Trustees ordered to pay

TRUSTEES ORDERED TO PAY IN EXCESS OF R300 000 TO THE BODY CORPORATE

The video below aired on Carte Blanche on 20 January 2019 and showcase the very first case in which Trustees have been ordered to pay back money which was lost due to the action they have taken.

The history is short, the Trustees were approached by the body corporate’s manager and informed that they will be implementing the conditions of the Debt Collectors Act with the collection of levies.

This management decision is within the powers of the Board of Trustees, yet they decided to take this to the Owners for their approval. Whilst this action may at first appear to be the right one, it is exactly this action that caused all the problems. Lets look at the facts:

1. The trustees in terms of the Act is empowered to take all management decision of the Body Corporate;
2. The managing Agent by definition is a debt collector in terms of the debt collectors Act and as such has no other option than to implement the Act as such;
3. The Owners voted against the implementation of the conditions of the Debt Collection Act.

The trustees now have an awkward situation at hand, by their Own doing. The law says they have to implement, but the Owners in essence took an illegal decision to stop the Trustees to do what the Act requires.

In essence this left the Trustees with only 2 options namely to stop debt collection completely, or implement the Act. The devil on the one side and the deep blue sea on the other…. The Trustees now took a decision to implement the Act, as they should have in the first instance, but not to charge the Owners directly in line with the instruction of the Owners. As someone had to pay the costs, they decided to make this a body corporate expense.

This worked very well until a new Board of Trustees were elected that felt that it was unfair to make all Owners pay debt collection costs, as it is the intention of the Act that the debtor must carry the costs.

The new Board took the matter to CSOS who made an order that the Trustees and the Managing Agent together and separately must pay back in excess of R300 000.00 to the Body Corporate.

The important factors to remember here is firstly that the 2016 Act took away the protection of the Trustees, and secondly that the Trustees should take the decisions that they are empowered to take in terms of the Act.

It is understood that this matter will be taken on appeal and we will report back as soon as there is more on this.

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