A sting in the tail

Sunday, 01 September 2013
Harry Joffe revisits racially discriminatory clauses in South African trusts.

The recent case of BOE Trust Ltd and others [2012] ZASCA 147, September 2012, gave the South African Supreme Court of Appeal the chance to revisit racially discriminatory clauses.

Facts of the case

A trust was created by the will of the late Mrs De Villiers. The will included the following provisions:

‘The remaining income shall be applied by my trustees for the provision of small bursaries to assist white South African students who have completed an MSc degree in organic chemistry at a South African university and are planning to complete their studies with a doctorate degree at a university in Europe or in Britain.

‘The selection of these students, and the size and duration of the bursaries shall, after discussions between them, be the joint responsibility of the four Organic Chemistry professors of the Universities of Cape Town, Stellenbosch, Bloemfontein and Pretoria in consultation with BOE Trust Ltd…’

‘In the event that it should become impossible for my trustees to carry out the terms of the trust, I direct that the income generated by the trust be used annually to provide donations equal in size to each of the following charitable organisations…’

Note that the charities were not in any way determined by reference to race.

Mrs De Villiers died in February 2006. A letter written by Mrs De Villiers’ sister made it clear to the Court that Mrs De Villiers had been repeatedly advised that to bequeath bursaries to white students would possibly not be given effect to, as it was discriminatory. Notwithstanding the repeated warnings, Mrs De Villiers retained the word ‘white’. The Court felt that it was because of these warnings that Mrs De Villiers provided an alternative avenue for the income (donations to charities) if it turned out that it was impossible for the trustees to carry out the terms of the trust.

When the trustees tried to give effect to the bursaries and contacted the universities concerned, all the universities responded negatively, as a result of the racial selection criterion attached to the bursary. The universities said they would accept the bequest only if the requisite steps were taken to delete the word ‘white’ from the will.

BOE Trust Ltd and others is not contrary to settled South African precedent and does not amend it. Racist clauses in South African trusts and wills will still normally be deleted by the courts. This case was different on the fact

Given the attitude of the four universities, the bursary was stymied and could not be carried out. The trustees therefore brought an application to court to have the word ‘white’ deleted from the will.

The ruling

The application was based on the principles of public policy, the right to equality as enshrined in the South African constitution, and, more importantly, two earlier decided cases of Minister of Education and another v Syfrets Trust NO and another 2006 (4) SA 205 C and Curators, Emma Smith Educational Fund v University of KwaZulu-Natal and others 2010 (6) SA 518 SCA. These cases both directed that racially discriminatory provisions in trust deeds should be deleted, as they were contrary to public policy.

The Court in the present case held, however, that the Emma Smith case was different on the facts. There were no alternatives stated in that case should the terms of the trust become impossible to carry out. Indeed, the previous trust had functioned for many decades before being challenged. In the current case, no bursaries were paid and none ever could be, because of the stance of the universities. This raised the question of whether the alternative – the backup clause – provided in the will needed to be given effect to.

The Court concluded that it had to ascertain the intention of the testatrix. They felt it was clear that she intended that should it prove impossible, for whatever reason, to give effect to the provisions of the bequest, the money should go to the charitable organisations.

The Court felt that the fact that the universities would not participate as a result of the racist nature of the bequest was an impossibility in respect of the bursary bequest. There was no requirement that the impossibility had to be objective, for example that the universities no longer offered the MSC in organic chemistry. The result was that effect had to be given to the wishes of the testatrix; the bequest to the named charitable organisations needed to be enforced.

In a unanimous decision, the Court refused to delete the word ‘white’.

Comment

It is interesting that in 2012 a South African court did not delete a racist clause. This decision is not contrary to settled South African precedent and does not amend it. Racist clauses in South African trusts and wills will still normally be deleted by the courts. This case was different on the facts: the Court was not upholding a racist clause, as the clause would never be given effect to. They were upholding the backup clause inserted by the testatrix, to benefit the charities, on the impossibility of the first clause, and there was no reason not to uphold that backup clause. The key issue in this case was the backup clause on impossibility, which distinguished it from precedent. 

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Harry Joffe

Harry Joffe TEP is Head of Legal Services at Discovery Life.

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