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Lately, we’ve come across various news articles wherein top ranking officials, in a position of trust, are being investigated for “breaking the rules” only to benefit themselves. Similar principles should apply when trustees of Bodies Corporate are in arrears with their levy contributions. When it comes to the payment of levies, they are supposed to set an example.

The now repeated regulations under the Sectional Titles Act (“STA”) used to provide that an Owner, who is in arrears with his/her levy contributions, may not be nominated or appointed as a Trustee of the Body Corporate. Furthermore, it provided that a serving Trustee’s appointment as Trustee will automatically lapse if he/she fails to bring levy arrears up to date within (7 days) after receiving a warning notice to do so.

Currently, Rule 6(4) (i) of the Management Rules, Annexure 1 to the regulations promulgated under the Sectional Titles Schemes Management Act, 8 of 2011, provides that a Trustee ceases to hold office if that Trustee fails or refuses to pay the Body Corporate any amount due, after a court or adjudicator has given judgment or order for payment of that amount.

It is worth noting that under the old Management Rules an Owner’s appointment as trustee has automatically lapsed if he/she has failed to bring the arrears up to date within (7 days) written notice.

However, the current Management Rules indicates that a trustee will only cease to hold office when the trustee fails or refused to pay the arrears after a judgement or order of a court or adjudicator.

Therefore, it is only logical for the Body Corporate to be compelled to take action against a defaulting Trustee until judgement or an order for payment of the arrears is obtained against that Trustee and only when that Trustee fails or refuses to comply with the order he/she will cease to be a Trustee.

*It is the general opinion that Rule 6(4) (i) does not safeguard the interest of members of a Body Corporate.

This provision also deviates from the principle that Trustees act in a fiduciary position of trust.

It can take months to obtain judgement against a defaulting Trustee, pending adjudicating, and then the possible dispute concerning the Trustee’s liability.

During this time there would certainly be a conflict of interest between the interest of the Body Corporate and that of the Trustee. The Trustee should not be entitled to remain in the office as a Trustee, pending adjudication of the matter.

The same principles will apply when it comes to nominations for the election of a Trustee. An Owner is not entitled to be nominated as a Trustee where a judgement or order for the payment of arrears has been granted against that Owner AND that owner fails or refuses to make payment of their arrears.

It is the general view of many that the default Owner should, for the same reasons, be disqualified from being nominated for election as a Trustee from the get-go.

Article – Courtesy of Werner Loock – EY Stuart Incorporated.


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