Bad blood and money
By Gunnar Dahl and Natasha Louw
Harvey NO & Others v Crawford NO & Others, a decision of the Supreme Court of Appeal on 17 October 2018, dealt with the question whether references to “child”, “children”, “issue”, “descendant”, and “legal descendant” in a specific trust deed also included adopted children.
The facts were not in dispute. The donor established the trust (a private trust) by a written instrument in 1953. The beneficiaries of the trust were his four biological children and “the child or children” of the donor’s four children. At the time the donor executed the trust deed, three of his children already had biological children of their own, and his other child, Dulcie (a daughter), was married, but had no children. Dulcie adopted two children in 1955 and in 1957, after the life of the donor had ended.
The trust deed provided that on termination of the trust, the trust capital must be distributed to the beneficiaries, being the donor’s children “or in the event of any child [of the donor] dying prior to termination of the trust, his or her share shall devolve upon his or her legal descendants“. On application by Dulcie and her two adopted children, the question the Court had to decide was whether the two adopted children were entitled to benefit. The trustees and the donor’s other children opposed the application.
Dulcie and her two adopted children argued that:
|–||As it was not evident from the trust deed that the donor intended to exclude adopted children from benefiting under the trust, adopted children ought to benefit like biological children.|
|–||The trust deed should be interpreted to include rather than exclude adopted children, in line with the spirit, purport, and object of the Bill of Rights in the Constitution.|
The minority (one Judge) would have found in favour of Dulcie and her two adopted children. But the majority (four Judges) found in favour of the trustees and the donor’s other children.
The majority held that the trust deed must be interpreted by giving the relevant words and phrases the meanings which they bore when the trust deed was executed (in 1953). Relying on repealed legislation and previous Court decisions, the majority held that at the time the word “child” referred to a legitimate biological child only. That, and the fact that the donor had used the term “legal descendants”, indicated that the donor had intended to benefit only (his) blood descendants. The omission by the donor expressly to include adopted children indicated his intention not to include adopted children.
The majority emphasised a difference between public (charitable) trusts, and private trusts. In respect of a public trust, a donor’s freedom (as settlor/founder of the trust) to dispose of property along discriminatory lines must give way to constitutional norms (no unfair discrimination). But, in respect of a private trust, a donor is free to discriminate, including excluding adopted children (and even biological children).
We are in agreement with the public/private trust distinction. Had the donor expressly excluded adopted children, that would have been the end of the matter. But he did not. The majority’s approach of determining the intention of the donor with reference to repealed legislation and previous Court decisions that pre-date the constitutional era may be more contentious. There could be scope for the Constitutional Court to find, for instance, that the donor’s intention was that the terms “children” and “legal descendant” should bear the meanings ascribed thereto by law from time to time, and at present include adopted children.