Can a trust institute a defamation action? An exploratory investigation

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Abstract

The law of defamation is concerned with the protection of a legal subject’s good name and reputation. The good name and reputation of a natural person was already protected in the Code of Hammurabi in the 17th century BC and the modern action available to an injured party in the South African law – the actio iniuriarum – has its roots in the Roman 12 Tables which dates from the 5th century BC.

The actio iniuriarum is a civil action, but it has some interesting characteristics. Firstly, although this aspect has been fiercely debated, it seemingly still retains some remnants of its penal character in the Roman law. Secondly, the burden of proof differs from most civil actions. In a defamation action the plaintiff only needs to prove the existence of the defaming statement. If that has been proven, a legal presumption arises that the statement was both unlawful and intentional. This means that the defendant has to prove, on a preponderance of probabilities, that the statements were lawful and/or unintentional. Thirdly, the subjective feelings of hurt and injury of the plaintiff is not important: what is important is whether the defamatory statement objectively damaged the good name or reputation of the plaintiff. Thus the Supreme Court of Appeal has in Media24 v SA Taxi Securitisation (437/2010) [2011] ZASCA 117 noted that if one falsely accuses a medical doctor of malpractice, he may sue for defamation, even though he does not personally feel hurt by the statement. Another interesting aspect of the action for defamation is that the plaintiff can usually only be compensated in money, although the Constitutional Court indicated in Le Roux v Dey [2011] ZACC 4that the time is ripe for the common law to be amended in this regard.

Finally, the action is also available to legal entities. The legal development to extend the common law action to “non-humans” has taken more than a century in the South African law and has been the subject of a number of judgments, culminating in the recent Herbal Zone v Infitech Technologies (204/2016) [2017] ZASCA 8 judgment where it was decided that “[a] corporate entity ... is entitled to claim damages based on defamation”.

The position of a trust when it is defamed is however not clear. A trust is, in its simplest form, an agreement between the founder and the trustees in which ownership and control of the trust assets are conferred on the trustees for the benefit of the beneficiaries. Although the beneficiaries are considered to be the “beneficial owners” in the English law, dual ownership is not part of the South African law.

As is the case with the action for defamation, the “trust” concept has a number of interesting characteristics. These include that the definition of a trust is vague and the term is used for a number of concepts. A trust is further not considered to be a juristic person distinct from its trustees, but as a sui generis legal entity consisting of “an accumulation of assets and liabilities”. Furthermore, although the trustees are the owners of the trust assets, they may only act within the ambit of the deed of trust and may in principle not use the trust assets for their personal interest. On the other hand, although the beneficiaries of a discretionary trust have no vested rights in the trust assets, they are entitled to act if the trustees do not act in their (the beneficiaries’) interest. The insolvency of a trustee will also not influence the trust assets. The trust and trustee are thus two separate “legal entities” for the purpose of insolvency. Fixed property of the trust is also not registered in the names of the trustees, but in the name of the trust or “the trustees for the time being” without any reference to the trustee. If the trusteeship changes, no change is made to the deeds, thus the death of a trustee does not affect the existence of the trust. It only means that nobody can act in the trust’s name until a new trustee has been appointed. Finally, although the courts do not consider a trust to be a juristic person, a number of statutes define a trust as such and judgments often refer to “trusts” as if they were separate entities distinct from their trustees.

The ambivalence of the legal position of a trust has recently been the subject of two judgments of European courts. In both instances the court ruled that a trust should be considered a separate and distinct legal entity. On the other hand, with regard to a claim for defamation, in both the Zimbabwean and English court, the court found that, as a trust is not an entity, it cannot claim for defamation. Although this aspect has never – as far as we are aware – been argued in a South African court, it seems to be unfair as trusts are part of the legal reality and often participate in commercial transactions. This article therefore argues that the action for defamation should, for the following reasons, be extended to trusts: Firstly it is necessary to extend the action due to the fact that there is no legal certainty on this matter and because trusts are often involved in legal issues. Cursory research indicates that trusts were parties to 36 cases in the Supreme Court of Appeal and the Gauteng and Free State High Courts during the past three years. Secondly the current legal position, in contravention of sections 8 and 9 of the Constitution, unfairly discriminates against trusts as trusts are not afforded the same protection as an individual or a corporate entity when the trust is defamed. This situation is complicated by the fact that trusts are in some cases considered to be legal entities, which means that a trust could in one instance be protected but not in another matter.

The action for defamation can be extended to trusts in two ways: through statutory intervention or through judgments of the high courts. It is argued that the latter is preferable, because statutory changes take time and may result in some undesired effects. Further, the high courts have an inherent jurisdiction to develop the common law in accordance with the needs of society and to enhance justice and equity.

The high courts has in the past developed the law of defamation to extend the action to both trading and non-trading corporate entities, to allow inter alia the press to prove the absence of the intent to cause injury and to extend the legal aid available to include an apology. To extend the action to a trust would thus be in line with previous practice. A court could take the factors referred to in the European and previous South African judgments of the Supreme Court of Appeal into consideration when deciding whether a trust has, in a particular case, proved it has been defamed. These factors include the following: whether the trust has a clear separate legal existence, is involved in commercial activities or has a reputation that could be protected, has employees and a business premises and whether, because of the defamatory statements, the public and other businesses are no longer doing business with the trust. This article does not argue for a general defamation action available to all trusts but rather that, if the court is satisfied that a trust can in a specific case prove that it has been defamed, it should hold the defendant liable.

Keywords: defamation; legal personality; trusts

Lees die volledige artikel in Afrikaans: Kan ’n trust ’n lastereis instel? ’n Verkennende ondersoek

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