While many tasks in sectional title schemes can be delegated to a managing agent, fiduciary duty remains with the trustees.
Section 8 of the STSMA of 2011 states that each trustee must stand in a fiduciary relationship to the body corporate and further goes on to explain that “fiduciary relationship” implies that a trustee must act honestly and in good faith.
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.
- A trustee is required to exercise his powers in the interest and for the benefit of the body corporate and must not act without or exceed those powers.
- A trustee must avoid any material conflict between his own interests and those of the body corporate and may not receive any personal economic benefit, whether directly or indirectly, from the body corporate and must notify all trustees to the nature and extent of any direct or indirect material interest which he may have as soon as the trustee becomes aware of such interest.
If a trustee acts in violation of his fiduciary relationship, he is liable to the corporate body for any harm incurred as a result by the corporate body or any economic gain obtained as a result by the trustee.
If a trustee has acted upon the written approval of all the corporate body members and if such members were aware of all the facts, the actions of such trustees would not be seen as a violation of his fiduciary relationship with the corporate body.
The trustees must, therefore, display reasonable care and skill in managing the affairs of the body corporate.
The steps trustees can take to ensure they are qualified to execute their duties are to:
- Familiarise themselves with the Sectional Title Scheme Management Act and their Schemes Management and Conduct Rules.
- Download this eBook by Fitzanne Estates.
- Appoint a competent Managing Agent on whom they can rely for advice.
- Complete Scheme Executive Training offered by Fitzanne Estates.
The key to all successful schemes is a knowledgeable board of trustees. As trustees, only people willing to behave in the interest of all members should be elected. And trustees must equip themselves with the skills required to conduct their duties competently once they are elected. Knowledgeable trustees who steer clear of conflicts of interest can never be accused of having breached their fiduciary duty.
If you are a trustee or an owner in a sectional title scheme, and have any concerns or queries relating to this topic, download this eBook or sign up for Scheme Executive Training and make sure that you’re up to date with everything you need to know as a Scheme Executive.