Trafalgar News

Trafalgar News

Authority of Chairpersons in Sectional Title Schemes

Many disputes between owners and Trustees could have been avoided had it not been for the misconception that a Chairperson’s consent is sufficient to authorise any act or activity on the common property – for example to build a braai or to install a louvre deck roof at a Unit.

Apart from the fact that all decisions from Trustees must be passed by way of a majority vote at a Trustee meeting or by way of majority round-robin resolution, the general rule concerning any interference with common property (alteration, additions, etc.) is that an owner may not deal with common property at all. The reason behind this general rule is simply due to the fact that the common property is owned by all members of the Body Corporate in undivided shares and therefore an owner cannot do on or with common property anything not allowed in terms of the provisions of the Act and/or rules of the Scheme.

authority chairpersons

There are exceptions to this general rule:
• Prescribed Conduct Rule 4 provides that the Trustees may consent to minor alterations,
• Prescribed Management Rule 68(1)(vi) stipulates that Trustees can consent to the installation or building improvement on an owner’s exclusive use area subject thereto that such installation and/or improvement does not contravene Section 24 and Section 25 of the Act;
• Section 24 itself, in terms whereof a special resolution from the members of a Body Corporate, is required to extend the limits of an owner’s section.

The Trustees derive their powers from the Act and the rules, which do not give a Chairperson the authority to make binding decisions by himself/herself.
Some of the Prescribed Management Rules (Annexure 8 to the Regulations under the Act) that finds application on a Chairperson of a Body Corporate:

• Prescribed Management Rule 18 – Election of Chairman:
The Body Corporate is obliged at each Annual General Meeting (“AGM”) to elect Trustees for the ensuing year.
The newly elected Trustees will at their first meeting after the AGM elect a Chairman from their number who shall hold office until the end of the next AGM.
The Chairman has a deliberate and a casting vote. A deliberate vote is the Chairman’s normal (ordinary vote) used in his/her capacity as Trustee at a Trustee meeting and a casting vote is a vote reserved only for the Chairman and importantly in the context of Trustee meetings only.
This vote can only be used by a Chairman to break a deadlock after all of the Trustees (Chairman included) have cast their deliberate votes and such votes are tied. A casting vote cannot be used in a Trustee meeting where there are only two Trustees present.

• Prescribed Management Rule 19 – Removal of Chairman:
The Chairman can be removed during his/her term of office either by a majority vote of the Trustees adopted at a Trustee meeting or by the Body Corporate at a Special General Meeting, provided that the notice of such special general meeting calling the special general meeting disclosed the intention to vote upon the removal of the Chairperson. It is not required to give any reasons for the proposal in the Notice calling the meeting.

• Prescribed Management Rule 20 – Replacement of Chairman:
If the Chairman vacates his office or is removed or is disqualified during his term in office, the Trustees must elect among their number another Chairperson who will hold office for the remainder of the period and who will have the same voting rights.

• Prescribed Management Rule 21 – Temporary Chairman:
If a Chairman vacates the chair during the course of a Trustee meeting, is not present or for some reason is unable to preside at any meeting, the Trustees present at such meeting shall nominate another Chairman for such meeting who shall have the same voting rights as the elected Chairman.

• Prescribed Management Rule 21 – Voting rights:
All matters at any Trustee meeting must be determined by a majority of the votes of the Trustees present and voting.

• Prescribed Management Rule 59 – Chairman:
The Chairman shall preside as Chairman at every general meeting of the Body Corporate, unless he is not willing or available to act or otherwise resolved by the members of the Body Corporate at such meeting.
If the Chairman is not present within 15 minutes of the scheduled time of a general meeting, the members present must elect a temporary Chairman for the duration of the meeting.

• Prescribed Management Rule 60 – Voting procedure:
Normally voting in Sectional Title Schemes take place by a show of hands unless a poll is demanded by any person entitled to vote at the meeting either prior to or on the declaration of the result of the Chairman.
In accordance with the provisions of prescribed Management Rule 62, the Chairman is entitled, if a poll is not demanded, to change the method of voting to one by a poll and not by a show of hands in his discretion.
By Izak du Pisanie – EY Stuart Attorneys, Pretoria

2 thoughts on “Authority of Chairpersons in Sectional Title Schemes”

  1. Can a trustee/chairperson be an estate manager and derive and income from it i.e per unit in sectional title, payment to accredit estate agents and a fee for helpers (i.e. domestic workers they need to register with the estate manager and the owner needs to pay for this, is this legal????

    1. The Sectional Titles Act in its Prescribed Management Rules states the following: (please keep in mind that your scheme could have customised Management Rules)

      Prescribed Management Rule 5.
      Save for the provisions of rule 4 (2), a trustee or alternate trustee shall not be required to be an owner or the nominee of an owner who is a juristic person, in order to qualify for office as a trustee: Provided that-
      (a) the majority of the trustees are owners, or spouses of owners; and
      (b) the managing agent or any of his or her employees or employee of the body corporate may not be a trustee unless he or she is an owner.

      The Act itself then states the following about the fiduciary position of Trustees

      Section 40 Fiduciary position of trustees
      (1) Each trustee of a body corporate shall stand in a fiduciary relationship to the body corporate.

      (2) Without prejudice to the generality of the expression ‘fiduciary relationship’, the provisions of subsection (1) shall imply that a trustee-
      (a) shall in relation to the body corporate act honestly and in good faith, and in particular-
      (i)shall exercise such powers as he may have to manage or represent the body corporate in the interest and for the benefit of the body corporate; and
      (ii)shall not act without or exceed the powers aforesaid; and
      (b) shall avoid any material conflict between his own interests and those of the body corporate, and in particular-
      (i)shall not derive any personal economic benefit to which he is not entitled by reason of his office as trustee of the body corporate, from the body corporate or from any other person in circumstances in which that benefit is obtained in conflict with the interests of the body corporate;
      (ii)shall notify every other trustee, at the earliest opportunity practicable in the circumstances, of the nature and extent of any direct or indirect material interest which he may have in any contract of the body corporate.

      (3) (a) A trustee of a body corporate whose mala fide or grossly negligent act or omission has breached any duty arising from his fiduciary relationship, shall be liable to the body corporate for-
      (i)any loss suffered as a result thereof by the body corporate; or
      (ii)any economic benefit derived by the trustee by reason thereof.
      (b) Where a trustee fails to comply with the provisions of subsection (2) (b) (ii) and it becomes known to the body corporate that the trustee has an interest referred to in that subsection in any contract of the body corporate, the contract in question shall, at the option of the body corporate, be voidable: Provided that where the body corporate chooses not to be bound, a Court may on application by any interested person, if the Court is of the opinion that in the circumstances it is fair to order that such contract shall nevertheless be binding on the parties, give an order to that effect, and may make any further order in respect thereof which it may deem fit.

      (4) Except as regards his duty referred to in subsection (2) (a) (i), any particular conduct of a trustee shall not constitute a breach of a duty arising from his fiduciary relationship to the body corporate, if such conduct was preceded or followed by the written approval of all the members of the body corporate where such members were or are cognizant of all the material facts.

Leave a Comment

Your email address will not be published. Required fields are marked *