Makgoba & others v Ledwaba NO & others

The Mamphoku Makgoba Community Trust was established in 2004 to hold land transferred pursuant to land claims by the Makgoba community over 39 farms in the Limpopo province. The Trust was registered under the Trust Property Control Act 57 of 1988. The first to twelfth appellants served as trustees of the Trust. According to clause 6.4 of the Trust Deed, trustees could hold office for a maximum of three years. The appellants were elected in June 2010, meaning their term expired on 26 June 2013. Despite the expiry of their term, they continued in office and refused to hold general meetings to elect new trustees or account to beneficiaries. In November 2015, Mabuse J declared that the appellants' term of office had expired by effluxion of time. The appellants still refused to resign. The Master of the High Court, Pretoria, requested documents from the trustees to assess their conduct but was not satisfied with their responses. On 22 February 2017, the Master exercised her powers under section 20(2)(e) of the Trust Property Control Act and removed all the appellants as trustees. The appellants challenged this decision in the High Court, seeking reinstatement. The court a quo (Makgoka J) set aside the Master's decision, reinstated the appellants, but then ordered them to resign immediately and directed that a general meeting be convened to elect new trustees. The appellants appealed against aspects of this order.

• Whether the appellants' term of office as trustees had terminated by effluxion of time in terms of clause 6.4 of the Trust Deed
• Whether the Master was entitled to remove the trustees under section 20(2)(e) of the Trust Property Control Act 57 of 1988
• Whether the High Court's order reinstating and then immediately requiring the resignation of the trustees was appropriate
• What process should be followed for appointing new trustees
• Which beneficiaries were entitled to participate in the election of new trustees
• Whether a verification meeting should precede the election of new trustees
• The scope of the court's powers under section 23 of the Trust Property Control Act

1. The appeal was upheld to the extent that the order of the court a quo was replaced. 2. The first to twelfth appellants' term of office as trustees was declared terminated with effect from 26 June 2013, and any subsequent letters of authority issued to them were set aside. 3. The first and second respondents were ordered to convene a general meeting within 60 calendar days to nominate and appoint a new Board of Trustees, with the first, second and third appellants ineligible to stand for election. 4. Only the 603 beneficiaries listed in Annexure A14 were entitled to attend and vote at the general meeting. 5. All parties were to use their best endeavours to advertise the meeting. 6. The appointment of new trustees was to take place in accordance with the Trust Deed. 7. The newly appointed Board of Trustees was to convene a general meeting within 60 days of their appointment to appoint further beneficiaries under clause 5.2 of the Trust Deed, with oversight from the Master and the Department of Rural Development and Land Reform. 8. The appellants were ordered to pay the costs of the appeal.

A trustee's term of office terminates automatically upon expiry of the period specified in the trust deed, and the trustee cannot continue in office thereafter. Once a final court order has been granted declaring the expiry of a trustee's term, the trustee is bound by that order and cannot continue to act as trustee. The Master has the power under section 20(2)(e) of the Trust Property Control Act 57 of 1988 to remove trustees where circumstances warrant such removal. Although section 23 of the Trust Property Control Act confers broad powers on the court to make any order it deems fit when reviewing the Master's decisions, such powers must be exercised on the basis of evidence before the court and within the framework of the trust deed. The court cannot impose procedures for appointing beneficiaries that circumvent or contradict the procedures set out in the trust deed. Trustees have fiduciary duties to beneficiaries and must act in the best interests of the trust and its beneficiaries, including by holding regular meetings, accounting for trust property, and resigning when their term expires.

The Court commented that the Trust under the administration of the appellants had been dysfunctional for more than six years and had not served the needs of the beneficiaries it was created for. The Court noted that the appellants had abdicated their fiduciary responsibilities and that allowing their continued presence in the office of the Trust would perpetuate improper administration and be detrimental to the welfare of beneficiaries. The Court observed that the appellants had rushed to the Master to be re-appointed after being reinstated by the court a quo, despite being aware they were required to immediately resign, and only abandoned this position on the morning of the appeal hearing. While the Court agreed that such conduct warranted censure through a costs order, it declined to impose punitive costs as requested by the respondents. The Court also noted that the respondents' proposal for a verification meeting could not succeed procedurally because they had not filed a counter-appeal, having opposed the appellants' application for leave to appeal without demur.

This case clarifies important principles regarding the administration of community trusts established for land reform purposes. It confirms that: (1) trustees cannot continue in office beyond the term prescribed in the trust deed; (2) a final court order declaring the expiry of trustees' term is binding and must be complied with; (3) the Master has powers under section 20(2)(e) of the Trust Property Control Act to remove trustees; (4) courts have broad powers under section 23 of the Act to grant relief, but must act within the parameters of the trust deed and on the basis of evidence before them; (5) trustees owe fiduciary duties to beneficiaries and must hold regular meetings and account for trust property; (6) the process for appointing beneficiaries must follow the procedures set out in the trust deed rather than court-imposed verification processes; (7) trustees who refuse to comply with court orders and persist with their office beyond their term can be ordered to pay costs. The case is significant in the context of land reform trusts in South Africa, where governance disputes and issues of accountability have been common. It reinforces the need for proper governance and the importance of trustees acting in the interests of beneficiaries rather than entrenching themselves in power.