Member's access to a body corporate's financial records

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BUSINESS NEWS - We don’t know precisely what it was that raised the suspicions of Ms Beauty Mmantho Mokoka, but from her reading of an auditor’s report for the Montrose Mews sectional title scheme where she lived, an irregular loan had been made to her body corporate and she wanted to get to the bottom of it. Her persistence earned her a place in the journals of South African case law.

Evidently better versed in the reading of financial statements than this writer, she requested the body corporate to access their administrative fund’s bank statements and statements of expenditure for the period in question.

After all, the prescribed Management Rules in the Regulations under the Sectional Titles Schemes Management Act (STSMA) oblige a body corporate to keep books of account and financial records and to make it available for inspection and copying by members, registered bondholders and managing agents. The purpose of this provision is clear: proper and transparent financial management

So, when the body corporate responded that Ms Mokoka should formally apply for these records in terms of the Promotion of Access to Information Act, 2000, (PAIA), she viewed this as a delaying tactic meant to conceal information to which she was entitled, notwithstanding the body corporate’s undertaking that her PAIA application “would not be unreasonably refused”. She then approached the Community Schemes Ombud Service (SCOS) for an order compelling the body corporate to make the information available to her. The adjudicator granted the order. Note here that CSOS will only make these orders under circumstances where information is “wrongfully” withheld by a body corporate, that is where a member is legally entitled to the information, and it is not given.

In turn, aggrieved by the CSOS decision, the body corporate approached the Gauteng High Court to review the order.

Ms Mokoka’s right to access the information, they argued, is not founded in the STSMA’s Management Rules, but in the provisions of PAIA. Ms Mokoka, of course, maintained that PAIA does not apply. The court, persuaded by the arguments on behalf of Ms Mokoka, found that PAIA is not intended to apply to situations in which a duty to disclose information arises from a pre-existing legal relationship, such as the relationship established between a member and a body corporate in terms of the STSMA.

Bodies corporate governed by the STSMA and the prescribed Management Rules are therefore obliged to make specified information available to members on application. Importantly, this principle should also apply to members of homeowners’ associations registered under the Companies Act, and members of voluntary associations entitled to information stipulated in the association’s Constitution. However, the right to information is not unlimited and any information in documents not relevant to the member’s request must be redacted.

If you are a member, trustee, director or managing agent of a body corporate or a homeowners association and you would like advice on any aspect relating to your scheme, contact Jaco Lötter at 044-220 0240 for a free consultation. Talk to us, we speak property, fluently.

Tonkin Clacey Inc. Mossel Bay
044 220 0240
083 600 4903
jaco@tcinc.co.za
www.tcinc.co.za
Office 4, Nautilus Place
27 Marsh Street,
Mossel Bay