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K O Investment Trust and Another v Appleton Securities (Pty) Ltd (59/256/03) [2007] ZAGPHC 28 (17 April 2007)

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IN THE HIGH COURT OF SOUTH AFRICA

TRANSVAAL PROVINCIAL DIVISION

NOT REPORTABLE CASE NO: 25659/03

DATE: 17/4/2007

n the matter between:

K 0 INVESTMENT TRUST First plaintiff

DR SULIMAN OMAR TAYOB Second plaintiff

Third plaintiff

Fourth plaintiff

and

APPLETON SECURITIES (PTY) L TD

Defendant

JUDGMENT

JOOSTE, AJ:

BACKGROUND:

[ 1 ]

The plaintiff is a trust namely K 0 INVESTMENT TRUST. This action

was instituted by the first, second and third plaintiffs on behalf of the

trust in their capacity as trustees.

The trust has always had four

trustees and the fourth plaintiff was joined as a party to the

proceedings at the hearing of the matter.

In paragraph 1 of the

particulars of claim the identity of the plaintiffs is set out and it is

averred that they are cited herein in their capacities as trustees of K.O.

Investment Trust ("the Trust").

These averments are denied by the

defendant and the plaintiffs are put to the proof thereof in the

defendant's plea. Consequently the locus standi of the plaintiffs had

to be proven by way of evidence.

[2]

The second plaintiff, DR SULIMAN OMAR TAYOB ("Dr Tayob")

testified at the outset on behalf of the plaintiffs. The Trust is one of

the business units which the Tayob family utilises for the conduct of

what Dr Tayob describes in his evidence as "family business". This

business comprises several investment vehicles which are active inter

alia in property investments, as well as security investments.

The

defendant conducted two such accounts for vehicles in the "family

business" namely the one in the name of the Trust and the other in

the name of Punenz Investments CC. In May 2002 the trust and the

defendant came to be in dispute regarding the account conducted in

the name of the Trust. A letter of demand was sent by Dr Tayob and

in a subsequent letter the defendant confirmed that the parties were in

dispute regarding the account.

[3]

The present action was instituted in September 2003.

The plaintiffs

rely on the validity of a certain resolution (page 41, bundle A). This

document reads as follows:

"Extract from the minutes of a meeting of the trustees of K O

Investment Trust held at Mokopane on 5 July 2002:

Resolved:

That the Trust institute legal action in the High Court of South

Africa (Transvaal Provincial Division) against Appleton Securities

(Pty) Ltd for recovery of losses suffered by the Trust.

That Suliman Omar Tayob in his capacity as Trustee of the

Trust be and is hereby authorised and entitled to take all action

and sign all documentation required to give effect to this

resolution.

That the said Suliman Omar Tayob be and is hereby authorised

and entitled to appoint and instruct an Attorney and Counsel on

behalf of the Trust for all purposes relating to the said action".

[4]

In his evidence Dr Tayob confirmed the plaintiffs' reliance on this

document for the institution of the action. As will become clear later,

it is necessary to deal to a relatively full extent with the evidence of Dr

Tayob in this regard.

[5]

At the outset Dr Tayob was referred to clause 9.1 of the Trust Deed

(page 583, bundle D) that reads as follows:

"9.

DECISIONS OF THE TRUSTEES:

9.2

All decisions of the TRUSTEES shall -

9.2.1 If there are more than two TRUSTEES, by way of

majority vote;

When asked whether the business of the Trust was conducted in such

a fashion, the witness answered: "Yes, I have or we have".

[6]

Dr Tayob was also referred to the provisions of clauses 10.10 and

10.11 of the Trust Deed (bundle D, pp 585 to 586) which deals with

the powers of the trustees and which reads respectively as follows:

"to sue for, recover and receive all debts or sums of money, goods,

effects and things whatsoever which may become due, owing,

payable or belonging to the Trust; and

to defend, oppose, adjust, settle, compromise or submit to arbitration

all accounts, debts, claims, demands, disputes, legal proceedings and

matters which may subsist or arise between the Trust and any

persons, company, corporation or body whatsoever, or for the purpose

aforesaid to do and execute all necessary acts and documents;"

Again Dr Tayob confirmed that "we have" normally acted in

accordance with these provisions and also did so in the present action.

[7]

With reference to the resolution referred to above, the testimony reads

as follows:

"Q:

That is an extract of the minutes of a meeting of the trustees of

the Trust held at Makopane on 5 July 2002.

That is the

heading of the document. Was such a meeting held?

It was held.

And who were the trustees present?

The three trustees that were present was my father, Omar Moosa Tayob, myself and my bother (Inaudible) Tayob".

He confirmed that what was resolved at that meeting was the quoted

resolution which he repeated in his evidence and also confirmed that

he is acting in that capacity.

[8]

In cross-examination Dr Tayob was referred to the plaintiffs'

particulars for trial (paragraph 45) where they advised that at all

material times four trustees were appointed for the trust and that they

inadvertently failed to refer to the fourth trustee in the particulars of

claim, i.e. Culsen Tayob, a major woman.

The witness was also

referred to a supplementary discovery affidavit that was deposed to

on 26 April 2005 wherein the trust deed was discovered. He stated

that he presumed that someone called for the trust deed and when he

looked at the trust deed he was reminded that Culsen Tayob was a

trustee.

[9]

The relevant cross-examination pertaining to this aspect reads as

follows:

"Q:

The explanation for not having the need to join her was simply that it escaped your attention, am I right?

That is correct.

And it escaped your attention right up until the events in April 2005 when the trust deed was located and you were reminded that she was a plaintiff?

That is correct.

You have not discussed it with her before that?

No. Can you repeat that? I had not discussed?

You had not discussed this litigation with her as a trustee before that?

No, she was aware of the litigation, we just did not record her.

Yes, but she was aware (inaudible) because she is a family member. You did not consult her as a trustee.

Well, I consulted everybody, with respect.

Well, there is a resolution upon which you rely Dr Tayob the trustee's resolution, as I understood the evidence yesterday

from my learned friend, he directed us to a trustee resolution and pointed out that there were three of you present and all

three of you have voted in favour of the institution of the litigation.

That is correct.

And upon that you rely for locus standi.

That is correct.

And upon no other act by the trustees do you rely for the locus standi.

Well, my mother was aware of the litigation.

Why do you say that?

Because we were all at my father's house on {sic} the table.

Very different Dr Tayob, being aware and being consulted as a

trustee. At no stage did you consult her as a trustee.

She was aware and she consented it.

Why did you ask her to consent?

She was there, we made family decisions.

Was she making a decision as a family member or a trustee?

I am not sure.

Kilsim Tayob was not at the meeting on 5 July 2002 was she?

The meeting was held at my father's house. She was present. She did not sign the document.

Where was the meeting?

At my father's house.

Where?

In the dining room.

She did not participate because everyone lost sight of the fact that she was a trustee, is it not so?

The issue on the table was, I explained the situation that arose and that we needed to institute legal action and everybody

consented to it.

She did not sign the minute because everyone lost sight of the fact that she was a trustee?

She did not sign the minute, that is correct.

So, on behalf of the trust you and your father and your brother took a resolution?

We signed the minute, yes.

Believing that you were the only three trustees and believing that you were the only three people whose consent was

necessary in order to take a valid resolution?

That is correct. "

[10]

[11]

In re-examination Dr Tayob again stated that the meeting took place at

his parents' house with his mother also present.

He also confirmed

that the meeting took place on 5 July 2002 referring to page 41 of

bundle A. He furthermore stated that items 1, 2 and 3 of the extract

on page 41 was discussed at that meeting where his mother was

present and that she did not object to any of the issues raised. The

document on page 41 of bundle A (the extract), was not created the

same day but was created subsequently and also signed subsequently.

11.1 From Dr Tayob's evidence in chief it appears that the resolution

was taken at a meeting of trustees held on 5 July 2002 and

that only himself, his father and his brother were present at the

meeting. Furthermore that in passing the resolution, the three

trustees present acted in terms of clause 9.2.1 of the trust deed

being by way of a majority vote. There is no evidence of the

minutes of a meeting held at his father's home and such a

document was not discovered.

11.2 In cross-examination for the first time the meeting at his

father's home came to the fore and only after Dr Tayob

conceded that up to April 2005 it escaped his attention that

there was a need to join the fourth plaintiff.

Only after

[12]

originally conceding that he did not discuss the issue with the

fourth plaintiff before, the statement is made that she was

aware of the litigation and the meeting at his father's house

then developed.

11.3 Re-examination was simply an embroidering on the meeting at

his father's house and for the first time then the evidence

comes to the fore that the resolution signed by the three

trustees were in fact drawn up and signed only days after the

meeting at his father's house.

12.1 Dr Tayob impressed me as a very intelligent and clever person.

The impression is that he realised in cross-examination the

problem of only relying on the meeting attended by himself and

his father and his brother and that the family meeting was only

then mentioned.

Dr Tayob, as pointed out, conceded that at

the time neither he nor any other of the family members were

mindful of the fact that the fourth plaintiff was a trustee of the

trust.

12.2 Mr Kirk-Cohen, SC, on behalf of the defendant argued that even

on the basis that the family meeting indeed took place with the

[13]

purpose as the evidence of Dr Tayob suggests, it cannot be

contended that such a meeting around a dinner table constitutes

a resolution by the trust.

It was namely an informal meeting

which planned the road ahead and not a formal resolution.

There is no evidence that any of the trustees regarded this as a

meeting at which binding decisions were taken.

The fourth

defendant on Dr Tayob's evidence was not cognisant of her roll

as trustee and was accordingly not mindful of her different

capacities and not considering the issue being debated qua

trustee.

It cannot, according to the argument, in these

circumstances be said that the fourth plaintiff ever exercised a

"qua trustee".

On Dr Tayob's evidence only it might be questioned whether the

family meeting in fact took place and dealt with the issues at hand.

For instance if this was indeed the case, the question arises why his

evidence in chief was not presented on that factual basis and why it

was necessary to rely on the majority vote clause. The impression is

that that was done because only three trustees were present at the

meeting on 5 July 2002.

I am however of the view that

notwithstanding this his evidence is not of such a contradictory nature

that it can be considered as false.

On the same basis a finding, as

[14]

[15]

contended for by Mr Kirk-Cohen, that the meeting around the dinner

table did not constitute a resolution by the trust cannot be made.

Further evidence as to exactly transpired at the meeting can still be

presented.

For the present purposes it can therefore be accepted that the

resolution as evidenced by the extract was taken at the family

meeting.

It is therefore unnecessary to deal with the argument that,

on the basis that the only meeting that in fact took place on 5 July

2002 was the one attended by only three trustees, the resolution

taken at such a meeting is a nullity as the trust deed contains no

variation on the residual common law situation that trustees are

required to act jointly and that anything which flow from it, including

the institution of the action, is also a nullity, incapable of ratification.

The trust deed makes no provision specifically permitting a delegation

of powers, but there is also nothing prohibiting it.

Mr Kirk-Cohen

argued that in the absence of a clause permitting a delegation of

powers, such a delegation is not possible.

Mr Du Plessis, SC who

appeared for the plaintiffs, conversely argued that where there is

nothing in the trust deed prohibiting a delegation of powers it can

[16]

validly be done. He referred to various authorities to substantiate his

argument.

16.1 Firstly he referred to Honore's: South African Law of Trusts,

Cameron et al, 5th edition, pages 326 to 329 where the authors

deal with the question of delegation of powers versus

abdication. A delegation is not improper so long as it amounts

to a delegation in the sense of the appointment of another for

whose acts one will be responsible, to act on one's behalf, and

not an abdication in the sense of the appointment of another to

act instead of oneself, so as to relief oneself of the

responsibility.

On this basis the authors point out that two

trustees may thus validly decide to delegate the conduct of

litigation concerning the trust to one of them, reliance being

placed on Rosner v Lydia Swanepoel Trust 1998 (2) SA 123

(WLD) at 126.

Clearly the instant case is not a case of

abdication of powers.

16.2 Mr Du Plessis also referred to Coetzee v Peet Smith Trust &

Andere 2003 (5) SA 674 (T) at 680I where Van Dijkhorst, J

said the following:

[17]

"Die reel dat besluite gesamentlik eenparig moet wees,

verhinder nie die trustees om op die wyse sekere funksies te

delegeer aan bepaalde trustees of buitestaanders nie. Dit

geskied egter met behoud van uiteindelike verantwoordelikheid

en die verpligting tot behoorlike toesig. "

16.3 Also to Goolam Ally Family Trust v Textile, Curtaining and

Trimming1989 (4) SA 985 (CPD) where Kuhn, AJ stated the

following at 988D:

"The general rule is that joint trustees must act jointly. Generally speaking a joint trustee may delegate his duties to a

co-trustee or to any other agent but the power to do so depends on the provisions of the trust deed - in this case the

deed of donation.

If it is prohibited it cannot be done (cf

Edenburg v Mercantile Credit (pvt) Limited 1980 (1) SA 744 (ZR); Smit v Van der Werke N.O. & Andere 1984 (1) SA 164 (T). "

On the authorities above, it is obvious that unless a delegation of

powers is prohibited by the trust deed, it can validly be done in law. It

follows therefore that the resolution authorising Dr Tayob to institute

the action is a proper delegation of powers not prohibited by the trust

deed.

[18]

I therefore find that the plaintiffs have proven their locus standi in the

present action.

[19]

As far as costs are concerned, the matter stood down to enable

counsel to prepare argument on the issue at hand.

Argument was

presented on 17 October 2006 which continued after the lunch break.

The plaintiffs being successful on the issue of locus standi,

I am

therefore of the view that the defendant should pay the costs of the

day spent on argument.

[20]

The following order is made:

20.1 It is declared that the plaintiffs have the necessary locus standi

to have brought and to continue with the action;

20.2 The defendant is ordered to pay the costs of 17 October 2006.

F J JOOSTE

ACTING JUDGE OF THE HIGH COURT OF PRETORIA

Counsel for plaintiff: Instructed by:

R du Plessis, SC

Marius Botha Incorporated

c/o Du Plessis Eksteen Incorporated, Pretoria

Counsel for defendant: Instructed by:

S C Kirk-Cohen, SC

Hofmeyr Herbstein & Gihbala Inc

c/o Friedland Hart Incorporated, Pretoria