Schoonhoven NO and Others v Schoonhoven and Others [2024] JOL 63272 (KZP)

The High Court in KwaZulu-Natal Division of the High Court, Pietermaritzburg recently dealt with a complex legal matter in the case of Schoonhoven on 19 January 2024. This case pertained to a dispute arising from the Schoonies Familie Trust and highlighted the importance of clear and unambiguous trust provisions in preventing conflicts among trustees and beneficiaries. The court examined the trust deed, the deceased’s will, and the surrounding circumstances to determine the true intentions regarding the trustees’ authority in appointing capital beneficiaries of the trust on its termination in 2030. A declaratory relief was sought by the trustees to affirm their prerogative. The resolution of this legal dispute has implications for the parties involved and the effective administration and preservation of the Schoonies Familie Trust.

The Schoonies Familie Trust was established by Mr Johannes Bernardus Alphonsus Schoonhoven, its founder whose demise precipitated the disagreements that arose among family members who served as trustees and beneficiaries of the trust regarding the interpretation of its provisions, particularly concerning the appointment of capital beneficiaries on the trust’s termination in 2030. The applicants sought declaratory relief to rectify the trust deed, but their claim was dismissed as it required an action procedure to claim such rectification.

This case highlights the importance of clarity in trust documents, especially when it comes to the discretion granted to trustees in selecting capital beneficiaries. Ambiguous or open-ended language in a trust deed can lead to disagreements among trustees and beneficiaries. In this particular case, the court had to determine the extent of the trustees’ discretion and whether their interpretation of the trust deed aligned with the deceased’s intentions.

When interpreting a document in court, the starting point is the language used in the document, as discussed in the case of Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA). As described by Lord Neuberger MR in Re Sigma Finance Corp [2008] EWCA Civ 1303 (CA), when interpreting a document, the inevitable point of departure is the language used in the document. The court must consider the context and purpose of the document to ensure a fair and just interpretation. Therefore, judges must consider all relevant information surrounding the contract, including its purpose to reach a resolute, sound, and reasonable interpretation. The Endumeni Municipality case provides a framework for understanding and interpreting contracts, emphasising the importance of comprehending the language used in its specific context and considering the purpose of the provision being interpreted. Contractual interpretation involves a unified approach to understanding the meaning of the words used in a document. It is crucial to recognise that interpreting a provision in an agreement involves more than simply looking at the words utilised. Context, purpose, and the provision’s place within the overall agreement must also be considered. The meaning of the provision is determined by analysing the relationship between the words used, the concepts expressed by those words, and the broader scheme of the agreement. This approach enables a coherent and clear interpretation of the provision.

In the Schoonhoven case, it is unclear whether the absence of a specific mention regarding the appointment or election of capital beneficiaries in the trust deed was an unintentional oversight or an intentional decision. Regardless of the reason for this omission, it is evident that someone will eventually need to make that choice. In E Cameron, M De Waal and P Solomon 6ed Honore’s South African Law of Trusts (Cape Town: Juta 2018), the authors provided how a trustee should avoid conflicts of interest with trust beneficiaries and further state that if a trustee is also a beneficiary and acts to benefit themselves at the expense of other beneficiaries, their actions will be subject to strict scrutiny.

In the case of Moosa and Another v Jhavery 1958 (4) SA 165 (N), it was established that the trust’s intentions are determined by its execution and should be interpreted as they were at that time. The settlor’s intentions need to be understood based on the language used and the circumstances that existed when the trust was created. Turning to the case of Schoonhoven, there is no evidence from the first applicant, or anyone involved in the drafting of the amended trust deed regarding the deceased’s intentions at the time the will was signed. Therefore, it is crucial to carefully analyse the language used in the trust deed and consider the circumstances surrounding its creation to determine the settlor’s intentions.

The Schoonhoven case demonstrates the critical importance of clarity and precision in trust deeds and wills. The absence of specific provisions regarding the appointment of capital beneficiaries in the trust deed resulted in a dispute among the trustees and beneficiaries. This case shows that when the language of a trust deed is unclear or subject to interpretation, conflicts and legal disputes can arise. To prevent such issues, settlors should meticulously consider and clearly articulate their intentions in trust deeds and wills, leaving no room for ambiguity or confusion. In summary, the Schoonhoven case highlights the importance of thoroughly examining both the language used in a trust deed and the surrounding circumstances. This thorough analysis helps to determine the settlor’s intentions and minimises the likelihood of conflicts between trustees and beneficiaries.

The process of interpreting legal documents, exemplified in the Endumeni Municipality case, emphasises the importance of considering the language, context, and purpose of the provisions to ensure a fair and just interpretation. Additionally, trust deeds must reflect the settlor’s intentions at the time of execution. Precise and clear drafting of trust deeds and wills is crucial for effective administration and preservation of trusts, eliminating any potential for ambiguity or misinterpretation. This proactive approach helps to prevent future disputes among trustees and beneficiaries while upholding the true intentions of the settlor. The Schoonhoven case serves as a reminder of the broad implications of unclear and ambiguous trust provisions and highlights the necessity for meticulous drafting to avoid conflicts and legal uncertainties.

In conclusion, the Schoonhoven case highlights the significance of employing clear and precise language in trust deeds and wills. This is crucial to avoid any ambiguity or potential conflicts that may arise among trustees and beneficiaries. When faced with instances where uncertainties persist in the wording of a contract or legal document, it becomes necessary to consider the surrounding circumstances and evidence of the parties’ discussions or intentions. This course of action will aid in determining the true meaning and intent of the document.

Nakedi Mosoete LLB (Unisa) is a law graduate in Pretoria.

This article was first published in De Rebus in 2024 (May) DR 45.