Litigation is the primary method of dispute resolution in the South African justice system. Essentially, litigation is the institutionalised process adopted by the court system as the method of resolving disputes. The process is characterised by a number of deficiencies, which include the adversarial nature of the process, which often creates further conflict between disputing parties and often results in permanently destroyed relationships. Further shortcomings include the highly complex, costly and time-consuming nature of litigation. Court rolls have become overburdened due to the rapidly increasing volume of litigation at court. This often results in extensive waiting periods before matters are heard at court and further infringes the attainment of access to justice. As a result, alternative dispute resolution (ADR) processes are posed as a viable alternative to the process of litigation.

There are certain areas of law, which make provision for mediation to be used as a mechanism for resolving disputes between the parties. The compulsory practice of mediation within the field of family law is currently affected through statutes found within this area of law. The Mediation in Certain Divorce Matters Act 24 of 1987 is an example of this. This piece of legislation necessitates the compulsory process of mediation. The legislature’s rationale for incorporating the process of mediation into legislation stemmed from the critical problem that family-law legal practitioners in the past often viewed divorce solely as a legal event. One of the main objectives of the Labour Relations Act 66 of 1995 (“LRA”) as explained in the preamble of the LRA, is to ‘provide simple procedures for the resolution of labour disputes through statutory conciliation, mediation and arbitration’ through the Commission for Conciliation, Mediation and Arbitration or through accredited independent ADR services. The central objective of the LRA is promoting healthy industrial relations. South African law also makes provision for the practice and benefits of mediation outside of the abovementioned family and labour areas.

Reality is that most disputes are resolved within a non-legal context by means of informal dispute resolution processes such as negotiation and mediation. Mandatory court-based mediation provides that whenever an appearance to defend is instituted in action proceedings, or a notice of intention to oppose is delivered in application proceedings, the matter must first be referred to mediation in an attempt to settle and resolve the dispute. In the event of the disputants being unable to resolve their dispute or conclude a settlement agreement during the mediation process, the matter is then referred back to the conventional process of litigation to be adjudicated at court, as a defended action or opposed application procedure. The implementation of voluntary court-based mediation may be the answer in settling disputes, which can be resolved without approaching our courts for litigation.

Depending on the nature of your dispute, mediation may assist one in resolving your matter in an amicable manner for both parties, speedily, and in a more cost-effective manner as opposed to dragging your dispute through the lengthy process of litigation, based on the fact that it Is the primary method of resolving disputes.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Reference list:

• Maclons W, Mandatory Court Based Mediation as an Alternative Dispute Resolution Process in the South African Civil Justice System (Unpublished, University of the Western Cape, 2014)
• Faris, JA, An Analysis Of The Theory and Principles Of Alternative Dispute Resolution (University of South Africa 1995)
• The Mediation in Certain Divorce Matters Act 24 of 1987
• The Labour Relations Act 66 of 1995
• Rule 3 of the 2011 Draft Set of Rules. Law Society of South Africa ‘Draft mediation rules’ available at http://www.lssa.org.za/upload/DRAFT%20MEDIATION%20RULES%20APPROVED%20BY%20BOARD%2019%2011.pdf

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This article deals with the questions of who can institute litigation on behalf of a trust, as well as with the question of how jurisdiction is determined with regards to trusts.

Who can institute a claim?

A trust is not a legal person and cannot litigate in its own name. The trustees play a vital role in any litigation in which a trust might be involved. There are three overriding principles regarding trust administration:

1. The trustees are obliged to give effect to the provisions of the trust deed.
2. The trustees must perform their duties with the necessary “care, diligence and skill which can be expected of a person who manages the affairs of another”.
3. Any person acting as a trustee must exercise discretion, where allowed, with the necessary objectivity and independence.

Section 6(1) of the Trust Property Control Act (the Act) determines the following: “any person whose appointment as trustee in terms of a trust instrument, section 7 or a court order comes into force after the commencement of the Act, shall act in that capacity only if authorised in writing by the Master”. In Watt v Sea Plant Products Bpk, Judge Conradie interpreted this section to mean that a trustee may not, prior to authorisation, acquire rights for, or contractually incur liabilities on behalf of the trust”. Thus, a trustee can only contract and institute legal proceedings in his/her capacity as trustee once a letter of authority has been issued by the Master of the High Court.

In Nieuwoudt v Vrystaat Mielies (Edms) Bpk), an agreement was held to be invalid and unenforceable because the trustees had not acted jointly nor reached a unanimous decision. The conclusion to be drawn from this is that trustees must act jointly when entering into contracts or when instituting litigation.

A trustee has a duty to vindicate trust property and to collect due debts. This duty goes hand in hand with the duty to conserve trust property and ensures that the trustee is in control of the property which forms part of the trust fund. A trustee further has locus standi to defend actions instituted against the trustee to ensure that the trust property is conserved.

Should all the trustees be joined in an action to enforce a right of the trust?

Judge Cameron held in the Goolam Ally Family Trust case that all the trustees must be joined in suing and all must be sued. Therefore, all the trustees will be joined in their official capacity when instituting legal proceedings.

In Khabola NO v Ralithabo NO, the court quoted the general rule regarding locus standi as follows: Any person who has a direct or substantial interest in the matter has the required locus standi to institute legal proceedings. The learned judge found that the underlying contractual relationship between trustees could be equated to a partnership.

Jurisdiction:

For jurisdictional purposes, a partnership “resides” at the place where its principal place of business is situated, and if the principle set out in abovementioned case is followed – a trust also “resides” where its principal place of business is situated.

In Bonugli v The Standard Bank of South Africa Limited, the court referred to section 5 of the Act  which determines that a person whose appointment as trustee comes into effect after the commencement of this act, shall furnish the Master with an address for the service upon him of notices and process and shall, in case of change of address, within 14 days notify the Master by registered post of the new address. The cause of action arose in Johannesburg, and one of the defendants (a trustee in his representative capacity) was resident in Australia. The address which was used in the summons was the address given to the Master in terms of section 5 of the Act. A special plea with regards to lack of jurisdiction was raised, but the Cape Town High Court found that it had the necessary jurisdiction to hear the matter.

There are considerable differences between a partnership and a trust, but with regards to jurisdiction the general principles applicable to a partnership can also be applied to a trust – namely considerations of convenience and common sense for its conclusion to entertain a claim. The Cape Town High Court had jurisdiction to hear the Bonugli matter because the first defendant was resident within its jurisdiction, and because the address listed in terms of section 5 of the Act was within the jurisdiction. Considerations of common sense and convenience also required that the court should adjudicate the issue between the plaintiff and all the defendants.  It would have been impractical to institute a claim based on the same set of facts in two different courts, because the trustees were resident in different courts’ jurisdictions.

There remains some uncertainty regarding which court should have jurisdiction to hear a claim instituted by a trust or a claim against a trust. There appears to be three possibilities in this regard: Firstly, if the Bonugli judgment was followed, the residency of one trustee should be sufficient to establish jurisdiction. Secondly, the address provided in terms of Section 5 of the Act could be used to establish jurisdiction. Thirdly, the court where the trust’s principle place of business is situated could have jurisdiction. Hopefully the position regarding which court has jurisdiction to hear claims instituted by a trust or against a trust will be properly aired in the courts soon, to provide more certainty regarding this aspect.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).

References:

• Books:
  • Lexisnexis Trust Law and Practice, P A Olivier, S Strydom, GPJ van den Berg, October 2017
  • Civil Procedure: A Practical Guide, Petè, Hulme, Du Plessis, Palmer, Sibanda, Oxford University Press.

  Acts:

  • Trust Property Control Act 57 of 1988

  Cases:

  • Watt v Sea Plant Products Bpk (1998) 4 All SA 109 (C)
  • Nieuwoudt v Vrystaat Mielies (Edms) Bpk)
  • Goolam Ally Family Trust t/a Textile, Curtaining and Trimming v Textile, Curtaining and Trimming (Pty) Ltd 1989 (4) SA 985 (C) at 988D-E
  • Khabola NO v Ralithabo NO (5512/2010) (2011) ZAFSHC 62 (24 March 2011)
  • Bonugli v The Standard Bank of South Africa Limited 266/2011) (2012) ZASCA 48 (30 March 2012)

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Having received a number of matters that ended up in costly litigation we have decided to point out certain risks to dog owners regarding how liability arises and how to manage such risks and protect oneself against potential liabilities.

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