n Tydskrif vir die Suid-Afrikaanse Reg - Criteria for the appointment of an administrator of a sectional title scheme : notes




Inefficient governance and maladministration of a sectional title scheme can lead to serious disharmony within a scheme and a major decline in the amount of money invested in units in the scheme. Sectional owners who are part of the management structure of the scheme should take prompt steps in order to avoid its collapse. They can arrange for a special general meeting to be held to discuss the situation; they can replace inefficient, dishonest or autocratic trustees at the next annual general meeting; or they can appoint a managing agent to defuse arguments within the community and to ameliorate the finances of the scheme (see 2006 JOL 18414 (W)). Only if these measures are unsuccessful can owners, the body corporate, the local authority, creditors with a claim of at least R500 or the holders of real rights in the scheme (s 46(1) of the Sectional Titles Act 95 of 1986) approach the court for the appointment of an administrator to revive the scheme. In this way the appointment of an administrator is considered a measure of last resort.

The rationale underlying this is that the appointment of an administrator is a drastic step because it removes control of the affairs of the body corporate from the trustees elected by its members and places it in the hands of the administrator (see also the recent case of (13500/2010) 2011 ZAKZDHC 24 (20 May 2011) par 11-12). An administrator should therefore only be appointed when the trustees are not in a position to properly perform the functions assigned to them, when the body corporate has not elected trustees, or where for some other reason the affairs of the body corporate are not being, or are not capable of being, administered in the manner envisaged by the act. The purpose of appointing an administrator is remedial in that the management of the affairs of the scheme should subsequently be restored to the members of the body corporate. The enquiry into the need for the appointment of an administrator will inevitably turn on whether the affairs of the body corporate need to be taken out of the hands of the trustees and members of the body corporate in order to address and resolve the problems giving rise to the application (see also Wallis J in 2010 6 SA 599 (KZD) par 46).
The case is the most illustrative case to date dealing with the precise point at which an administrator should be appointed in an endeavour to prevent a sectional title scheme from descending into financial ruin and social disharmony.


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