Sec­tional ti­tle trus­tees can’t shirk fidu­ciary du­ties

Weekend Argus (Saturday Edition) - - PROPERTY -

AL­THOUGH many tasks in sec­tional ti­tle schemes can be del­e­gated to man­ag­ing agents, fidu­ciary duty re­mains with the trus­tees, says Willem le Roux, direc­tor of sec­tional ti­tle fi­nance com­pany Pro­pell.

“The duty of trust or fidu­ciary duty re­ally means that the per­son re­spon­si­ble will ex­er­cise his pow­ers in good faith and he will not act in his own in­ter­est or for another’s gain, but for the mem­bers – the own­ers of the sec­tional ti­tle units - he rep­re­sents,” says Le Roux.

“Trus­tees must dis­close any con­flicts of in­ter­est. Sec­tion 40(b) of the Sec­tional Ti­tles Act spec­i­fies that a trustee shall avoid any ma­te­rial con­flict be­tween his own in­ter­ests and those of the body cor­po­rate.”

In par­tic­u­lar, trus­tees may not de­rive any per­sonal eco­nomic ben­e­fit to which they are not en­ti­tled by rea­son of their of­fice as trus­tees 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.

They must also 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 they may have in any con­tract of the body cor­po­rate.

“If you act on be­half of another you have a duty to act with care.

“If you don’t do this, you can be held li­able for any losses suf­fered by mem­bers,” says Le Roux.

“The trus­tees must, there­fore dis­play rea­son­able care and skill in man­ag­ing the af­fairs of the body cor­po­rate.

“To en­sure they are qual­i­fied to ex­e­cute their du­ties trus­tees should fa­mil­iarise them­selves with the Sec­tional Ti­tles Act and their schemes man­age­ment and con­duct rules.

“They should also read some of the many how- to guides about sec­tional ti­tle, ap­point a com­pe­tent man­ag­ing agent on whom they can rely for ad­vice, and ap­point a com­pany such as Pro­pell that can help en­sure that levies are raised cor­rectly and that levy debt is col­lected with­out fear or favour.”

Le Roux says a com­pe­tent board of trus­tees is the key to all suc­cess­ful schemes. Only peo­ple will­ing to act in the in­ter­ests of all mem­bers should be elected as trus­tees. And once they are elected, trus­tees must equip them­selves with the knowl­edge needed to per­form their du­ties com­pe­tently.

“Knowl­edge­able trus­tees who steer clear of con­flicts of in­ter­est can never be ac­cused of hav­ing breached their fidu­ciary duty,” says le Roux.

Call Willem le Roux on 0861 33 34 35 or see­

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