4.1. How can we trust the Trustees of this trust not to become a dictatorship or manage it for personal gain?
The Trusts trustees owe, both at common law and in terms of statute, a fiduciary duty to the trust’s beneficiaries. The trustees are required to administer the trust solely for the benefit of the trust’s beneficiaries.
The Master of the Court must and will ensure that those who benefit from a trust cannot control the trust. This is very different from how a company or Home Owners Association works.
In the case of HOA’s the persons controlling the Association, even though they are elected by the members of the association, are normally also the people benefitting from the HOA.
Another point is that a trust does not have legal personality because it is effectively an accumulation of assets. In some circumstances – such as for tax purposes – it is regarded as having a separate legal identity. Despite its lack of legal personality, a trust can have legal capacity and the trustees may perform juristic acts as long as the trust deed allows this.
It means, in terms of legal action the assets the Trust is protected. The Trustees in the case of Marloth Park will under law be responsible to ensure our assets are;
- Protected for the beneficiaries, and
- Utilised for the beneficiaries through the PBC in accordance with the plans developed in workshops by the beneficiaries in line with the wants and needs of the majority of the owners.
That is why the operational function required to manage the assets will be performed through the PBC.
There is further information provided in the library of documentation.
4.2. How do we know that the Board, particularly the four property owners, will manage the Trust in accordance with my desires for my property?
A trust does not have legal personality because it is effectively an accumulation of assets. In some circumstances – such as for tax purposes – it is regarded as having a separate legal identity. Despite its lack of legal personality, a trust can have legal capacity and the trustees may perform juristic acts as long as the trust deed allows this. It means, in terms of legal action the assets the Trust is protected. That is why the operational function required to manage the assets will be performed through the PBC.
The Trusts trustees owe, both at common law and in terms of statute, a fiduciary duty to the trust’s beneficiaries. The trustees are required to administer the trust solely for the benefit of the trust’s beneficiaries. The Master of the Court will ensure that those who benefit from a trust cannot control the trust. In effect, the Marloth Park trust will act as a Body Corporate with the intention of setting up the Public Benefit Company (wholly owned by the beneficiaries to act as the Home Owners Association (HOA).
The difference between the functions of a Body Corporate and Home Owners Association are explained below for clarity;
- In the case of HOA’s the persons controlling the Association, even though they are elected by the members of the association, are normally also the people benefitting from the HOA.
- The body corporate’s function is to manage and maintain the property, which includes the common property (common green spaces, swimming pool clubhouse and other exclusive use areas). To do this they will appoint trustees to act on their behalf and the trustees’ duties will include:
- establishing a fund via levies paid by the owners for maintenance, management and administration of the common property and payment of taxes, water, electricity, insurance and other necessary services;
- opening a bank account;
- insuring the buildings;
- maintaining the common property;
- arranging repair of any damage caused once insurance has paid out or has been covered by whoever responsible;
- informing the Registrar of Deeds and local authorities what the official address of the body corporate will be; and
- maintaining all the instruments and machines that form part of the common property.
This Body Corporate function is usually provided in a sectional title environment. The body corporate is usually started by the developer and handed over to the Body Corporate on completion of the project. When Marloth started the "Body Corporate" structure did not exist (the law came into play in 1986) but our original private municipality provided most of these functions prior to NKLM taking over.
- In a Homeowners’ Association (HOA), each member owns the house and the erf or plot on which the home is situated. Usually established by the residents within a community, an HOA is formed to ensure that the infrastructure of an area is maintained. Another major role of an HOA could be ensuring the safety of those who live within the community (such as a boomed-off area).
- In Marloth Park our properties are freehold, but we also have common property, so we require both these services. Presently we do not have a Home Owners Association or a Body Corporate.
Even if we do not intend to recover or reinforce the ownership of our common property we will need to do the same exercise WE are pursuing to put in place a Home Owners Association.
4.3. In the Trust, I see that only the Trustees will vote. A majority needed for ordinary resolutions and 100% vote needed for Special Resolutions. How do the Owners get their say, other than appointing 4 Trustees?
The Trust operates in the exact same way that a Body Corporate functions.
The business plan and ecological plan are developed in a workshop environment with owners (in a similar environment as a Home Owners Ass under the PBC). These documents set out the scope or jurisdiction of the Trustees. The Trustees then have an obligation to perform on behalf of the beneficiaries. To act as Trustee is an exceptional onerous obligation and significantly more so than a business director – or a volunteer in the structures we currently have.
It is proposed that the Trustees are formed of a mix of owners and specialist in the management of environments similar to what we have;
Presently the type of trustees could include persons such as;
- Head Game Management Tshwane University. MSc. In Wildlife Management and PhD in nature conservation. An expert in Ecology and biostatistics.
- CEO of a 37,000Ha Private Game Reserve with residential and tourism components. Presently completing his PhD at Welgevonden University. Hugely experienced in managing large private wildlife undertakings and ensuring they are economically viable.
- Section Ranger in KNP, Hons in wildlife management, experienced and pragmatic and well connected within KNP & National Parks Board.
- Recently retired from ecological manager from Gauteng Province. Excellent security and anti-poaching experience and Ex 32 Battalion. Experienced in Project and wildlife management. Developed the Cradle of Humankind conservation area into the popular, diverse and viable tourism are it is today.
- An advocate currently practicing as an attorney. An environmental specialist with a long history of environmental and wildlife related issues.
- Mpumalanga Tourism & Parks Authority – various experts in game and tourism management in Mpumalanga.
- A township manager with ecological biases and ensuring the commercial and social aspects are equally integrated.
- A specialist focussing in setting up SRA’s & CID’s in South Africa.
These people could be approached to sit on our trust as trustees or we could approach them to assist on a contract basis. The trust provides for this opportunity.
4.4. In 126.96.36.199 “the MP owners / beneficiaries shall be entitled to appoint up to 4 trustees and to remove and/or replace any of them at any time”.
In the same way that Trustees are nominated by Home Owners to represent them on a body corporate, the trustees acting on the trust will be nominated by the home owners or beneficiaries.
4.5. I assume the Trustees will be giving directions to the manager of the PBC on what social & developments need to be done. Is this correct? How can the concerns of the MP owners be considered in determining these services?
No, you are not correct.
The business plans, sustainability plans, etc, will be developed in workshops together between the management of the PBC with owners and then reviewed annually and amended as required by owners. The directors of the PBC develop these documents and then together with a budget they are presented to the trust.
After review and final agreement, the budgets are approved, the Trustees then hold the directors of the PBC to task to ensure delivery of these requirements for the beneficiaries (the owners).
This is necessary as 95% of our owners do not live in Marloth and our owners are mostly not specialists in ecology or township management. They also have their own life and need this investment to be managed professionally on their behalf.
Every year there will be a full report available for all owners showing original intent and achievement for each year and also planned changes, improvements that will be implemented going forward. The report will reflect short, medium and long-term plans and will address Marloth under different heads such as:
- Township development,
- Commercial development
- Social programmes (within Marloth & interaction outside Marloth park)
- Security (access & anti-poaching)
4.6. It is vital for Marloth Park residents to know who the four property owners and five experts are who are going to be appointed as the trustees and what their vision is as far as managing the park is concerned.
The trust deed clearly states that four Trustees will be nominated by the Owners. So there are no property owners nominated yet. There is provision for 5 additional trustees;
- 1 of which could come from the municipality, and
- 1 of which could come form MPTA.
- Very importantly these five trustees could also be owners but there is a provision for them to also be topic experts to ensure we have the best available capabilities on hand.
The trustees have no capacity to manage and make decisions. Their ony task is to ensure the shared assets of the owners of Marloth Park are not abused and that the management of the Pubilc Benefit Company deliver on the business plans, sustainability plans and budgets set by the owners.
So the Trustees will only be known after they have firstly been nominated by the owners, then from these nominations, four are appointed.