Court orders removal of Grand Parade chair from 'dysfunctional' Hout Bay Trust

The Western Cape High Court has ordered that Dr Hassen Adams, executive chair of empowerment company and JSE-listed Grand Parade Investments [JSE:GPL], be removed with immediate effect as trustee of the Hout Bay Development Trust, which he was instrumental in founding in 1996.

The court made the ruling on Wednesday. 

In another matter relating to Adams, some minority shareholders in Grand Parade Investments have called for an extraordinary general meeting at the end of the month in an attempt to make changes to the board.

Five of Adams's fellow trustees in the Hout Bay Development Trust brought the application in terms of the Trust Property Control Act for removal against Adams and another trustee, Dick Meter. The applicants were Priscilla Jansen; Luvuyo Gonya; Janap Davids; Thembisele Dyani; and Gregory Louw.

The applicants complained that Adams and Meter - especially Adams - "have operated the trust in a manner which is contrary to the provisions of the act and the trust deed".

According to the applicants, it is implied in the trust deed that the purpose of the trust should be the upliftment of communities in the Hout Bay area.

It seems the applicants have been at loggerheads with Adams since August 2013, and Judge Dennis Davis found that the trust is basically dysfunctional.

'Numerous improprieties'

The applicants alleged that Adams and Meter committed "numerous improprieties in relation to the administration of the trust". They asserted that Adams, "aided and abetted" by Meter, had been guilty of acting as "chair" of the trust; representing the trust without lawful authority to do so; and breaching his fiduciary duties.

In his judgment, Davis found that "Adams continues to assert that he was and remains entitled to represent the trust ... his stance is not only misconceived in law but is indicative of a defiant attitude which renders him incapable of acting in a spirit of accountability and co-operation with the applicants".

Davis said Adams demonstrated "an utter lack of appreciation of the collaborative nature of trusteeship, and wholesale disregard for the law and the limits of his power".

For these reasons, apart from any other, Davis found Adams unsuited to hold the office as a trustee. He also found that there were significant unexplained errors in the minutes of trust meetings, which amount to material misrepresentations regarding the financial governance of the trust - a significant breach of duty.

Unexplained payments

Adams was, for instance, asked to explain a payment of R219 875 to H Adams in August 2013. He responded that it was in lieu of expenses incurred by the trust. No breakdown was given of the expenses and amounts involved, nor were supporting vouchers provided.

Another example was when Adams was asked to explain payment of R297 036 to an entity called Nadesons in August 2013. He replied these were monies paid in lieu of expenses incurred by the trust. Again, no details were provided.

Davis found that Adams's conduct of the affairs of the trust leave him (Davis) in no doubt that his (Adams) removal from office as a trustee is necessary in the interests of the proper functioning and administration of the trust and that he is not a fit and proper person to serve as a trustee.

As for Meter, Davis found he breached his duty in terms of the trust sufficiently to warrant removal from office as a trustee as well.

"The trust is currently dysfunctional. The trustees are deadlocked and incapable of passing unanimous resolutions, a state of affairs which imperils the proper administration of the trust and its property," concluded Davis.

"Adams and Meter have both breached their fiduciary duties to the trust on a number of scores and Adams has shown a disturbing lack of candour regarding the contents of the trust minutes. In the circumstances I am satisfied that the removal of Adams and Meter as trustees is necessary in the interests of the proper administration of the trust and the promotion of the interests of the beneficiaries."

It is not clear at this point whether Adams plans to appeal the judgment.

* Update: Adams told Fin24 on Friday that he has consulted with his legal counsel and he indicated there are good grounds for appealing the judgment.

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