Our sectional title experts are faced with a situation where it has become unclear who the board of trustees are.
The owner of one of the units says a board were elected and changed from time to time as people resigned, were not reappointed, removed or the like.
Then, in recent times and ostensibly due to an internal power struggle, a series of events has resulted in the current situation.
The “old” board maintain their validity while the “new” trustees insist they form part of the existing board or, alternatively, that they are the de facto existing board.
Arguments and correspondence are being fired from one side to the other and disputes as to legitimacy of meetings, decisions and resolutions are numerous.
The new board furthermore refuse to provide the names of some of their members, “fearing” that they will be intimidated.
The owner who contacted the experts alleges that the new board wish to take control of the finances of the scheme for their own gain.
He says they allege that the previous board were corrupt despite them using a reputable managing agent and having the financials audited annually.
In short, the owner now enquires as to how the identities of the “new” trustees can be established.
See the reader’s question here.
Trustees are elected by the body corporate in general meeting.
They act in a fiduciary capacity in that they care for and administer the dealings of the sectional title scheme with honesty and in good faith.
Should any trustee breach the provisions relating to his or her duties and obligations, a special general meeting can be used to remove such a trustee.
For the election process, members of the body corporate put forward written nominations to propose trustees and, in general meeting, certain of these will be voted in.
The names of the appointed trustees are recorded in the minutes and, accordingly, their identities should be clear from that.
In one court ruling it was confirmed that approaching the court for a declaratory order as to the identity of the trustees is largely not appropriate.
A straightforward method of remedying the appointment and identities of the trustees would be to use the next AGM to re-elect certain of the existing trustees or to elect a new board.
In addition, the Promotion of Access to Information Act applies to a body corporate and any interested party can apply to the trustees for information that may be justified in the circumstances.
In terms of the financial aspect mentioned, one must remember that trustees are generally not remunerated for their duties. They are however entitled to be reimbursed for any expenditure incurred in exercising such duties.
Access to the funds of the scheme is not a ‘free for all’ and the trustee can incur liability should any monies be misappropriated.
If a dispute between trustees and/or owners cannot be settled, either may demand arbitration under the auspices of the Sectional Titles Act.
The decision of the arbitrator is final and binding and can be made an order of the High Court.
It is evident that the provisions of the Sectional Titles Act, interpreted with any appropriate case law, should be adhered to by the body corporate and, in particular, the trustees.
Using the appropriate remedy at the appropriate time can result in saving the body corporate a substantial amount of money by virtue of the fact that the parties don’t merely run to arbitration upon the raising of any dispute.
It is to be expected that parties will have different views as to the management of a scheme and the act is there to provide a structure within which these views can be reconciled.
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