Court Case: Application to amend a trust deed

by | Mar 9, 2018 | Advisory Services, Uncategorized

In the recent matter of Harper and Others v Crawford NO and Others (2017) 4 All SA (WCC) the Applicant applied to the Western Cape High Court to amend a trust deed.

The Applicant was the Donor’s daughter and a beneficiary of a Trust created in terms of a trust deed executed by the Donor/Founder in January 1953.  The Trust Deed was amended in May 1953 to state that the capital and income beneficiaries of the trust were the Donor’s four children and any of their descendants.  On the death of the Donor, the income and capital was to be divided in equal shares between the Donor’s four children and if any child died at that time, his or her quarter share should be distributed to his or her descendants in equal shares.  The trust deed stated that if one of the beneficiaries had no children, then on the death of that beneficiary, the descendants of the other beneficiaries would receive that quarter in equal shares.

At the time of the application, the Applicant was the sole surviving child of the Donor.  The Applicant could not have any biological children and had discussed the option of adoption with the Donor.  The Donor advised the Applicant not to rush into anything because she was still young.  After the Donor’s death the Applicant legally adopted two children.  The other children of the Donor were able to have children of their own – the grandchildren of the Donor.

The Applicant requested the court to interpret the trust deed to include her adopted children as her descendants and therefore as beneficiaries of the Trust.  The Applicant was of the view that excluding them would amount to discrimination because they were not her biological children.  Her application was based on the Equality clause of the Constitution and the court’s ability to amend a trust deed due consequences that the Donor did not foresee at the time, and which are now contrary to public policy (section 13 of the Trust Property Control Act).

The court stated that when interpreting a trust deed, it looks at the ordinary meaning of the words which must be read in the context of the whole trust deed.  The court also looked at circumstances at the time when the trust deed and its amendment were executed, as well as the fact that the Donor was aware of the fact that the Applicant was considering adoption.

The court examined previous cases relating to equality and discrimination and found that all those cases related to trusts with a public purpose and nature.  They were therefore trusts where equality was of more importance than the present matter where the trust was a private trust.

The court stated that it could not amend the trust deed because it was unable to find that the trust deed brought about consequences that the Donor could not have foreseen.  The Donor was aware that adoption was an option for the Applicant and could have included adopted children as beneficiaries.  The court stated that the trust deed must be interpreted in accordance with the intention of the Donor and did not discriminate against the Applicants.  The court dismissed the application.

In light of this judgment, it would appear that careful consideration needs to be given to the consequences of amending the provisions of a trust deed and whether the amendment gives effect to the intention of the Donor at the time of the amendment.