THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

JUDGMENT

Not Reportable
Case No: 1158/2019

In the matter between:

HAITAS KONSTANTINOS
APPELLANT
and
FRONEMAN GABRIEL FRANCOIS VAN LINGEN
FIRST RESPONDENT
HAITAS MARIA ELPIS
SECOND RESPONDENT
FWC ESTATE & RELATED SERVICES (PTY) LTD
THIRD RESPONDENT
BRAND KITCHEN HOSPITALITY (PTY) LTD
FOURTHRESPONDENT
MEZEPOLI HOLDINGS (PTY) LTD
FIFTH RESPONDENT
MEZEPOLI CAMPS BAY (PTY) LTD
SIXTH RESPONDENT
MEZEPOLI MELROSE ARCH (PTY) LTD
SEVENTH RESPONDENT
MEZEPOLI NICOLWAY (PTY) LTD
EIGHTH RESPONDENT
PLAKA HOLDINGS (PTY) LTD
NINTH RESPONDENT
PLAKA MENLYN (PTY) LTD
TENTH RESPONDENT
PLAKA NORTHCLIFF RESTAURANT (PTY) LTD
ELEVENTH RESPONDENT
MERCHANT PROPERTY INVESTMENTS (PTY) LTD
TWELFTH RESPONDENT
THE COMPANIES AND INTELLECTUAL PROPERTY
COMMISSION
THIRTEENTH RESPONDENT
THE MASTER OF THE HIGH COURT OF SOUTH
AFRICA, GAUTENG DIVISION, PRETORIA
FOURTEENTH RESPONDENT

Neutral citation:
Haitas v Gabriel Francois Van Lingen Froneman and Others
(1158/2019) [2021] ZASCA 01 (06 January 2021)
Coram:
PETSE DP, ZONDI, VAN DER MERWE and NICHOLLS JJA and
UNTERHALTER AJA
Heard:

06 November 2020
Delivered:

This judgment was handed down electronically by circulation to the
parties’ legal representatives by email. It has been published on the Supreme Court of
Appeal website and released to SAFLII. The date and time for hand-down is deemed to
be 15h00 on 06 January 2021.

Summary: Trust Law - s 20(1) of Trust Property Control Act 57 of 1988 (the Act) - whether
the conduct of the trustees justifies their removal in terms of s 20(1) of the Act,
alternatively the common law - whether a breakdown of the relationship between a
beneficiary and the trustees justifies the removal of the trustees from office.

______________________________________________________________________
ORDER
______________________________________________________________________

On appeal from: Gauteng Division of the High Court, Johannesburg (Matojane J sitting
as court of first instance):

The appeal is dismissed with no order as to costs.
______________________________________________________________________
JUDGMENT
______________________________________________________________________

Nicholls JA (Petse DP, Zondi and van der Merwe JJA and Unterhalter AJA
concurring):
[1] When wealthy businessman, Evangelos Haitas (the deceased) died on 21 October
2018, a family feud broke out over the control of the restaurant businesses that he had
built up during his lifetime. The appellant, Mr Konstantinos Haitas, is the deceased’s son
and sole surviving heir. He is also the only income and capital beneficiary of an inter vivos
trust, the Kam Trust (the Trust), established by his late father in 2007, and the vehicle
through which the restaurant businesses are owned. While he was alive the deceased
was the fulcrum of the businesses. His two co-trustees played little role, with effective
control in the hands of the deceased. His death has resulted in suspicion and hostility
between the appellant and the remaining two trustees.

[2] The first and second respondents, respectively Mr Gabriel Froneman and Ms
Maria Elpida Haitas, are the surviving trustees appointed by the deceased in December
2013. Mr Froneman is a chartered accountant employed as such at Middel & Partners
Incorporated. He is the representative of FWC Estate & Related Services (Pty) Ltd (FWC),
the third respondent. Ms Haitas is the deceased’s sister, the appellant’s aunt, and resides
in Greece. The fourth to twelfth respondents are private companies owned by the Trust
(the trust companies), and no relief is sought against them. The shares held by the Trust

in the trust companies constitute its principal assets. The Trust owns the majority of the
shares or all issued shares in the trust companies. They, in turn, own four restaurants
situated in Melrose Arch, Nicolway, Menlyn Park and Eastgate and two franchise
operations, under the Plaka and Mezepoli brands, which earn license fees. Merchant
Property Investment (Pty) Ltd holds the various properties owned by the Trust. The head
office, from which the businesses are managed and operated, is Brand Kitchen Hospitality
(Pty) Ltd (Brand Kitchen). It is the fourth respondent. The thirteenth and fourteenth
respondents are the Companies and Intellectual Property Commission and Master of the
High Court, respectively, who took no part in these proceedings.

[3] The appeal has its genesis in an urgent application in the Gauteng Division of the
High Court, Johannesburg (the high court) launched by the appellant on 16 April 2019
when he was 19 years old. The main relief sought was the removal of Mr Froneman and
Ms Haitas as trustees, and for the Master to urgently appoint two more trustees, one of
whom should be an independent trustee. This Court was urged, in the alternative, to
appoint two additional independent trustees to break any deadlock that might arise in the
running of the Trust. The appellant also sought to declare the appointment of Mr
Froneman and Ms Haitas as directors of the trust companies void ab initio. Further,
ancillary relief was sought that the trustees produce the financial statements of the Trust
and all the trust companies; that they meet urgently with the appellant regarding trust
matters and that he be permitted to have legal representation at such meeting. Finally,
the appellant seeks an order that Mr Froneman and Ms Haitas pay the costs of the
application in their personal capacities.

[4] The high court (Matojane J) dismissed the application and made no order as to
costs. It held that although the trustees did not function optimally in all respects, there
was no necessity to remove them and no reason to believe that they would be guilty of
any future misconduct or would endanger the assets of the Trust. Leave to appeal was
granted to this Court by the high court.

[5] To understand the family dynamics, it is necessary to set out the dramatis
personae. First and foremost is the appellant himself. As the sole heir and beneficiary, he
is apparently keen to maintain a certain lifestyle. The obstacle he faces is that the trust
property vests in him only when he turns 23 years old. In addition, in terms of the
deceased’s Will any inheritance will be retained in a testamentary trust and only accrue
to him once he turns 25 years old, if he is in possession of a university degree. If not, then
a third will accrue to him at the age of 25 and the balance when he reaches 30 years of
age1. The Will makes provision for the appellant to succeed the deceased as a trustee of
the Kam Trust on reaching the age of majority.2

[6] At the time of his father’s death the appellant had commenced his studies at the
University of Amsterdam in the Netherlands. These were abandoned soon after the death,
ostensibly to attend to trust matters and to his father’s estate. His expenses while abroad
were shared equally by his mother and father. His current complaint is that he is receiving
no maintenance from the Trust. The trustees have only paid him € 878.82 when he was
still in Amsterdam; a further R2 000 on his return; and an amount of R5 645.00 in
repayment of monies paid by his stepfather for medical expenses.

[7] A central character, and according to the trustees the driving force behind the
appellant’s actions, is his mother and the former wife of the deceased, Ms Margarita
Tsangaris-Scherf. During the subsistence of the marriage she was integrally involved with
growing and running the businesses. The marriage ended in an acrimonious divorce. She
was one of the original trustees and a capital beneficiary. Her resignation as a trustee
was one of the terms of the divorce settlement. She has since remarried Mr Sandro Scherf
who evidently also plays a supportive role in the appellant’s life.

[8] Ms Sofia Lorena Lanuza Batista is a Panamanian national and had been the
deceased’s romantic partner since 2013. She is the target of much of the appellant’s
anger and resentment. Ms Batista is a businesswoman in her own right who, on the urging

1 Clause 5.2 of the Will.
2 Clause 5.3 of the Will.

of the deceased, left her employment at Bidvest to become a consultant to the trust
companies. She co-habited with the deceased and was sharing a house with him at the
time of his death. The appellant accuses the trustees of making various unauthorised and
unlawful payments on behalf of Ms Batista into a Panamanian bank account which he
alleges contravened exchange control regulations, and amounts to money laundering.
She is not a beneficiary of the Trust or an heir to the deceased’s Will. Nor is she a party
to these proceedings.

[9] Mr Mohsen Abdullah, also known as Manal, is a 10% shareholder in Brand
Kitchen, which manages and operates the businesses. Mr Abdullah worked for the
deceased for 12 years prior to his death and was the operations manager of the
businesses at the time of the death. He has experience in the restaurant industry and has
expressed concern for the future of the businesses. Mr Abdullah was aggrieved when the
trustees overlooked him for the position as general manager and, instead, appointed Ms
Batista. He has a close relationship with the owners of one of the Plaka franchisees,
trading as Mastika Tree. They, with the support of Mr Abdullah, sought substantially to
reduce their royalties after the deceased’s death. No royalties at all have been paid since
November 2018 and as a result the trustees accuse Mr Abdullah of acting against the
interests of the trust. He has made common cause with the appellant and his mother in
trying to remove the trustees from office and brought to light what he perceived to be
irregular payments made to Ms Batista. Mr Abdullah described the deceased as being
the ‘heart and soul’ of the business whose personal relationships with franchisees,
landlords, staff and supplier was an integral part of the businesses’ success.

[10] Ms Otilia De Sousa is an attorney who represented the deceased in his divorce
proceedings against Ms Tsangaris-Scherf. She has been appointed executrix of the
deceased’s estate. She, too, is accused of attempting to sideline the appellant and
deprive him of vital information.

[11] According to Mr Froneman and Ms De Sousa the deceased, while he was ill,
warned them that his son was immature and would be unduly influenced by his mother.

This was a situation he wanted them to guard against at all costs. The undertaking they
made to the deceased in this regard has inevitably informed most of their actions and has
in turn infuriated the appellant and his mother. Their attempts to prevent Ms Tsangaris-
Scherf from playing a role in the businesses has undoubtedly contributed to a pervasive
mistrust between the trustees and Ms De Sousa on the one hand and the appellant and
his mother on the other.

[12] The day after the death of the deceased, a meeting was convened at the joint
residence by Ms Batista. Staff salaries and rentals had to be paid in a few days at the end
of the month. At the meeting, it was decided that Mr Froneman should be appointed as a
director of the trust companies. The meeting was attended by the companies’ banker and
lawyer who advised that this was the quickest way to gain access to the bank accounts
for the purposes of paying necessary expenses. Mr Froneman was duly appointed on 23
October 2018.

[13] On 1 November 2018, Ms Haitas was appointed as a director of the trust
companies, the day before the deceased’s funeral was held in Greece. The day after the
funeral, she read the Will to the appellant and his mother, and provided them with a copy
of the Trust Deed. It turned out that this was an outdated Trust Deed which led to further
suspicion.

[14] On 9 November 2018, the appellant received a copy of the acceptance of
trusteeship form to be completed in order to accept his appointment as a trustee of the
Kam Trust. The appellant also wrote to Mr Froneman demanding access to financial
information about the trust companies; the deceased’s life insurance policies and
confirmation that the Trust would continue to cover half his living expenses in Amsterdam.
He stated: “most importantly, I would like to inform all concerned that my mom will be
involved in all matters, on my behalf, she has my power of attorney, signing power and is
my most trusted advisor. . . ” It appears that from then on relations deteriorated rapidly.

[15] Ms Tsangaris-Scherf started sending emails to Mr Froneman, as did the
appellant’s current attorneys, all demanding documents and financial information. The
appellant requested to meet with the trustees and Ms De Sousa but insisted that this be
in the presence of his advisors, his attorney or his stepfather. The trustees indicated that
any meeting would only take place directly with the appellant. A stalemate was reached.
In November 2018, the question of whether the trust was quorate was raised, an issue
which will be dealt with later.

[16] On 27 November 2018, the appellant returned from the Netherlands. On his return,
he wanted to visit the house his father lived in, and shared with Ms Batista, because he
wanted to spend some time in his father’s room. He also requested the use of his father’s
Pajero motor vehicle and the keys to a property on the Vaal River owned by one of the
trust companies. The request was denied by his aunt, Ms Haitas, who also refused access
to the house, saying that this was a matter that should be taken up with Ms Batista as the
house was also her home. This further strained relations.

[17] On 16 April 2019, the appellant launched the present application for the trustees’
removal. The appellant received his letters of executorship on 19 May 2019. No meeting
of the trustees could be held as Mr Froneman and Ms Haitas insisted that the appellant
could not have his advisors present. However, on 20 May 2018, he was given access to
various financial documentation relating to payments made by the trust companies,
including those to Ms Baptista. The financial statements provided to the appellant were
the un-audited financial statements for the trust companies from 2009 to 28 February
2017. The financial statements for 2010 were missing.

[18] Before dealing with the appellant’s complaints against the trustees, two preliminary
points must be referenced. The first was that the amended Trust Deed is ‘suspicious’ and
possibly fraudulent. It differed from the original Trust Deed in various respects, including
that the appellant had to wait until the age of 23 before he would become a capital
beneficiary of the trust property. The sole reason for the suspicion was that the Trust
Deed was signed on 23 May 2018 at Melrose Arch when in fact the deceased was in

Greece at the time. It was not signed by all the trustees on the same day and before all
the witnesses. However, there is no dispute that the amended Trust Deed was signed by
all the trustees, including the deceased. Ms Tsangaris-Scherf’s attempt to cast doubt on
the Trust Deed was not pursued before this Court and requires no further consideration.

[19] The second issue was that the Trust was inquorate after the deceased’s death
when Mr Froneman and Ms Haitas were trustees. Clause 5.2 of the Trust Deed states
that at all times there shall be a minimum of 3 and a maximum of 5 trustees. It goes on to
deal with the situation where a trustee resigns or dies in the following manner:
‘Provided that if there is only one trustee . . . the remaining trustee will be authorised to exercise
all the powers of trustees for the maintenance and administration of the trust fund until such time
as another trustee has been appointed, which appointment the trustee so in office shall make
within NINETY (90) days of the resignation or death of his co-trustee.’

[20] The thrust of the argument was that as there were two trustees, and not only one
trustee, remaining after the death of the deceased, the provisions of clause 5.2 would not
be applicable. Any other interpretation, so it was contended, would render the
requirement of a minimum number of trustees entirely obsolete and counter to this Court’s
decision in Land and Agricultural Bank of South Africa v Parker and others3. In that case
the difficulty was that there was a sub-minimum number of trustees. It was held that a
provision requiring a minimum number of trustees to hold office is a capacity-defining
condition, unless the Trust Deed provides otherwise. If fewer than the required number
of trustees hold office, a trust does not have the capacity to take any action. These facts
are distinguishable from the current matter where the contention is that there are too
many trustees for the relevant clause to have application. In my view clause 5.2 cannot
have the meaning contended for by the appellant. It cannot be seriously suggested that
after the death or resignation of a fellow trustee, one trustee can exercise all the powers
to administer the Trust but not two – that would be a manifest absurdity.4 Interpreted

3 Land and Agricultural Bank of South Africa v Parker and Others 2005 (2) SA 77 (SCA).
4 Natal Joint Municipal Pension Fund v Emdumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262
(SCA); 2012 (4) SA 593 (SCA); 2012 4 SA 593 (SCA) and the later cases of this Court enjoin courts to
interpret contracts in a commercially sensible and business-like manner, having regard to their language,
context and purpose in what is a unitary exercise.

sensibly, the proviso in Clause 5.2 means that provided there is at least one trustee, the
remaining trustee or trustees will be authorised to exercise all the powers of the trustees.
So understood, Clause 5.2 regulates the position when there remain either one or two
trustees.

[21] Aligned to the above is the contention that the appointment of Mr Froneman and
Ms Haitas as directors of the trust companies was void ab initio. Relying again on Land
and Agricultural Bank it is argued that that when the minimum number of trustees do not
hold office the remaining trustees have a duty to appoint a further trustee. Because of the
delay in appointing the appellant as the third trustee, the two trustees did not have the
requisite capacity to appoint themselves as the directors without the appellant’s
authorisation. In the absence of this, Mr Froneman and Ms Haitas could not exercise the
rights attached to the shares in the trust companies to appoint themselves as directors.
They did not act jointly as trustees and therefore their appointment is void ab initio.

[22] Having found that clause 5.2 of the Trust Deed, properly interpreted, must mean
that two trustees were within their rights and competent to attend to the administration of
the Trust, it follows that this argument is equally unmeritorious and must suffer the same
fate. It was contended that even if it is accepted that clause 5.2 is capable of being
interpreted as applying to two trustees, their authority would be limited to the most
essential aspects for maintaining the Trust, and not to usurp the powers to control the
trust companies. This is precisely why the appointment of a director of the trust companies
was urgently required - for ‘the maintenance and administration of the trust fund’. It would
have been detrimental to the trust companies to have delayed the payment of staff
salaries and rentals until the appellant had received his letters of authority.

[23] I revert now to the crux of the appeal. Essentially, there are three broad categories
of complaints that the appellant contends justify the removal of the trustees. These are
the lack of disclosure and transparency in regard to the financial documents of the Trust
and the trust companies; the trustees’ refusal to maintain the appellant; and the payments
made to Ms Batista;

[24] The appellant argues that instead of openness and transparency, Mr Froneman
and Ms Haitas have shown a reluctance to disclose the financial records of the Trust and
trust companies. Clause 15.1 of the Trust Deed expressly provides that the trustees shall
keep a proper set of books recording the financial affairs of the Trust. In addition, ‘financial
statements will be prepared and will be subject to annual audit. Every beneficiary of the trust shall
on request be entitled to a copy of the financial audited statements of the trust.’ On 20 May 2019
the trustees furnished the appellant with the audited statements from 2009 – 2016 with
the exception of the 2010 financial statements. That, in this regard, they were remiss in
their duties as trustees is common ground.

[25] One of the appellant’s greatest grievance is the trustees’ unwillingness to allow
him to benefit from any trust monies. In February 2019, in response to a request from the
appellant, Mr Froneman sent an email expressing his regret that the appellant had
terminated his studies in Amsterdam as a good education was his father’s greatest wish
for him. Mr Froneman pointed out that the deceased’s personal bank accounts were
frozen and until the appellant turned 23 years old he was not entitled to a distribution from
the Trust. Their fiduciary duties as trustees, stated Mr Froneman, was to ensure ‘that
capital and income is preserved.’ The latter statement was not strictly correct, as the Trust
Deed afforded the trustees a wide discretion as to the allocation and distribution of trust
income.5 Nonetheless, the trustees remained trenchant in their refusal to make payment
of any trust monies to the appellant. They persisted with the view that should he require
maintenance he should make an application to the Trust which they would consider.

5 Clause 11 of the Trust Deed provides that:
‘Employment of Income
The trust is a discretionary trust as far as the employment, allocation and distribution of trust income is
concerned, and the trustees may in their absolute discretion, by way of a proper resolution passed by them,
allocate income to any beneficiary who may qualify as an income beneficiary, and in particular they are
entitled to:
11.1 pay all costs incurred by the trustees in connection with the administration of the trust;
11.2 pay such amounts to any beneficiary as the trustees may deem reasonable and desirable for the
maintenance, education and general welfare of such beneficiary’.

[26] While refusing to give the appellant any monies, the trustees made payments in
the approximate sum of R600 000 to Ms Batista, which the appellant considered unduly
generous and favoured Ms Batista over the appellant. In addition, the trustees approved
payments of foreign exchange to Ms Batista which, it is contended, were unlawful. Two
invoices in the ZAR amount of R61 528.52 and R61 350.75 were issued by Elango Implex
Inc, based in Panama, for ‘consulting fees’ and ‘market research in the Region’ on behalf
of Ms Batista. Mezepoli Holdings and Plaka Holdings made the application for the foreign
exchange payments in January 2019 and, a few days later, on 25 January 2019 Mr
Froneman authorised the payments.

[27] Mr Froneman’s justification was that it was legal and permissible for Ms Baptista
to have her consulting fees paid through this entity. Because of the administration
involved, he later advised her to invoice her services through a local company in future.
This she did through Tailor Webs (Pty) Ltd (Tailor Webs). Mr Froneman, on behalf of
Brand Kitchens, signed an agreement in terms of which Tailor Webs would get paid
R80 000 per month for consultancy fees and a further R15 000 for property management.
It is not disputed that Ms Batista did the work, although the appellant queries whether she
should have been paid this much. The appellant’s complaint is that because Ms Batista
did not invoice the trust companies in her personal capacity, this resulted in a loss of
R12 000 in respect of value added tax which would not otherwise have been payable and
that the illegal foreign exchange payments imperilled the Trust. Further, that the conflict
over Ms Baptista’s payments was a stark illustration of the conflict that arose from Mr
Froneman and Ms Haitas having appointed themselves as directors of the trust
companies.

[28] It is common cause that when Ms Batista entered into an intimate relationship with
the deceased, he persuaded her to leave her job with Bidvest and work as a consultant
for the trust companies. On the appellant’s own version she was responsible ‘for
overseeing work done by three outsourced personnel, being a social media or public
relations assistant, a marketing consultant and an artwork designer.’ When the deceased
became too ill to work, from March to October 2018, Ms Batista took over most of his

workload, as well as her own. Mr Froneman says that before he died, the deceased had
instructed him to pay her half her normal commission which had accumulated over 4
months and her annual bonus into a foreign entity. He denied that the offshore payments
were irregular, asserting that they were legitimate and recorded in the companies’ books.
As an accountant he was satisfied that the payments were reasonable for the work that
had been done by Ms Batista.

[29] The primary issue for determination is whether the conduct of the two trustees
justifies their removal in terms of s 20(1) of the Trust Property Control Act 57 of 1988 (the
Act), alternatively the common law. Section 20(1) provides that:
‘A trustee, may, on application of the Master or any person having an interest in the trust property,
at any time be removed from his office by the court if the court is satisfied that such removal will
be in the interests of the trust and its beneficiaries.’

[30] The general principle is that a court will exercise its common law jurisdiction to
remove a trustee if the continuance in office of the trustee will be detrimental to the
beneficiary or will prevent the trust from being properly administered.6 A trustee has a
fiduciary duty to act with due care and diligence in administering property on behalf of
another. However, courts have taken a pragmatic approach as to what misconduct should
be construed as imperilling trust assets. As early as 1946 the court in Volkwyn NO v
Clarke and Damant7 cautioned that this was a delicate matter and the power to remove a
trustee was one that should be used with circumspection. Irrespective of whether the
common law or s 20(1) is utilised, the courts have emphasised that when a deceased
person has deliberately selected certain persons to carry out their wishes because they
believe they are best placed to do so, a court should be loathe to interfere8.

[31] The early authorities, and the circumspection required before a court exercises its
power of removal, were cited with approval by this Court in Gowar9. It was held that

6 Sackville West v Nourse and Another 1925 AD 516 at 526; Gowar and Another v Gowar and Others [2016]
ZASCA 101; [2016] 3 All SA 382 (SCA); 2016 (5) SA 225 (SCA).
7 Volkwyn NO v Clarke and Damant 1946 WLS 456.
8 Volkwyn NO v Clarke and Damant 1946 WLS 456 at 464.
9 Above fn 6 paras 30 & 31.

neither mala fides nor misconduct necessarily warrant the removal of a trustee.
Disharmony in the administration of a Trust is only to be considered if this imperils the
trust assets and removal will only be necessary if it is in the interests of the Trust and its
beneficiaries.

[32] In certain circumstances it is not necessary that there be a finding of dishonesty,
gross inefficiency or untrustworthiness on the part of the trustee and a conflict of interest
may be sufficient justification for the removal of a trustee. The appellant argued that even
an innocent trustee can be removed for conflict of interest. For this, reliance was placed
on Kidbrooke Place Management Association and Another v Walton and Others10. That
case concerned a Trust whose object was to donate land to develop a housing scheme
for retired persons who obtained life rights to their unit. The trustees sold properties to
companies in which they had a direct or indirect proprietary interest, which they then on-
sold at a R50 000 profit for every erf. In addition, one of the trustees and his wife were
the sole members of a close corporation which earned commission on the sale of life
rights. The court held that the trustees were in breach of their fiduciary duties in that they
had profited from their actions, which they had failed to disclose, and had acted in direct
conflict with the express provisions of the Trust Deed. Their actions were motivated by
personal gain and an order was granted removing the remaining trustee from office, the
other trustee having resigned.

[33] I do not understand Kidbrooke to be authority for the proposition that conduct by
the trustees which does not find favour with the beneficiary justifies their removal. In fact
this Court has found that enmity between the beneficiary and the trustees is not of and in
itself an adequate reason for their removal.11 Rather, the court in Kidbrooke found that,
although playing a valuable role in the administration of the trust, the trustees
misconstrued the nature of their role and responsibilities. In Kidbrooke the removal

10 Kidbrooke Place Management Association and Another v Walton and Others NNO 2015 (4) SA
112(WCC).
11 Above fn 6 para 31.

application was a precursor to further legal action by the life rights holders for a proper
accounting and disgorgement of profits.

[34] Insofar as it may be contended that Letterstedt v Broers12 which was cited with
approval in Kidbrooke, provides support for the appellant’s contention this, too, is
misplaced. In both Kidbrooke and Letterstedt the trustees breached their fiduciary duties
by profiting at the expense of the Trust, with the trustees overcharging the trust estate in
the latter. Lord Blackburn observed:
‘It is quite true that friction or hostility between trustees and the immediate possessor of the trust
estate is not of itself a reason for the removal of the trustees. But where the hostility is grounded
on the mode in which the trust has been administered, where it has been caused wholly or partially
by substantial overcharges against the trust estate, it is certainly not to be disregarded.’13

[35] What the above authorities have emphasised is that the conduct of trustees must
be detrimental to the trust assets and it is only then that their conduct may warrant
removal. It not necessary that their conduct be unimpeachable but generally where there
is no impropriety and no financial gain on the part of trustees, courts will not interfere. In
this matter there is nothing to suggest any impropriety in the conduct of Mr Froneman and
Ms Haitas. There is no evidence of any personal gain or of overcharging. The criticism to
be levelled against them is that they have been over-zealous in carrying out what they
believed to be the deceased’s wishes. What is clear is that since early November 2018
all meaningful communication between the trustees and the appellant had broken down.
That there is disharmony cannot be disputed. But, in my view, it is not sufficient to warrant
the removal of Mr Froneman and Ms Haitas as trustees and I see no reason to interfere
with the high court’s reasoning in this regard.

[36] That the trustees have, in some respects, been lax in maintaining proper
accounting records of the Trust cannot be denied. The problem pre-dates the death of
the deceased who did not require audited financial statements and ran the businesses

12 Letterstedt v Broers (1884) 9 AC 371 (PC).
13 Letterstedt v Broers (1884) 9 AC 371 (PC) 386 - 387.

single-handed. Although access to some of the information is now only of historical value,
once the appellant was appointed as a trustee, he still believed documents were being
withheld from him and required unfettered access to all financial information to ensure
that the trustees were complying with their duties. This underscores the depth of mistrust
between the appellant and the trustees. Certainly, it was negligent of the trustees to give
the deceased free rein during his lifetime, and subsequent to his death they have not
been forthcoming with financial information. The information that is available was
provided to the appellant once he became a trustee. It was not necessary to apply for the
trustees’ removal to obtain financial disclosures. This could have been obtained by far
less drastic remedial action. In prayer 6 of the notice of motion it is exactly this that is
sought.14

[37] Similarly, the foreign exchange payments made to Ms Batista were at the instance
and upon the instruction of the deceased and, while perhaps ill-advised, have not resulted
in any negative repercussions to the trust companies because a proper case is made out
that the payments were for services rendered.

[38] The appellant is entitled to an income from the Trust for his education and general
well-being. This, Mr Froneman has stated under oath that he and Ms Haitas will consider
once they receive an application. While this approach is unnecessarily formalistic, it
neither imperils the trust, nor subverts the interests of the appellant as the beneficiary of
the trust. The trustees would be well-advised to properly consider the appellant’s needs
in order to avoid further litigation.

[39] The only issue is whether the trustees’ conduct has imperilled the trust companies,
and therefore the trust assets. The appellant claims, as advised by Mr Abdullah, that this

14 Prayer 6 of the notice of motion provides:
'6 An order that the first and second respondents forthwith, but in any event in no less than 5 days from the
date of this order furnish to the applicant: -

6.1 the latest audited financial statements of the KAM Trust; and

6.2 the latest audited financial; statements (or if they have not been audited, the latest draft

financial statements) accounting and financial records (which includes all audited financial
statements) from inception of the Trust Companies.'

is indeed the case. This is denied by the trustees who point out that Mr Abdullah has an
axe to grind, as he was not elevated to the position that he thought he deserved. He has
also actively encouraged Mastika Tree to stop paying license fees. There is no doubt that
the restaurants have suffered a decline in turnover. With the deceased having played
such a pivotal role in the businesses, it is only to be expected that his death would cause
an upheaval, as well as a loss of confidence and morale amongst staff and management.

[40] As regards the proposal that other independent trustees be appointed to break the
deadlock, the issue is whether there is a deadlock to break. The appellant and his mother
disapprove of the manner in which the Trust is being run but this does not mean that it is
rendered dysfunctional. We were informed that the appellant would have peace of mind
that he was being treated fairly if independent trustees were appointed. But even if one
were to accept that this Court has the power to appoint further trustees, there is
insufficient reason to do so. The appellant has elected not to attend meetings of trustees
presumably because of the enmity with his co-trustees. The other trustees are his aunt
and his father’s trusted financial advisor who, whatever their shortcomings, have the
Trust’s interests at heart. The appellant would be well advised to attend these meetings,
and take legal advice thereafter, if he so wishes. Until he participates in the governance
of the Trust it is premature to claim that there is a deadlock requiring the appointment of
an independent trustee. In any event the appellant is at liberty to approach the Master
under s 7(2) of the Act to appoint further trustees, if warranted.

[41] In conclusion, my view is that the conduct of the trustees, although leaving much
to be desired in the way they handled certain matters, does not justify the primary relief
sought against them - their removal. The appeal falls to be dismissed.

[42] The high court made no order as to costs. In this court there was no argument on
costs and no suggestion that any other order would be more appropriate. I find no reason
to differ from the high court.

[43] In the result I make the following order:

The appeal is dismissed with no order as to costs.

_________________
CH NICHOLLS
JUDGE OF APPEAL

APPEARANCES:

For appellant:

A C Botha SC (with him M F B Clark)
Instructed by:

Brian Kahn Inc., Johannesburg

Claude Reid Inc., Bloemfontein

For first to twelfth respondent:
M Smith
Instructed by:

Nance-Kivell Attorneys, Germiston
Israel & Sackstein Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF
APPEAL

From:
The Registrar, Supreme Court of Appeal
Date:

06 January 2021
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and does not form part of
the judgments of the Supreme Court of Appeal
Haitas Konstantinos v Froneman and Others (1158/2019) [2021] ZASCA 01 (06 January 2021)

Today the Supreme Court of Appeal (SCA) handed down judgment in an appeal against an order of the Gauteng
Local Division of the High Court, Johannesburg (Matojane J). The appeal involved an application to remove two
trustees from office and turned mainly on the issue of whether a breakdown in the relationship between beneficiary
and trustees justifies removing the trustees from office in terms of s 20(1) of Trust Property Control Act 57 of
1988 (the Act) or the common law
This matter began with an urgent application by the appellant in the high court on 16 April 2019 when he was 19
years old. The main relief sought was the removal of Mr Froneman and Ms Haitas as trustees and for the Master
to urgently appoint two more trustees, one of whom should be independent. The high court dismissed the
application and made no order as to costs.
The crux of the appeal involved three broad categories of complaints levelled against the trustees, which the
appellant contended justified their removal from office in accordance with s 20(1) of the Act or the common law.
These were, a lack of disclosure and transparency in regard to the financial statements of the Trust and the trust
companies; the refusal of the trustees to maintain the appellant; and certain payments made to Ms Batista who had
been the deceased’s romantic partner since 2013.
On lack of disclosure and transparency, the court found that the trustees furnished the appellant with all audited
financial statements, save for the 2010 financial statements. The court held that the trustees were, in some respects,
negligent in their maintaining of proper accounting records. However, the information that is available was
provided to the appellant once he was a trustee. The court held further that it was not necessary to apply for the
removal of the trustees to acquire financial disclosure.
One of the appellant’s grievances was the refusal by the trustees to maintain him, stating that the appellant was
not entitled to any distribution from the Trust until he turned 23 years old. Although the Trust Deed gave the
trustees a wide discretion regarding the allocation and distribution of trust income, the trustees were adamant that
the appellant should make an application for maintenance to the Trust which they would consider accordingly.
The court held that the appellant is entitled to an income from the Trust for his education and general well-being.
The court cautioned that the trustees should carefully consider the appellant’s needs to avoid further litigation.

While refusing the appellant maintenance, the trustees approved foreign exchange payment to Ms Batista’s
Panama based company for services rendered. The appellant argued that these payments were illegal and imperiled
the Trust and that they resulted in a loss of R12 000 in respect of value added tax which would have been avoided
had Ms Batista invoiced the Trust in her personal capacity. The court found that these payments were made at the
instance and upon the instruction of the deceased, and for services rendered.
The core issue for determination, said the court, was whether the conduct of the trustees justified their removal in
terms of s 20(1) of the Act, alternatively the common law. In general, the court will exercise its common law
jurisdiction to remove a trustee if the continuance in office of the trustee will be detrimental to the beneficiary or
will imperil trust assets. In certain circumstances it is not necessary for there to be a finding of dishonesty, gross
inefficiency or untrustworthiness on the part of the trustee and a conflict of interest may be sufficient justification
for the removal of a trustee. The appellant argued that even an innocent trustee can be removed for conflict of
interest. The court found that, irrespective of whether the common law or s 20(1) is utilised, the courts have
emphasised that when a deceased person deliberately elects specific persons to carry out his or her wishes, a court
should be slow to interfere. The court held further that there is nothing to suggest any impropriety in the conduct
of the trustees and that a breakdown of the relationship between a beneficiary and the trustees does not justify the
removal of the trustees.
The appeal was dismissed with no order as to costs.
________________________________________