AN EMPLOYEE OR MANAGING AGENT OF A BODY CORPORATE IS DISQUALIFIED TO ACT AS A TRUSTEE UNDER CERTAIN CIRCUMSTANCES
Prescribed Management Rule 5(b) stipulates that a Managing Agent or any of his or her employees or an employee of the Body Corporate may not be a trustee unless he or she is an owner.
It is often debated at meetings whether a nominee for the office of trustees is disqualified to be appointed as a result of the aforesaid provision.
Prescribed Management Rule 5(a) stipulates that the majority of trustees must be owners or spouses of owners. If nominations for trustees are considered, the employment restriction is often confused with the position of a service provider to the Body Corporate.
According to the Oxford Dictionary, an employee is : “A person employed for wages or salary, especially at non-executive level.”
According to the Collins Concise Dictionary, an employee is : “A person who is hired to work for another or for a business, firm, etc., in return for payment.”
A person is therefore an employee where there is a relationship as between master and servants.
The following situations can be considered:
A. Mr. A: –
• Is not an owner;
• Is employed by the firm of attorneys who attends to collection of arrear levies on behalf of the Body Corporate;
• Disclosed the fact that he is employed by the collection attorneys;
Provided that the majority of trustees to be elected are owners of units in the scheme, Mr. A is not disqualified to act due to the fact that he is not an employee of the Managing Agent or of the Body Corporate. Mr. A is employed by the attorneys who act as a professional service provider to the Body Corporate. There is no master/servant or employment relationship in existence;
B. Ms B: –
• Is not an owner;
• Is employed by a letting company which company is a subsidiary of the Managing Agent;
• Attends to the letting of various units in the scheme and also assists with the Body Corporate administration entrusted to the Managing Agency, although she is in employ of the Letting Company and not in employ of the Managing Agent;
Strictly speaking Ms B is not employed by the Managing Agent or by the Body Corporate and provided that the majority of trustees to be elected are owners, she is not disqualified.
The fact that she assists in the Managing Agency can lead to a conflict of interest and it is not advisable that she should act as a trustee;
Prof Graham Paddock expressed the view in the Paddocks Club Forum that although an owner, in the employ of a Managing Agent, is not disqualified to act as a trustee, that such a situation should be avoided (www.paddocksclub.co.za)
C. Mr C:-
• Is an owner and a Director of an Electricity Metering Company who supplies electricity current to the members of the Body Corporate
• The Electricity Metering Company is a wholly owned subsidiary company of the Managing Agent.
The fact that there is a connection between the Electricity Metering Company and the Managing Agent does not disqualify Mr C to act as a trustee. The Metering Company is a service provider to the Body Corporate and Mr C is not an employee of the Managing Agent.
In any event, Mr C is an owner and therefore the disqualification is not applicable.
D. Mr D:-
• Is a Director of a company who is an owner of a unit in the Scheme
• Conducts business as a Letting Agent and acts as Managing Agent on behalf of the Body Corporate and therefore employed by the Managing Agency.
Mr. D is not disqualified to act as he is a representative (Director) of the company that owns the unit.
As can be seen from the aforesaid scenarios, there is a difference between an employee and a service provider and a service provider to a Body Corporate is not disqualified to act as a trustee, even if the service provider is not an owner of a unit in the complex.
Written by Elmo Stuart – EY Stuart Attorneys, Pretoria, www.eyslaw.co.za
