Duties of Trustees
Trustees have a fiduciary duty which can best be described as a duty of trust towards the Body Corporate of a Sectional Title Scheme. This means that trustees must exercise their powers in good faith on behalf of all the owners of the Sectional Title units whom they represent. They may not act in their own interest or for another’s gain. They must also display reasonable care and skill in managing the affairs of the Body Corporate. If trustees fail to do so they could be accused of having breached their fiduciary duty which may result in them being held personally liable for any losses suffered by the Body Corporate (the owners of the Sectional Title Units).
Recently, in the case of Body Corporate of Sunnyside Gardens v Perreira ZAGPPHC 1960 (28 November 2023) the conduct of members of the Board of Trustees was considered.
A summary of the case
The Chairperson of the Board of Trustees and another trustee had a long history of conflict with Perreira (owner of a Unit in the Scheme and a co-trustee). They did not hide the fact that they disliked him and found him to be a nuisance. They apparently received complaints about Perreira running a carpentry business from his garage and illegitimately using the common property electricity for his business. Without notifying Perreira about these complaints and giving him an opportunity to respond thereto, attorneys were instructed to send him a letter. The letter was circulated to the Managing Agent and all members of the Board of Trustees.
The Attorney’s letter claimed that Perreira was using his garage for an impermissible purpose (a carpentry business) and in doing so, he was illegitimately using the electricity of the common property and causing a nuisance to his neighbours. He was asked to immediately stop being a nuisance to other owners, to cease running his business from his garage and to cease using the electricity of the common property to sustain his business.
Perreira believed the letter to be slanderous and he was disgusted at the accusations against him. He further felt threatened by it. He responded by sending a letter to the attorneys, denying the allegations, and requesting an apology, but received no reply. He instituted legal action against the Body Corporate for defamation and claimed payment of R100 000 in damages.
The Magistrate concluded, amongst other, that
- The letter did not merely inform Perreira of complaints that have been received and provide
an opportunity to respond thereto. The letter was defamatory of Perreira and clearly indicates that Perreira was both accused and found guilty of wrongdoing.
- The inference can be drawn on the evidence that the intention of the responsible members of the Board of Trustees was to defame the plaintiff and injure his reputation amongst the members of the Body Corporate. Both witnesses disliked Perreira and made no attempt to hide it.
- There was no evidence that Perreira had indeed contravened the conduct rules as alleged in the letter. There was no plug point from which Perreira could have drawn electricity. No investigation was conducted after complaints were allegedly received. There were no incident reports reflecting any complaints received by the trustees from any owner.
Perreira’s defamation action against the Body Corporate was successful. He was awarded R50 000 in damages with interest and costs. The Body Corporate appealed to the High Court and asked that the magistrate’s order be set aside with costs. Perreira, however, defended the judgment and order. The appeal was unsuccessful and was accordingly dismissed with costs.
On appeal, the Court mentioned that the matter concerned the conduct of members of Board of Trustees, who are duty bound to act in good faith and cannot advance their personal agendas as had ensued.
In Closing: Whether the Body Corporate considered the conduct of the members of the Board of Trustees as a breach of their fiduciary duty towards them or whether they were held personally liable by the Body Corporate for the aforesaid amounts which they were ordered to pay Perreira is unknown.
Groete / Regards
Eberhard, Cheryl-Anne, Andre, Marzanne & Kume