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Parameters / limitations of members’ powers to instruct trustees

Is it possible for trustees to establish a ‘policy’ regarding pets?

 

May owners’ actually instruct trustees as to how a ‘pets policy’ must be implemented?

limitations of members

In terms of section 39(1) of the Act the owners may from time to time issue directives or

impose restrictions upon trustees regarding their functions. Such a directive or restriction

is issued by an ordinary majority vote at a general meeting. This is in fact a compulsory

item on the prescribed agenda for the annual general meeting, but this of course does not

mean that the owners must issue directives or impose restrictions at the AGM. Nor does it

mean that this can only be done at the AGM, and can it in fact be done at any general

meeting. In the normal course of events notice of the intention to issue directives or

impose restrictions will have been given as part of the agenda for the meeting. However, a

matter could also arise during the course of a meeting which requires instructions from

the members. This could in my view be in order, depending upon the nature of the

matter.

 

A question which arises is whether the powers of owners to direct or restrict is subject to

any limitations. It is a subject previously mentioned and the conclusion then was that

owners do not have an unrestricted power to instruct. Obviously they cannot issue

instructions which are illegal or contrary to the provisions of the Act.

 

With regard to the two questions posed above, my answer to the first is that it should be

assumed that there is no such thing as a ‘policy’ in sectional title management, unless it

has been captured in the rules.

 

Are the owners, however, in terms of section 39(1) entitled to instruct the trustees

regarding the pets issue?

 

In my view any expression of the owners’ wishes at a general meeting can be no more

than an opinion poll which the trustees may take into account when exercising their

discretion, as they must in terms of Conduct Rule 1(1). They must still make a decision

which is objectively reasonable, and the wishes of the majority of owners is only one of

the aspects which they should consider.

 

A related question is whether members may impose restrictions upon trustees regarding

maintenance of the buildings. In this regard trustees should be careful: The duty to

maintain is a statutory injunction which cannot be ignored or avoided, and in terms of

Section 39(1) it is a duty which must be exercised by the trustees. But the same provision

also makes it clear that the exercising of trustees’ functions are subject to directives given

and restrictions imposed by the members.

 

The judicious interpretation seems to be that the members are allowed to issue directives

or impose restrictions as part of a maintenance plan or schedule, but that members are

never entitled to instruct the trustees not to maintain. A typical example would be where,

 

in a mixed use scheme, the majority of owners feel that the body corporate should not be

responsible for maintenance of certain elements of the common property used only in

respect of certain commercial sections, and the trustees are instructed accordingly. Such

an instruction would be ultra vires the powers of the members and the trustees would be

obliged to ignore it. The proper way to address the situation is to make a special,

reasonable management rule in terms of Section 32(4) by which the entire or a portion of

the costs of maintenance of the area in question is assigned to the commercial owners.

 

The above are two examples where owners are not authorised to issue instructions to the

trustees. It must not be forgotten that trustees are appointed to perform specific

functions and that they are required to exercise certain discretions. Trustees should be

careful not to evade their fiduciary duties by referring certain decisions to the members

and then to accept directives which the members are not authorised to give.

 

Tertius Maree

MCS Courier Issue No 45

tertius@section.co.za

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