13
• The proper interpretation of the founder's intention: whether this is determined by the terms of the trust deed or by verbal wishes expressed by the founder before death
• The legal position of beneficiaries under a discretionary trust who have no vested rights

The appeal was dismissed with costs, including costs of senior counsel where employed, to be paid by the first, second and third appellants jointly and severally to the respondents.

The binding legal principles are: (1) Under section 13 of the Trust Property Control Act, the founder's intention is determined from the trust deed, not from verbal wishes expressed subsequently. (2) The first jurisdictional requirement under section 13 (the 'anchor jurisdictional factor') requires that the impugned provisions have brought about consequences the founder did not contemplate or foresee. This must be satisfied before considering whether any of the requisites in section 13(a), (b) or (c) are met. (3) Where a trust deed gives trustees sole discretion to determine a vesting date and continue the trust indefinitely, and the founder did not take steps to vary these provisions, the founder must be taken to have contemplated that trustees would exercise this discretion, and that beneficiaries would accept the trustees' decision. (4) Beneficiaries under a discretionary trust who have no vested rights cannot insist that trustees exercise their discretion to fix a vesting date. (5) Where trustees exercise their discretion reasonably in accordance with the trust deed and in furtherance of the trust objectives, their conduct cannot be said to bring about consequences unforeseen by the founder. (6) Applicants under section 13 must establish a causal relationship between the impugned provisions and the hampering of trust objectives or prejudice to beneficiaries. (7) Family breakdown caused by beneficiaries' legally and factually untenable demands does not satisfy the jurisdictional requirements of section 13.

The Court observed that: (1) Section 13 of the Trust Property Control Act represents a middle path chosen by the Legislature between respecting the founder's intentions and serving the interests of beneficiaries or the public interest. (2) Section 13 has expanded the limited common law powers to vary trust provisions, but the importance of the founder's intention is preserved through the jurisdictional requirements. (3) To allow variation or termination too readily risks undermining the underlying nature of a trust, in which beneficiaries' rights are determined by and subject to the terms of the trust deed. (4) The different components of section 13 (the anchor jurisdictional factor and the requisites in subsections (a), (b) and (c)) are often intertwined and it may not always be practical or desirable to conduct a discrete inquiry into each factor. (5) Termination of a trust under section 13 is an extraordinary remedy to be used only as a last resort. (6) Allegations of conflict of interest and undue influence must be properly substantiated with evidence, not made through broad unsubstantiated averments. (7) While the Court acknowledged the appellants may have genuine concerns about the impasse between trustees, this could not justify termination of the trust in the absence of the jurisdictional requirements being satisfied.

This judgment clarifies the proper approach to applications under section 13 of the Trust Property Control Act. It emphasizes that: (1) The founder's intention is determined from the trust deed, not from subsequent verbal statements; (2) Courts must respect the founder's intentions and not easily override them; (3) The two jurisdictional requirements of section 13 are strict prerequisites to the court's power to vary or terminate a trust; (4) Beneficiaries under a discretionary trust have no vested rights and cannot insist on distribution if trustees exercising their discretion reasonably decline to fix a vesting date; (5) Termination of a trust under section 13 is an extraordinary remedy to be used as a last resort; (6) The mere fact that beneficiaries are dissatisfied with trustees' exercise of discretion, or that family conflict exists, does not satisfy the requirements of section 13; (7) Wide discretionary powers given to trustees are to be respected where they form part of the scheme of the trust as intended by the founder. The case is important for trust law and estate planning, confirming that properly drafted discretionary trusts will be upheld according to their terms, even where this leads to family disputes.