Implementing prepaid sub-metering in sectional title
The process of implementing prepaid sub-metering in a sectional title scheme cannot be a sole or unilateral decision taken by the Body Corporate Management Company or trustees. Sectional Title requires that body corporate members should be consulted and reaches a unanimous resolution to change how things operate when it concerns something as important as how their utilities are billed within their body corporate.
In order to consult the members it is customary that the managing agent or a trustee will research the facts to understand the implications of changing to prepaid billing. Often this process starts by the appointed person contacting companies who can provide consultation and assist with information that can help to inform all stake holders.
It is often very difficult when starting out for people to determine “who are the best people to speak to” and receive consultation from. Every industry has its’ rats and mice, small and unreliable companies which could close down any day and leave their customers hanging. As a general rule it is best practice to speak to prepayment sub-metering companies who are at least paid up licensee members of the STS Association. This ensures that the company is bound by the STS Association Code of Conduct which was put in place to protect customers’ interests as well as has responsibility towards Eskom conduct, practices, rules and regulation. Should a company provide you with AMI/AMR equipment, it is best that they also belong to the AMI/AMR association to ensure compliance and best practices are adopted and updated to best serve customers. Once all the facts have been gathered and conveyed to the members it is time to call a meeting to vote on the decision. The voting process is used to allow members of the body corporate to steer the decision making of appointed trustees. This means that, from time-to-time, owners will be called upon by trustees to exercise their democratic right by voting. The outcome of a vote results in a “resolution” being passed.
There are three kinds of resolutions:
- An ordinary resolution
- A special resolution
- A unanimous resolution
- A unanimous resolution is required in order to execute any project that will change the body corporate utility billing management system from that of post-paid billing to that of prepaid billing.
There are two ways to reach and pass a unanimous resolution:
Reaching a unanimous resolution can be difficult, especially if there are problematic owners who are the cause of financial loss to the body corporate. They may not want to change from post paid billing to prepaid, because this would mean that they have to make payment for utility services and cannot get away with using these services without paying or delaying payments. Unlike an ordinary resolution an owner cannot be prohibited from voting when a special or unanimous resolution is required. If it is only an ordinary resolution that is required, where a simple majority of 51% is required, then an owner can lose the right to vote if:
The owner is in arrears with levy or other payments
The owner has received written warning from the trustees or management agents for breaching conduct rules of the scheme, and despite receipt persists in the conduct. That said, it should also be kept in mind that the owner can request that a bondholder vote on behalf in both these conditions. To reach and pass a unanimous resolution an 80% quorum must be reached.
So what is a Quorum?
A quorum simply means that a minimum number of people have to be present at the meeting for it to proceed. The quorum is generally calculated by how many sections are within the scheme. But the quorum can also be calculated by the participation quota of the sections within the scheme. Generally, each section represents a vote and you need a minimum number of votes to proceed with the meeting. Here are some examples:
- 10 units or less – the quorum will be the number of owners holding 50% of the votes.
- 11 to 49 units – the quorum will be the number of owners holding at least 35% of the votes.
- 50 or more units – the quorum will be the number of owners holding at least 20% of the votes.
In every quorum persons can vote as follows:
- In person
- By proxy or
- By representative recognized by law as entitled to vote.
As is often the case, many people do not attend body corporate meetings. So what happens when you do not have enough people to form a quorum? In the minimum number of people do not arrive at a meeting then the meeting is automatically postponed to the following week at the same time at the same place. If a week later a quorum is still not present, then the persons present or by proxy will be deemed to constitute a quorum and the meeting will proceed on that basis.
Once a unanimous resolution has been reached the trustees of the body corporate can then proceed to execute the project plan for conversion to prepaid utility management. At this point the trustees should already know which prepaid sub-metering service provider they would like to appoint. With this they will also know which technologies will be used and how issues such as meter management, revenue collection, vending and support will be handled.
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