Property Management, Property Rentals and Property Financial Services in South Africa

0861 664 444   sales@trafalgar.co.za

What circumstances disqualify a Trustee?

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.

business hand shake

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

8 Responses to What circumstances disqualify a Trustee?

  1. I always spent my half an hour to read this web site’s articles every day along with a mug of coffee.

  2. Hello! I’ve been following your site for some time now and finally got the courage to go ahead and give you a shout out from Porter Texas! Just wanted to tell you keep up the excellent work!

  3. You could certainly see your enthusiasm within the work you write.
    The sector hopes for more passionate writers such as you who aren’t afraid to mention how they believe. Always follow your heart.

  4. Having read this I thought it was extremely enlightening.
    I appreciate you finding the time and energy to put
    this information together. I once again find myself
    spending a lot of time both reading and commenting. But so what, it was still worthwhile!

  5. business branding and printing says:

    This is really interesting, You’re an overly professional blogger. I have joined your feed and look forward to in the hunt for more of your excellent post. Also, I have shared your web site in my social networks

  6. Hermine says:

    It’s actually a great and helpful piece of info. I am happy that you shared this useful info with us. Please stay us informed like this. Thank you for sharing.

  7. graphic designer says:

    I was very happy to discover this web site.

    I wanted to thank you for ones time due to this fantastic
    read!! I definitely liked every little bit of it and i also have you bookmarked to check out new things on your site.

  8. I am regular reader, how are you everybody? This post posted at this web page is actually pleasant.