Strauss and Another v Van Zyl (A 920/12) [2014] ZAGPPHC 1012 (27 November 2014)

Strauss and Another v Van Zyl (A 920/12) [2014] ZAGPPHC 1012 (27 November 2014)

The court held that trustees of a trust do not owe a duty of care to creditors to prevent pure economic loss upon dissolution of the trust. The obligation to pay the tax liability arose from contract and not from a negligent act that should be regarded as wrongful as a matter of policy. Policy considerations, including the potential for conflict of interest between beneficiaries and creditors, the existence of alternative remedies, and the absence of precedent for such a duty, do not support the imposition of delictual liability on trustees in these circumstances. The appeal was upheld and the action dismissed.

Citation
[2014] ZAGPPHC 1012
Parties
Appellant: Coenraad Strauss; Appellant: Estate Late J H Schoeman; Respondent: Marthinus Johannes van Zyl
Court
North Gauteng High Court, Pretoria
Jurisdiction
South Africa
Judgment Date
27 November 2014
Case Number
A 920/12
Procedural Posture
Civil Appeal / Appeal From Judgment of Court a Quo
Outcome
Appeal upheld; action dismissed with costs, including costs of two counsel.
Judges
E Bertelsmann, M Kubushi, M Modiba
Legal Topics
Pure Economic Loss, Duty of Care, Trustees Liability, Wrongfulness, Policy Considerations, Unjust Enrichment
Delict Civil Procedure Pure Economic Loss Duty of Care Trustees Liability Wrongfulness Policy Considerations Unjust Enrichment

Case Brief

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Parties

Coenraad Strauss

Appellant

Estate Late J H Schoeman

Appellant

Marthinus Johannes van Zyl

Respondent

Procedural Posture

Civil Appeal / Appeal From Judgment of Court a Quo

Legal Issues

  1. 1 Whether trustees of a trust owe a duty of care to creditors to prevent pure economic loss upon dissolution of the trust.
  2. 2 Whether policy considerations justify imposing delictual liability on trustees for unpaid tax liabilities of a company formerly owned by the trust.
  3. 3 Whether the existence of alternative remedies precludes recognition of a duty of care in these circumstances.

Ratio Decidendi

The court held that trustees of a trust do not owe a duty of care to creditors to prevent pure economic loss upon dissolution of the trust. The obligation to pay the tax liability arose from contract and not from a negligent act that should be regarded as wrongful as a matter of policy. Policy considerations, including the potential for conflict of interest between beneficiaries and creditors, the existence of alternative remedies, and the absence of precedent for such a duty, do not support the imposition of delictual liability on trustees in these circumstances. The appeal was upheld and the action dismissed.

Court Disposition

Appeal upheld; action dismissed with costs, including costs of two counsel.

Orders

  • The appeal succeeds with costs, including the costs of two counsel.
  • The order issued by the court a quo is set aside and substituted with: 'The action is dismissed with costs, including the costs of two counsel.'