Comparative perspectives on the role of the trustees and the managing agent as dramatis personae in the governance of sectional title schemes in South Africa

Durham, Carryn Melissa (2016-03)

Thesis (LLD)--Stellenbosch University, 2016

Thesis

ENGLISH ABSTRACT : Ownership of affordable housing is made possible through the concept of sectional title, which maximizes the number of available homes per square meter and makes optimum use of available land. The utilization of sectional title schemes to provide housing to a broader base of South Africans would only be successful if schemes are provided with an efficient management structure. Besides the general meeting, the two most important dramatis personae in the management of sectional title schemes are the trustees and the managing agent. This thesis will focus on the role played by these administrators in the governance of sectional title schemes. The discussion will commence with an exposition of the legal status of both these role players followed by an examination of the reasons for their election and appointment to perform the day-to-day management functions of the body corporate. In order for these role players to carry out their functions effectively they need to be suitably qualified and should have the personal qualities required to execute the task. Furthermore, the role players should be properly elected or appointed to their positions by established administrative procedures. The powers, functions and duties of the trustees and the managing agent must be clearly defined with the minimum overlap between their tasks to ensure certainty, and to avoid a situation where a certain function is either not performed at all, or where a single function is performed by two or more of the role players. Due to the fact that these role players should be held accountable for abuses or negligence in the performance of their functions, the fiduciary position and instances of indemnification of trustees for negligent execution of their duties will then be dealt with. This will be followed by an examination of the remuneration payable to trustees and managing agents and their claims for expenses incurred in the performance of their functions. Finally, the terms of appointment of the managing agent will be scrutinized and the circumstances in which his appointment and the office of trustees may be terminated will be placed on the table. The thesis will regularly identify particular deficiencies in the Sectional Titles Act 95 of 1986 and the prescribed management rules relating to trustees and managing agents. Where appropriate and practicable, reference will be made to the manner in which New South Wales, Singapore, Malaysia, China and Germany deal with particular shortcomings. The aim is to search for potentially more appropriate solutions to iron out such problems, and thereby to regulate the governance of sectional title schemes in South Africa more effectively. Where a sectional title scheme faces financial ruin or experiences flagrant managerial mismanagement, the Sectional Titles Act provides for the appointment of an administrator. This measure of last resort should be avoided by ensuring that properly elected, qualified and accountable managerial role players administer the scheme. Therefore, I propose that the Sectional Titles Act 95 of 1986 (or rather the future Sectional Titles Schemes Management Act 8 of 2011) should be amended to make provision for the mandatory appointment of a professional manager as the sole executive organ of the body corporate assisted by an elected board of trustees consisting of sectional owners, and who act merely in a advisory capacity. The status of the managing agent would be elevated to that of an executive organ of the body corporate. This will mean greater responsibilities for the managing agent, but would result in more efficient management of South African sectional title schemes.

AFRIKAANSE OPSOMMING : Die instelling van deeleiendom verwesenlik die droom van menige Suid-Afrikaners om eiendomsreg van n bekostigbare woning te verkry, aangesien dit meer wonings per vierkante meter deur die optimale benutting van grond verseker. Die gebruik van deeltitelskemas om behuising te voorsien aan ʼn wyer spektrum van Suid-Afrikaners sal egter slegs met sukses bekroon word indien voorsiening gemaak word vir ʼn doeltreffende bestuurs struktuur. Afgesien van die algemene vergadering, berus die bestuur van deeltitelskemas by twee belangrike rolspelers, naamlik die trustees en die bestuursagent. Hierdie tesis sal fokus op die rol wat hierdie twee dramatis personae speel in die administrasie van deeltitelskemas. Die bespreking sal aanvang neem met ʼn uiteensetting van die regs status van die twee rolspelers, gevolg deur ʼn omvattende ondersoek van hoekom hulle verkies of aangestel word om die daaglikse bestuursfunksies van die regspersoon te verrig. Ten einde hulle funksies doeltreffend uit te voer, moet albei rolspelers oor toepaslike kwalifikasies en gepaste persoonlike eienskappe beskik vir die soort werk wat aan hulle toevertrou word. Verder moet trustees behoorlik verkies en bestuursagente behoorlik aangestel word ingevolge gevestigde administratiewe prosedures. Die magte, funksies en verpligtinge van elke rolspeler moet ook duidelik uiteengesit word ten einde te verhoed dat bepaalde funksies nie uitgevoer word nie, of dat die trustees en die bestuursagent koppe stamp oor die uitvoering van ʼn bepaalde taak. Aangesien die rolspelers aanspreeklik gehou word vir enige misbruik van mag of nalatigheid in die uitvoering van hulle funksies, word die vertrouensverhouding tussen die rolspelers en deeleienaars bespreek, sowel as die vrywaring van trustees vir alle verliese wat in die verrigting van hul funksies sonder growwe nalatigheid aan hulle kant veroorsaak word. Dit sal gevolg word deur ʼn ondersoek na die vergoeding van trustees en bestuursagente, met verwysing daarna dat hulle betaling vir hulle uitgawes kan eis. Ter afsluiting sal die bepalings wat die aanstelling van die bestuursagent raak, asook die omstandighede waarin trustees van hul amp onthef, of die aanstelling van die bestuursagent beëindig kan word, behoorlik ondersoek word. Hierdie tesis sal deurgaans bepaalde tekortkominge in die Wet op Deeltitels 95 van 1986 en die reëls wat verband hou met trustees en bestuursagente aandui. Waar doenlik, sal regsvergelykend verwys word na oplossings wat die regstelsels van Nieu- Suid Wallis, Singapore, Maleisië Sjina en Duitsland bevat om soortgelyke probleme die hoof te bied. Die doel is om die bestaande tekortkominge uit te stryk en dus die bestuur van Suid-Afrikaanse deeltitelskemas meer doeltreffend te beheer. Indien ʼn deeltitelskema finansiële ondergang of verregaande wanbestuur in die gesig staar, maak die Wet op Deeltitels voorsiening vir die aanstelling van ʼn administrateur. Dit is die laaste uitweg en behoort vermy te word, deur die bestuur van ʼn deeltitelskema in die hande te plaas van behoorlik verkose, gekwalifiseerde rolspelers wat verantwoordelik gehou kan word vir wanbestuur. Daarom stel ek voor dat die Wet op Deeltitels 95 van 1986 (of eerder die Wet op die Bestuur van Deeltitelskemas 8 van 2011) gewysig word om voorsiening te maak vir die aanstelling van ʼn professionele bestuurder as die enigste uitvoerende orgaan van die regspersoon bygestaan deur ʼn raad van trustees bestaande uit deeleienaars in ʼn raadgewende hoedanigheid. Dit sal die status van die bestuursagent verhoog tot dié van ʼn uitvoerende orgaan van die regspersoon wat groter aanspreeklikheid sal meebring en terselfdertyd doeltreffender bestuur van suid-afrikaanse deeltitlelskemas tot gevolg sal hê.

Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/98826
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