Kenias Mafukidze and Ray Tsvakwi and Leonard Chiteka and Twinwart Investments Limited v Masaisai Trust and Reuben Gwatidzi N.O and Dennis Sibanda N.O and Chikomborero Musimwa N.O and Netty Musanhu N.O and The Headmaster – Masaisai Trust N.O and The Master of the High Court

### Preamble
1
HH 788-18
HC 6040/18
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KENIAS MAFUKIDZE

and

RAY TSVAKWI

and

LEONARD CHITEKA

and

TWINWART INVESTMENTS LIMITED

versus

MASAISAI TRUST

and

REUBEN GWATIDZI N.O

and

DENNIS SIBANDA N.O

and

CHIKOMBORERO MUSIMWA N.O

and

NETTY MUSANHU N.O

and

THE HEADMASTER – MASAISAI TRUST N.O

and

THE MASTER OF THE HIGH COURT

HIGH COURT OF ZIMBABWE

MUZENDA J

HARRE, 8 November 2018 & 28 November 2018

Opposed Application

Advocate T. Zhuwarara, for the applicants

Advocate K Kachambwa, for the respondents

MUZENDA J: The first respondent, Masaisai Trust (the Trust) was born on the 8th March 1999 and it established itself at Corner Lorraine Drive & Neil’s Way Bluffhill Westgate, Harare. Kenias Mafukidze (1st applicant), Anna Brazier, Reuben Gwatidzo (2nd respondent), Charles Howat (5th respondent) and Mugove Walter, Nyika being the founding trustees and settlers. The Trust was established for a fundamental noble idea of forming an educational institution with educational facilities which produces well rounded pupils. It was to be administered by not less than five (5) and not more than ten (10) trustees. The first Trustees were to hold office for a period of three (3) years from the date of appointment which date was the 8th March 1999. One half of the first Trusteees would retire at the Annual General Meeeting (“AGM”) of the Board of Trustees following the expiration of their three (3) year tenure a retiring Trustee was eligible for re-election and the AGM of the Board of Trustees (BOT) was required to be held during the first three (3) months of each year.

On the 11th March 2002 the BOT of Masaisai incorporated a private company, Trinwart Investments (Private) Limited (4th applicant). On the 25th September 2002 fourth applicant was changed into a public company. Fourth applicant was a special purpose vehicle formed by the Trust to raise money to fulfil its educational ambitions. The public company proceeded to raise the money through debentures issued through private placement by fourth applicant, with the Trust as the major shareholder in fourth applicant. It is accepted by the parties that the first applicant was the brainchild of this initiative of debentures. The first applicant was a Trustee for a period of nineteen (19) years, from 8th March 1999 to 9th March 2018 when he resigned. He is also a former chairman of the Trust. The institution now enrols students in excess of 400, there are fifteen (15) classroom blocks, or swimming pool, a pump house, a pick-up truck, a 65 seater school bus, a car park and drive way, caretaker’s house, a double block ECD classroom under construction, a strong room under construction, …. Water drain under construction, introduction of e-learning, the classroom had been painted and floor tiled and the school was awarded a certificate of excellence for the best Grade 7 results in 2014.

After the resignation from the first respondent as a Trustee, the applicants headed by the first applicant have brought an application for removal of Trustees and requesting the court to appoint an interim board of Trustees in terms of s 7 of the Companies and Associations Trustees Act, [Chapter 24:04] as well as on the basis of common law seeking the following relief from this court.

“IT IS ORDERED THAT:

The 2nd , 3rd, 4th, 5th and 6th respondents be and are hereby removed from the office of Trustees of 1st respondent Trust.

The 1st respondent be and is hereby ordered to convene Annual General Meeting within sixty (60) working days of the granting of this order.

The 1st respondent be and is hereby ordered to serve the notice for the Annual General Meeting on all interested stakeholders namely the applicant’s herein at least ten working days before the date of the meeting.

Messrs Willard Zireva, Oswell Binha, George Chakava, Simon Bere, Sifelani Jabangwe, Synedia Mahachi and Daphne Sanhanga, be and are hereby appointed interim trustees for 60 (sixty) days from the date of this order.

The second to sixth respondents shall jointly and severally the one paying the others to be absolved, pay the applicants costs of suit on the legal practitioner and client scale, should they oppose the relief sought herein.”

The applicants are applying for the removal of the Trustees on the following grounds.

First respondent’s trustees have never resigned or been re-elected as required in the Trust Deed;

The current trustees have long overstayed their respective 3 year tenures stated in the trust deed;

The trustees have failed, refused and / or neglected to conduct an AGM as required by the trust deed.

The applicants allege that the first respondent’s trustees are responsible for the contravention of the Trust Deed in the manner specified above and are therefore incapable of acting in execution of the trust objectives. Applicants want the Trust reconstituted.

The respondents in their response to the above issues agree that this court can exercise its common law jurisdiction to remove a trustee from office when the continuance in office will prevent the trust being properly administered and will be detrimental to the welfare of the beneficiaries and surely power must be exercised with circumspection. The court can remove a trust but in doing so must be cautious and can only do so if the conduct of the trustee imperils the trust property or its proper administration. The respondents contend that they had been complying with the Trust’s constitution. Meetings were held at the beginning of the year and nomination of new trustees done, or trustees would agree that their re-election was necessary. It became the trust’s practice that retirement, assumption and re-election of Trustees took place at these meetings. The list of people who have held the positions of Trustees took place at those meetings. The list of people who have held the positions of Trustee in the Trust was available and has been produced in the opposing papers. There was an AGM scheduled for 14th April 2018 which first applicant derailed, they aver so the respondents add that there was substantial compliance, there is no AGM and election of Trustees as advocated by the first applicant. The meetings in terms of the deed should be that of the Board of Trustees and should not include debenture holders and parents as argued by the applicants. The AGM of the Board of Trustees attended by Trustees and additional Trustees are not elected, they are assumed into office through nomination by existing Trustees. The second and sixth respondents did not fail to conduct the AGM of the Board of Trustees, they also did not fail to retire at the end of the tenure, they also deny that they have failed to comply with the Trust Deed’s requirements to retire trustees, re-elect them, and assume new trustees to hold an AGM.

The respondents went on to submit that an application for removal of a trustee should focus on the welfare of the beneficiaries and proper administration of the trust property. Removal of a trustee is inherent power which should be exercised continuously and only when the conduct of the trustees, imperils the trust property or its proper administration.

According to the respondents applicant’s sole ground for removal of the Trustees is the failure to comply with the trust deed but the trustees are adamant that they have been fulfilling the objects of the trust. They went on to outline the achievements which need not be repeated. They urge the court to note that the trustees have done exceptionally well in fulfilling the objects of the Trust, the welfare of the beneficiaries and that the pupils have been adequately catered for.

The conduct does not imperil the trust property or its administration. The removal of the trustees will actually affect the proper administration of the trust and its property.

Points in limine

Second to seventh respondents raised preliminary points which l need to deal with first.

Respondents challenge Tichaona Chigumadze’s activity to institute proceedings on behalf of Tinwart Investments Limited, the company, (4th applicant herein).

They argue that the board of directors that purported to authorise Tichaona Chigumadze to represent fourth applicant had the authority to do so. The first respondent Trust holding 52.2% shareholding did not authorise him to represent the company, first respondent was not called to any meeting to vote on instituting proceedings and vote that Tichaona Chigumadze to represent first respondent in such proceedings. The respondents also challenged the applicants to produce CR14 and evidence to prove how shareholding was passed. There was no evidence attached showing that notice for a meeting was sent to interested persons calling for a meeting to vote on instituting proceedings and authorizing Tichaona Chigumadze to represent the fourth applicant. There is no board resolution authorising him to stand on behalf of the company. The resolution was only made on 30th July 2018 after the institution of proceedings. The respondents pray that the preliminary point be upheld with costs.

The second point in limine was the misjoinder of the Trust’s School head. She has no direct and substantial interest in the appointment or removal of trustees with the trust. Advocate Zhuwarara conceded that there was a misjoinder and the citation of seventh respondent should not have been done and she is accordingly excused from these court proceedings with no order as to costs against the applicants.

The respondent’s first preliminary point is opposed by the applicants. They insist that fourth applicant properly authorized T Chigumadze through a Resolution and has the authority to represent fourth applicant through its board of directors stated in fourth applicant’s CR 14 on p 222 of the record.

I have looked at the fourth applicant’s CR 14 and am satisfied that T Chigumadze is listed amongst the board of directors. Hence he has the requisite authority to represent the fourth applicant. The point in limine is dismissed with costs.

The third point in limine raised by the respondents was that second and third applicants have no locus standi in the present matter. Second and third applicants have children at the school and that they have no interest in the removal or assumption of Trustees. The applicants list parents as having direct interest in the entire system of appointment or assumption of Trustees, eligibility to be appointed trustees and participating in decision making and planning of the affairs of the trust. I have examined the provisions of the Trust and I am satisfied that the second and third applicants as parents of the children have no direct involvement in the appointment or removal of the Trustees and in this case they lack locus standi to bring the application. They are also excused from the proceedings with no order as to costs.

On the merits, s 7 of the Companies and Associations Trustees Act (Chapter 24:04) states

“7.  High Court may be requested to appoint new trustees when no other means of supplying vacany exists.

As often as death, unsoundness of mind, resignation, failures to elect, absence from Zimbabwe or other cause the trustees of any association or of any association which under s 5 is placed under this Act, become incapable of acting in the execution of the trust for such company or association it shall be lawfully for any person who is a member of or interested in such company or association to apply by petition to the High Court for such order as he concurs himself entitled to and he may by affidavit give such evidence in support of such section as he thinks fit and may serve notice of such petition upon such person or persons as he may think it needful or expedient to serve with such notice:

Provided that upon or before the hearing of such petition the court in which it is pending may order service of notice of such petition upon any person or persons whom the court thinks fit, and may order such notice to be published in the Gazettee.”

In the matter of The Trustees of the Leonard Cheshire Homes Zimbabwe Central Trust v Robert Chite and 7 Others HH 267/2010, the court discussing s 7 cited above held that its purpose is to:

“……provide for the appointment of trustee by the High Court to ensure the continuation in existence of a trust. It is the trust that the law is interested in sustaining and not decision of trustees whose terms of office have expired or trustees appointed by persons who has no mandate to act for the trust. Section 7 covers the trustees inability to act because of  “death unsoundness of mind, resignation, failure to elect, absence from Zimbabwe or other cause” In this case other causes would cover the trustees exceeding their terms of office and failure to elect would cover the trustees who had exceeded their terms of offices’ failure to validly appoint new trustees.”

In Ex Parte Davenport and Another 1963 (1) SA 728 (SR) at 733 G the court held as follows:

“in exercising so delicate a jurisdiction as that of removing trustees their lordships do not venture to lay down any general rule beyond the key broad principle.. that their main guide must be the welfare of the beneficiaries. If it appears clear that the continuance of the trustees would be detrimental to the execution of the trustees … the trustee is always advised by his own counsel to resign, and does so if, without any reasonable ground he refuses to do so, it seems to their Lordships that the court might think it proper to remove him”

In Bonsma v Meaker N O & Ors, 1973 (2) RLR 16 (G) (1973 (4) SA 526 R at 530 A) the court set out an important principle that the power of the court to remove a trustee must be exercised with circumspection. Even if the trustee has acted incorrectly in his duties and has not observed the strict requirements of the law something more is required before his removal is warranted.”

(See also Albert Machengete Mashoko v Mashoko/Chikosi Family Trust HH 12/11. where it was held that the court has to be satisfied that the continued trusteeship does not endanger the interests of the trust and its beneficiaries”)

In De Villier’s v James 1996 (2) ZLR 597 at 603 Korsah J A spelt out three main principles which govern the administration of trusts which are as follows:

“1.  The trustee must give effect to the trust instrument so far as it is lawful and effective;

2.  the trustee must exercise his or her powers with core, diligence and skill which can be

reasonably expected of a person who 	manages the affairs of another; and

(3) expect as regards questions of law, the trustee is bound to exercise an independent 	discretion.”

(See also Honores, South African Law of Trusts, 4 ed at p 190). (Ex parte Soleman 1951 (4) SA 373. Ex parte Kemp’s Executor [1940] WLD 26)

The powers of the court at common law are well dealt with in the matter of Ex parte Allom, 1954 (4) SA 335 (C).

Both sides in this matter are agreeable on the point of law but differ on facts. The questions for decision are whether the second to sixth respondents’ have failed to comply with the requirements to retire and hold an AGM and secondly whether the applicants have justified that the continuance in office of the second to sixth respondents will prevent the trust being properly administered and will be detrimental to the welfare of the beneficiaries.

The applicants have established that they have an interest in the Trust and that the first applicant is a member of a Trust but failed to outline in detail where the trustees failed to hold meetings in accordance with the Trust. There was need to accurately chronicle in detail the non-compliance of each and every clause that was breached by the second to sixth respondents. The applicants also failed to prove or show the period of office of each Trustee in breach of the provision relating to the office bearers and or purporting the anomalies of appointment or assumption of each Trustee so as to drive home their argument. They failed. On the other hand the respondents having received allegations of their failure to comply with the provisions of the Trust they were obliged to attach copies of the minutes of such AGM meetings where the Trustees were assumed and or appointed, none were produced. The whole aspect of how the Trust was managed from its inception was supposed to be outlined in detach to rebut the applicants’ accusation. The respondents are equally economic with the information. The unavoidable consequence of those shortcomings is that there are dispute of facts or each of the two issues outlined herein and cannot be resolved without leading of evidence. There is virtually need for a full investigation on the management of Trust, passing of resolution and execution of duties by the trustees and tenure of office of each trustee before a court can embark on the removal of such a trustee. The affidavits and documents filed of record are scantly for the issues to be decided and given the fact that the first applicant had been a trustee and member for 19 years, he was put to task to explain the exigencies and basis of his application before a court can exercise the drastic task of removing a trustee. There is need to lead more evidence and prove all the allegations and court-accusations.

As a result the following order is returned:

IT IS ORDERED THAT:

The application be referred to trial.

The founding affidavits, opposing and answering affidavits form the pleading for the purpose of trial.

Either party prepare the necessary papers for pre-trial conference.

Costs be in the cause.

Mushoriwa Pasi Corporate Attorneys, applicant’s legal practitioners

Mutombeni Mukwesha, Muzawazi, respondent’s legal practitioners