By The Paddocks Club Team
The body corporate is in the process of varnishing all the garden gates. The gardens are exclusive use areas (EUAs). One of the owners is refusing that his gate be varnished, as he varnished it himself a while ago. The trustees feel that they should varnish the gate, as the owner can later on hold them responsible if his gate is not done and for some reason it is damaged. Does the owner have the right to refuse to have his gate varnished?
The EUAs are common property and must be maintained by the body corporate.
The owner having done this work himself is a problem, because if the trustees agree not to varnish his gate with all the others he will, at least in theory, be entitled to avoid contributing to that cost.
On balance – and unless the trustees agreed that the owner could undertake his own gate maintenance – I suggest that the trustees should take the attitude that they need to have the contractor varnish all the gates, so as to keep the cycle of body corporate maintenance the same in all EUAs.
A steel balustrade was replaced in our building, alongside a staircase. The replacement was inferior to what was originally there which prompted a few owners to query the costs. I was told that I may view the documents then later I was told that this information was for trustees only. The trustees withheld the documents, requesting that a reason be submitted for wanting to know the costs and viewing the invoice and quotes. I then received the letter requesting reasons for my query and the trustees’ intention to charge me R75.00 for the letter issued to me, perhaps a tool to deter me and other owners from making any further enquiries. I took it upon myself to visit the Managing Agent offices to view the documents only to find that the chairman’s company issued the invoice. It came to light that the new balustrade had cost us approximately R32000.00. This amount was alarming in relation to what we saw installed and I requested to view the 2/3 quotes that were obtained before carrying out the work. The fact that the trustees were cagey fuelled our concerns. To date the quotes from other contractors have been withheld. The Managing Agent was quick to say that the work was probably done to save the body corporate money but many still questioned whether our money was well spent. We, the owners, took it upon ourselves to obtain further quotes only to find that the new balustrades could have been installed at approximately R15000.00 by other contractors. At approximately R35000.00 we could of had a balustrade that is upmarket and trendy, which would of uplifted the overall appearance of the building.
As owners, we have a few concerns:
1. Why was the invoice withheld?
2. Are we within our rights to view or obtain copies of the quotes and invoices?
3. Why did we pay almost double the costs of what other contractors are quoting to the Chairman’s company?
4. Can we as owners do something about this very suspicious business?
Can you advise me on whether we as owners may have copies of the quotes and invoices? How best should can we address or handle this matter? Can we, the owners, reverse this transaction since it was not a cost saving exercise?
The answers to your questions are as follows:
1. Yes the owners are entitled to copies of the quotes and invoices in terms of PMR 35(2).
2. The trustees stand in a fiduciary relationship to the body corporate and must honestly and in good faith. In terms of section 40(2) of the Sectional Titles Act the trustees must avoid any material conflict between his own interests and those of the body corporate and shall not derive any personal economic benefit to which he is not entitled by reason of his office as trustee of the body corporate if the benefit is obtained in conflict with the interests of the body corporate. The trustee must notify every other trustee at the earliest opportunity practicable in the circumstances of the nature and extent of any direct or indirect material interest which he may have in any contract of the body corporate. A trustee whose mala fide or grossly negligent act has breached any duty arising from his fiduciary relationship shall be liable to the body corporate for any loss suffered as a result thereof by the body corporate or any economic benefit derived by the trustee by reason thereof.
In terms of section 40(3) where a trustee fails to comply with the above provision and it becomes known to the body corporate that the trustee has an interest in any contract of the body corporate, the contract in question shall, at the option of the body corporate be voidable, provided that where the body corporate chooses not to be bound a Court may on application by any interested person, if the Court is of the opinion that in the circumstances it is fair to order that such contract shall nevertheless be binding on the parties, give an order to that effect, and may make any further order in respect thereof which it may deem fit.
Therefore if you have the support of the body corporate and you can prove that the Chairperson breached his fiduciary duty you can have the contract made voidable.
Article reference: Paddocks Press: Volume 9, Issue 4, Page 4
This article is published under the Creative Commons Attribution license.