Choose your trustees well to avoid drama
HOW EASY IS it (or not) to remove a trustee? Trustees are the guardians of the trust assets and have a duty to manage these assets in the best interests of the beneficiaries, as outlined in the trust deed. Choosing a trustee, without anticipating various negative outcomes, who may become problematic later, may cost you dearly. may include the removal of a trustee, as approved by the majority of trustees. This clause does not seem to give the protection, as many people are hoping.
A recent case dealt with the issue whether a majority of trustees can remove another trustee from his/her office as trustee. A number of lessons can be learnt from the Trustees of the Ritom Trust versus Van Niekerk case, which was heard as recently as May 2018. In this case, three professional trustees, consisting of two auditors and a lawyer, wanted to remove the mother of the only beneficiary of the trust, as trustee. It appears if the beneficiary’s father, who is neither the founder, nor a trustee of the trust, influenced the other trustees to get rid of the mother, as trustee.
The following lessons are learnt: Even though a trust deed may contain a clause, empowering trustees to remove another trustee by majority vote, it is not sufficient to, without reason, enforce this clause. Trustees have to act reasonably and exercise reasonable care, to remove another. The removal of a trustee without good reason is against public policy and the principles of ubuntu, reasonableness and fairness.
The mere conflict between trustees and beneficiaries, or among trustees, is insufficient for the removal of a trustee. Removal of a trustee will be ordered if the trustee’s continuance in office will prevent the trust being properly administered or will be detrimental to the welfare of the beneficiaries. The overriding question is always whether or not the conduct of the trustee imperils the trust property or its proper administration (Gowar case of 2016). If a trustee is requested by others to resign, he/ she shall vacate his/her office only in the event of an acceptance of request by him/ her; otherwise not.
Although the removal of a trustee on the happening of a certain event is allowed (Osman v Jhavari case of 1939), the decision of a majority of trustees to remove another is not seen as “an event”. “An event” cannot be a majority decision by trustees to cause the vacation from office by a trustee against his/her will and/or without good cause, whether by way of a request to resign, or otherwise.
Proper procedure should be followed to remove a trustee, such as a properly constituted trustees’ meeting and upon proper notice of the trustees’ intention.
Even if the master or a court removes a trustee as described above, he/she should have a right to challenge the decision in a court. The removal of a trustee, which may have the result that the whole purpose of the trust deed is undermined – to ensure that the interests of the beneficiaries are properly taken care of – will not be allowed.
In terms of Section 10 of the Constitution, everyone, including a trustee, has the right to have their dignity respected and protected. It is therefore difficult for “outsiders” to “dump” a trustee who is acting in the interest of the beneficiaries.
In terms of Section 34 of the Constitution, everyone has a right to have any dispute, that can be resolved by the application of law, to be decided in a fair public hearing before a court.