“Trustees at community schemes such as sectional title complexes, homeowners’ associations, retirement housing schemes, share block companies and housing cooperatives
are often unaware that they can be held liable and even sued in their personal capacity for failures in governing a community scheme.” – Business Tech 19 August 2023.
Section 40.3 (a) of The Sectional Titles Act of 1986 (the OLD ACT) stated the following:
“A trustee of a body corporate whose mala fide or grossly negligent act or omission has breached any duty arising from his fiduciary relationship, shall be liable to the body corporate for-
(i)   Any loss suffered as a result thereof by the body corporate; or
(ii)   Any economic benefit derived by the trustee by reason thereof.
Section 8.3 of the Sectional Titles Schemes Management Act of 2011 (the CURRENT ACT) states the following:
“A trustee of a body corporate who acts in breach of his or her fiduciary relationship, is liable to the body corporate for
a)   any loss suffered as a result thereof by the body corporate; or
b)   any economic benefit received by the trustee by reason thereof.
The fundamental difference in the wording between the old Act and the current Act are the words “mala fide or grossly negligent”. Mala Fide means: “to act or behave in bad faith or with wrong intentions.”
The Law makers specifically decided to remove “grossly negligent” and “mala fide” as the burden on body corporate to prove that a Trustee acted grossly negligently or intended to do wrong was very onerous.
But what exactly is meant by a “fiduciary relationship”? The origin of the word fiduciary in Latin stems from:” fīdere”, which means “to trust”.
The Merriam-Webster Dictionary states the following: “fiduciary applies to any situation in which one person justifiably places confidence and trust in someone else and seeks that person’s help or advice in some matter.”
The Collins Dictionary indicates :” a person bound to act for another’s benefit”
Every act or decision made by a Trustee must be made with the benefit of the other members in mind.
When a Trustee acts in his or her own interest and disregards the duty to ensure that the body corporate does not suffer a loss, the trustee will be held liable for such a loss.