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[2020] ZAWCHC 82
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BAE Estates and Escapes (Pty) Ltd v Trustees for the Time Being of the Legacy Body Corporate and Another (9728/2019) [2020] ZAWCHC 82; 2020 (4) SA 514 (WCC) (4 February 2020)
REPORTABLE
THE
REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH
AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
Case
No: 9728/2019
Before
the Hon. Mr Justice Bozalek
Hearing: 31 October
2019
Delivered:
4 February 2020
In
the matter between:
BAE ESTATES
AND ESCAPES (PTY) LTD
Applicant
(Registration
number: 2018/208328/07)
and
THE TRUSTEES
FOR THE TIME BEING OF
THE
LEGACY BODY CORPORATE
1
st
Respondent
PAM GOLDING
PROPERTY MANAGEMENT SERVICES (PTY) LTD 2
nd
Respondent
(Registration
number: 2001/008556/07)
JUDGMENT
BOZALEK
J
[1]
This
is an application for the review of the decision of the body
corporate of The Legacy Sectional Title Scheme (‘the scheme’)
which is situated in Green Point, Cape Town. The applicant, a private
company, carries on business as a real estate agency selling
and
renting properties within Cape Town and surrounding areas. It
is said on its behalf that it is a highly reputable agency
and in
particular is well established on the Atlantic Seaboard.
[2]
The
first respondent are the Trustees for the time being of The Legacy
Body Corporate established in terms of sec 2 of the Sectional
Title
Schemes Management Act, 8 of 2011 (‘the STSMA’) and they
oppose the relief sought. The second respondent is a
private company
specialising in sectional title administration and the management of
homeowners’ associations. It
is the managing agent
of the scheme and played a central role in the events surrounding the
impugned decision. No relief is sought
against the second respondent
however and it abides the decision of the Court.
[3]
In
broad terms the application concerns the decision taken by the first
respondent on or about 21 May 2019 barring the applicant
from
conducting business in the scheme. The applicant brought an urgent
application seeking the setting aside of the decision and
costs, to
be couched in the form of a rule nisi, on 19 June 2019. The matter
was postponed for hearing on 31 October 2019 to allow
for the filing
of affidavits and heads of argument. No interim relief was granted.
Despite the form of the relief sought in the
notice of motion I
understood the parties to be in agreement that the application was to
be treated as one for final relief.
Background
[4]
Most
of the facts constituting the dispute are common cause. Where any
facts are in dispute I will outline these but in my view
they are not
such as to preclude a decision being made on the merits of the
dispute. This appears also to be the view of the parties
since
neither of them sought a referral to evidence.
[5]
The
dispute centres around the occupation of Unit 107 in the scheme which
at all times was owned but not occupied by a Dr G Vizirgianakis
(‘the
owner’) who lives in Johannesburg. In May 2018 the owner
instructed the applicant to find a tenant for his unit.
The applicant
did so and the owner entered into a year long lease agreement with
two co-tenants, Messrs Du Preez and Vandiar (‘the
tenants’).
In terms of the lease the owner agreed that the tenants would be
permitted to sublet the unit through Air Bnb.
The tenants duly took
advantage of this dispensation from the lease’s commencement
date on 1 August 2018. From late September
2018 onwards, however, a
steady stream of complaints reached the second respondent concerning
the conduct of these Air Bnb occupants.
[6]
The
main source, albeit by no means the only source of these complaints,
was the occupant of the unit below Unit 107, Ms Vernon,
who is also a
trustee of the body corporate. She complained
of
Air
Bnb
occupants
dropping ash and cigarettes butts onto her patio and of noise
disturbances apparently caused by late night partying and
guests
being brought onto the premises by
Air
Bnb
occupants.
Ms Vernon’s attempts to resolve these difficulties directly
with various
Air
Bnb
occupants
or the tenants were not successful and led her to complain directly
to the second respondent. In turn the second respondent
directed
these complaints to the applicant, apparently in its capacity as the
owner’s agent. The applicant responded by contacting
the
tenants, as well as the owner, but the problems grew and began to
affect a growing number of owners or tenants at the scheme.
[7]
On
6 May 2019 the owner wrote to the second respondent advising that he
had ‘
issued
instructions’
for his tenants to vacate the unit by the following day and that no
further
Air
Bnb
bookings
would be allowed. On 15 May 2019 the applicant’s director, Ms
Bianca Arnsmeyer, emailed the second respondent confirming
that the
tenants’ lease had been cancelled but stating that they would
now vacate on 20 May 2019. She ascribed the nuisance
problems to
‘
short
term
Air
Bnb
rentals’
.
She added that these problems were not of the owner’s doing.
This statement, I might add, was puzzling because the owner
had
expressly contracted to permit
Air
Bnb
occupants
and had been aware of the problems they caused for some time.
[8]
On
20 May 2019 the owner was advised by the second respondent, acting on
behalf of the first respondent, that he was no longer permitted
to
carry out short term letting of his unit and further that the
Trustees had resolved to restrict the applicant from operating
within
the scheme. The email quoted the relevant portion of conduct Rule 37
which reads as follows:
‘
Letting
and occupancy of sections
37. An owner may
let or part with occupation of his section provided:
…………
37.3 that in
order to retain the nature of the Scheme, short term holiday letting
shall be permitted provided that such short term
holiday letting is
managed through a letting agency which is considered to be reputable
for such purpose in the sole discretion
of the Trustees. The Trustees
shall in their sole discretion have the right to restrict any short
term letting;’
[9]
The
email concluded:
‘
In the
light of the above and the recent correspondence to you advising of
the Trustees’ instructions to no longer allow you
to carry out
short term letting at Unit 107, we urge you to find a reputable
letting agency to manage long term rentals of your
unit.’
[10]
At
virtually the same time the applicant received an email from the
second respondent advising that the Trustees had resolved to
restrict
the applicant from operating within the scheme. It read in part:
‘
In terms
of Rule 37.3 of the Body Corporate rules short term holiday letting
is permitted provided that it is managed to through
a letting agency
which is considered to be reputable in the sole discretion of the
Trustees … Due to recent incidents at
Unit 107, the Trustees
have resolved to restrict (the applicant) from operating within The
Legacy with immediate effect’.
[11]
The
applicant immediately objected to the decision and advised the second
respondent it had nothing to do with the short term letting
of Unit
107, this being the responsibility of the tenant/s who had been
permitted to do so by the owner. The applicant threatened
legal
action if the resolution was not revoked. On the following day, 22
May 2019, the applicant’s attorney wrote at length
to the
respondents along the same lines demanding an immediate retraction of
the resolution and an apology, failing which legal
action would be
commenced. Amongst other points made on the applicant’s
behalf were that the owner’s mandate
to the applicant was
simply to obtain a tenant and that it had played no part in the
conclusion of any short term
Air
Bnb
rentals,
this being an issue between the owner and the tenant/s, that it
regarded the suggestion that it was not a reputable agency
in a
serious light, that it currently held a mandate from the owner to
lease or sell the unit and thus that it did not accept the
restriction imposed by the Trustees’ resolution.
[12]
A
week later a meeting was held between the applicant’s
principals, its attorney and certain of the Trustees when it was
again conveyed on behalf of the applicant that it had played no part
in sub-letting the apartment i.e. to the
Air
Bnb
occupants
and therefore that the Trustees’ resolution had been
unjustified. No solution to the dispute was found, however,
and when
a final deadline of 3 June 2019 for the retraction of the resolution
was not met legal proceedings were commenced shortly
afterwards.
The
respective parties’ cases
[13]
The
applicant’s case is that the Trustees resolution restricting it
from conducting business in the scheme:
13.1
was
unlawful and passed in error in that conduct rule 37.3 had no
application since the applicant was not engaged in any short term
holiday letting;
13.2
was
procedurally unfair in that it was passed without any prior
investigation into the applicant’s role and without any prior
notice to the applicant;
13.3
was
taken arbitrarily and without the Trustees applying their mind;
13.4
was
taken with an ulterior motive, namely, to simply prevent the
applicant from carrying on business within the scheme.
[14]
The
applicant contends also that the resolution or decision amounted to
administrative action in terms of PAJA (The
Promotion of
Administrative Justice Act, 3 of 2000
) but that in any event if PAJA
was not applicable, it was entitled to review the resolution in terms
of the common law read with
sec 3 of the Constitution.
[15]
On
behalf of the first respondent it was contended that the disputed
resolution did not constitute administrative action in that
it had
not exercised a public power nor performed a public function and
furthermore that, properly interpreted, the decision did
not
adversely affect the applicant’s rights nor have a direct,
external legal effect.
[16]
Two
primary issues arise, the first being whether the resolution is
reviewable either as being administrative action in terms of
PAJA or
a decision or action which is reviewable at common law. The second
issue, which only arises if the first issue is answered
in favour of
the applicant, is whether the decision falls to be reviewed and set
aside on its merits or for procedural reasons.
[17]
As
regards the first issue, in order for a decision by a person other
than a state organ to qualify as administrative action for
the
purposes of PAJA it must, in terms of the definition clause,
constitute the exercising of a public power or the performance
of a
public function in terms of an empowering provision. When regard is
had to existing case law it is not entirely clear whether,
in the
ordinary course of events, decisions taken by a body corporate amount
to administrative action in terms of PAJA.
In
Body Corporate of the Laguna Ridge Scheme No 152/1978 v Dorse
1992 (2) SA 512
D, which was decided prior to the promulgation of
PAJA, McCall J assumed, in the absence of contentions to the contrary
from the
parties, that the decision of a body corporate affecting a
member was potentially reviewable at common law.
[18]
In
North
Global Properties (Pty) Ltd v Body Corporate of Sunrise Beach Scheme
and Others
[2013] JOL 30400
(KZD), Pillay J held as follows [at para 9]:
‘
[9]
Trustees’ decisions must be objectively reasonable; when they
are not, they are reviewable under the common law read consistently
with, in my respectful opinion, the STA, Promotion of Administrative
Justice Act 3 of 2000 (“PAJA”) and section 33
of the
Constitution of the Republic of South Africa, 1996 (“the
Constitution”). As a statutory body performing
not only
commercial and regulatory functions but also administrative
functions, it is implied from the STA that trustees must comply
with
the constitutional principle of just administrative action. As
a juristic person taking administrative action, a body
corporate is
also an administrator as defined in the PAJA. What is just is
determined in the context of the STA and PAJA.’
[19]
By
contrast, in
Khyber
Rock Estate East Homeowners Association v (Unit) 09 of Erf 823
Woodmead Ext 13
,
Spilg AJ held, in relation to a homeowners’ association
incorporated in terms of sec 21 of the Companies Act, 61 of 1973,
that the decisions of trustees serving on such a body did not fall
within the purview of PAJA, presumably because he considered
that
such bodies did not exercise a public power or perform a public
function. He found, however, that such decisions were susceptible
to
common law review as being those of a voluntary association. The
learned judge stated as follows:
‘
[34] The
Promotion of Administrative Justice Act No. 3 of 2000
in its terms
applies to administrative action on the part of an organ of state or
a juristic person exercising a public power or
performing a public
function. Accordingly, trustees of homeowners
associations do not fall within the purview of PAJA.
Nonetheless, Section 39(2) of the Constitution requires a Court, when
developing the common law, to promote the spirit, purport
and objects
of the Bill of Rights. PAJA is an expression of the provisions
of Section 33 of the Constitution and is considered
to be a
codification of the grounds of review of public administrative
bodies...
In Pharmaceutical
Manufacturers Association of SA & Others: In re: Ex Parte
application of President of the RSA &
Others
[2000] ZACC 1
;
2000 (2) SALR 674
(CC) at para 45, the Court referred to administrative law and the
Court’s power of review as an incident of the separation
of
powers built on constitutional principles. The Court however stated
that: “Even if the common-law constitutional principles
continue to have application in matters not expressly dealt with by
the Constitution (and that need not be decided in this case)
the
Constitution is the supreme law and the common law, insofar as it has
any application, must be developed consistently with
it, and subject
to constitutional control”. In Bato Star at para 22, the
Constitutional Court again commented that
the “… extent
to which the common law remains relevant to administrative review
will actually be developed on a case-by-case
basis as the Courts
interpret and apply the provisions of PAJA and the Constitution”.
[36] Accordingly
and as I understand it, a Court will only interfere with the decision
of the trustees of a homeowners’ association
where that body
has failed to comply with the natural justice requirements of
legality, procedural fairness and reasonableness;
the latter, in the
sense of a rational connection existing between the facts presented
and the considerations that were applied
in reaching the conclusion.
[20]
In
the present matter two elements of the definition of administrative
action in PAJA call for closer attention. Firstly, there
is the
requirement that the action have a public character i.e. ‘
when
exercising a public power or performing a public function in terms of
an empowering provision’
,
and secondly, that it have ‘
a
direct external legal effect’
.
A
public power or function
[21]
The
first respondent relied on the decision in
Chirwa
v Transnet Ltd and Others
[2007] ZACC 23
;
2008
(4) SA 367
(CC) (para 186), where the Constitutional Court set out
factors to be considered in determining whether a public power has
been
exercised or a public function performed. These include the
relationship of coercion or power that the actor has in its capacity
as a public institution, the impact of the decision on the public,
the source of the power and whether there is a need for the
decision
to be exercised in the public interest.
[22]
As
discussed by Cora Hoexter in Administrative Law in South Africa, 2
nd
edition, Juta, our courts, particularly since the advent of the new
Constitution, have wrestled with the question of whether private
entities are capable of exercising public powers or performing public
functions. The question of whether a non-state organ
is
exercising a public power or performing a public function is also
best determined on a case by case basis. In considering this
issue in
the present instance relevant factors include the fact that t
his
and other body corporates are established pursuant to and derive
their powers from statute, namely, the STSMA. The STSMA provides
that
body corporates are responsible for the enforcement of the rules and
for the control, administration and management of the
common property
for the benefit of all the owners in a given scheme. Overall the
STSMA provides for the establishment of body corporates
to manage and
regulate sections and common property in sectional titles schemes
and, for that purpose, to apply rules applicable
to such schemes.
[23]
These
management or conduct rules take effect from the date of
establishment of the body corporate and bind it, the owners of the
sections and any persons occupying a section. Sectional titles
schemes encompass a substantial and, I would hazard, an evergrowing
component of the housing market and thus affect a significant section
of the public. Many of the rules, such as the rule utilised
in the
present matter, are coercive or have a disciplinary character.
[24]
Although
the subjection of owners and occupiers in a sectional title scheme to
conduct or management rules, as well as the decisions
flowing from
their application, can be seen as contractual in nature, these
arrangements flow from the statutory authority granted
to homeowners’
association by the relevant legislation. Furthermore, apart perhaps
from those original owners of units who
participate directly in the
formulation or approval of the management or conduct rules, the vast
majority of owners and occupiers
of sections in such schemes have no
choice but to accept this regime if they wish to reside in a
sectional title scheme.
[25]
A
point taken by the first respondent was that the impugned resolution
only binds owners and occupiers and not third parties such
as the
applicant and in this regard it relied on the recent judgment of the
Supreme Court of Appeal in
Mt
Edgecombe CC Estate Management Association v Singh and Others
2019
(4) SA 471.
The argument that the resolution only affects or binds
owners and occupiers in the scheme is however belied in the present
instance
by its terms which in effect proclaim that the applicant is
not a reputable letting agency for the purpose/s of short term
holiday
letting and which, at the least, restricts owners from using
it for such purpose/s. It takes little imagination to appreciate the
harmful effect on the applicant of the resolution and its publication
to owners in the scheme. The
Mt
Edgecombe
decision is not on point and thus offers no support for the
applicant’s case. Although the ratio of that case supports the
view that as between home owners and a homeowners’ association
conduct rules have a contractual basis, in the present matter
the
impugned resolution impacts directly on a party outside that
relationship thus bringing very different considerations into
play.
[26]
Thus,
in the present instance the impugned decision or resolution was not
limited in its effect to owners or occupiers of the scheme.
It had a
direct and significant impact upon the applicant, a party external to
any contractually based arrangements administered
by the body
corporate acting through the Trustees.
Direct
external legal effect
[27]
To
constitute administrative action in terms of PAJA a decision taken
must also adversely affect the rights of a person and have
a direct
external legal effect. In the present instance, whereas previously
the applicant could engage in short term holiday letting
on behalf of
its client, the owner, and potentially also on behalf of all the
owners in the scheme, such right was removed by the
body corporate’s
resolution. Furthermore, the applicant’s reputation was harmed,
it lost the owner as a client and
its potential client base was
reduced.
No
need for any review?
[28]
Another
argument made on behalf of the first respondent was that inasmuch as
the applicant averred that conduct rule 37.3 was not
applicable,
since it had not been engaged in short term holiday letting, there
was accordingly no need for any administrative law
challenge by the
applicant to the decision. If the applicant was of the view that the
decision was a nullity it was entitled to
continue its business
without recourse to the courts.
[29]
The
applicant certainly did not contend that the decision was a nullity.
Given the harm done to the applicant’s reputation
by the
resolution which purported to bar it completely from operating within
the scheme the applicant was, in my view, fully entitled
to challenge
the first respondent’s decision/ resolution. It matters not, in
my view, that the applicant’s case is
that it was not in fact
handling short term holiday rentals on behalf of the owner. That
commercial activity now been closed to
the applicant both in relation
to its existing client and other potential clients who own units
within the scheme. What is more,
the applicant has now been publicly
branded by the Trustees as not being reputable for the purposes of
short term letting at the
scheme. The impugned resolution thus has
clear implications and consequences for the professional reputation
of the applicant and
those of its directors and their right to
practice their occupation. In my view then it does not assist the
first respondent to
contend that, at worst, the resolution was a
nullity vis-à-vis the applicant and should simply have been
ignored by it.
[30]
It
was also argued on behalf of the first respondent that even assuming
that the impugned decision was unlawful vis-à-vis
the
applicant, the latter had other remedies at its disposal such as an
action for defamation or for unlawful interference in its
contractual
relationship with its client, the owner. In my view the possible
existence of such remedies does not necessarily imply
that the remedy
of administrative review is not available to a party which is subject
to a decision it would otherwise be entitled
to review.
[31]
In
summary, not only does the body corporate derive its power to
formulate conduct rules and to apply them from a statutory source,
namely, the STSMA, the exercise of those powers can affect a
substantial number of people in important matters concerning the
conditions under which they occupy the property concerned. In the
exercise of those powers a body corporate can be seen as exercising
a
public power or performing a public function namely regulating and
administering the conditions under which persons who share
common
property in a sectional title scheme must live. In the present case
furthermore, the exercise of its power or performance
of its function
impacted upon a party not directly subject to the conduct rules.
[32]
The
first respondent’s impugned decision impacted adversely upon a
third party which had an existing commercial relationship
with one of
the unit owners. Having regard to these and other relevant factors as
a whole I consider that the impugned decision,
at least vis-à-vis
the applicant, does constitute administrative action as defined in
PAJA and is therefore reviewable at
its instance.
Reviewable
at common law?
[33]
If
I am incorrect in finding that the resolution taken by the first
respondent falls squarely within the boundaries of PAJA, the
question
arises whether it is reviewable at common law. Prior to 1994 our
Courts regularly reviewed the exercise of coercive powers
or the
actions of private tribunals not exercising public powers,
particularly in the context of disciplinary proceedings.
See
Turner Jockey Club of South Africa
1974
(3) 633 (A) and
Theron
v Ring Van Wellington van die NG Sending Kerk in Suid Afrika
1976 (2) SA 1
(A) and
Klein
v Dainfern College
2006 (3) SA 73
(T).
[34]
In
the present matter the applicant relies in the alternative on its
right to lawful, reasonable and procedurally fair administrative
action in terms of sec 33(1) of the Constitution as well as its
freedom to trade in terms of sec 22 of the Constitution. Assuming
for
present purposes that the applicant cannot rely on the provisions of
PAJA because the power exercised by the first respondent
lacks a
public character (or for lack of compliance with some other element
of PAJA’s definition of administrative action),
I can see no
reason why, in protecting the applicant’s constitutional
rights, the Court should not subject the first respondent’s
resolution to review against the standards of lawfulness,
reasonableness and procedural fairness. Doing so would fall squarely
within the inherent and constitutionally sanctioned power of the
Court to develop the common law in accordance with the values
of the
Constitution and the rights which it enshrines, taking into account
the interests of justice.
The
merits
[35]
Turning
to the substance of the first respondent’s decision/resolution
and the process which led to its being taken, three
features stand
out. In the first place the resolution appears not to have been
preceded by any basic investigation of the underlying
facts by the
first or second respondent and nor was the applicant, or the owner
for that matter, afforded any prior opportunity
to make
representations regarding the proposed decision. A second feature is
that, certainly as initially conveyed to all parties
and applied, the
decision went well beyond the provisions of conduct rule 37.3.
Thirdly, when regard is had to the facts which
are common cause there
appears to have been no basis upon which the problems arising from
the presence of Air Bnb occupants in
the unit could be ascribed to
the applicant.
The
applicant’s responsibilities and the need for a prior
investigation
[36]
As
far as the applicant’s responsibility for the problems
emanating from unit 107 are concerned, regard must be had in the
first place to the terms of the lease between the owner and the
tenants. Not only did it provide that the tenants (lessees) were
permitted to sublet the premises via Air Bnb, it made no provision
for any role by the applicant in such arrangements. In fact
the lease
stipulates that the applicant’s sole responsibility to the
owner/lessor was to procure a suitable lessee. Referring
to the
rights and obligations as between the lessor and the lessee, clause
10.4 further provides: ‘
It
shall not be the function of BAE
(the
applicant)
to
monitor or enforce their respective rights and obligations under this
Lease Agreement, between themselves’
.
[37]
Notwithstanding
these provisions it is clear that the applicant did play a role in
attempting to alleviate the problems which arose
from the presence of
short term Air Bnb occupants of the unit. It received and responded
to emails from the second respondent regarding
the increasing
complaints and communicated in this regard with the owner and other
interested parties. In its founding affidavit
the applicant’s
director explained these actions as being done purely as an act of
good faith and added that the unit was
managed by a Mr Adam Clayton
who was employed by the owner. There is nothing in the opposing
affidavits which casts any serious
doubt on these averments.
[38]
The
first respondent set out in some detail email correspondence relating
to the problems emanating from unit 107. Initially the
second
respondent referred problems to Mr Clayton. He had no connection to
the applicant but, initially at least, appeared to take
responsibility for management of the unit in the absence of the
owner. At some stage he began to involve the applicant in the dispute
and its representatives began trying to assist in resolving the
problem. At no stage did they advise that this fell outside of
their
mandated responsibilities but nor did they explicitly accept
responsibility for management of the problems. At a later stage
the
second respondent began to communicate with the owner about the
problems caused by occupants of his unit. The owner claimed
ignorance
of Air Bnb occupants using his unit and implied that the
responsibility for this lay with his tenants.
[39]
In
this somewhat confusing situation one can easily see how the
respondents might have mistakenly assumed that the applicant played
a
direct role in placing Air Bnb occupants in the unit: the applicant
assisted in trying to resolve the problems and the owner
affected
ignorance of the problems and failed to disclose that he had
permitted his tenants to let the unit to Air Bnb occupants;
the
owner’s de facto agent, Clayton, passed the problem onto the
applicant which did not make its position and responsibilities
clear
to the respondents prior to the resolution. However, the fact remains
that nothing was ever produced by the first respondent
to indicate
that the applicant bore responsibility, direct or indirect, for
placing Air Bnb occupants in the unit or for not regulating
the
tenants’ conduct in doing so. That responsibility lay at the
door of the owner who appears to have been disingenuous
in not
accepting such responsibility.
[40]
It
would appear that when the complaints reached a crescendo around 20
May 2019, (and compounded perhaps by the applicant’s
continuing
involvement and the fact that the owner resided in Johannesburg) a
careless assumption was made by the second respondent
and the
Trustees that the applicant was instrumental in the selection,
placement or management of Air Bnb occupants in unit 107.
This
assumption was unwarranted. More importantly, had the proposed
resolution been put to the applicant before it was taken, its
directors would in all probability have set the record straight and
the Trustees might very well have been dissuaded from issuing
the
restriction ultimately imposed upon the applicant.
[41]
As
mentioned, the applicant’s case on the merits is that it played
no part in the short term letting of the unit 107 beyond
attempting
to assist, as an act of good faith, in resolving the issue of the
many complaints arising from the occupation of the
unit either by the
then tenants or by Air Bnb occupants. If this is accepted, as I
consider it must be, the first respondent’s
decision to
restrict its activities in terms of conduct rule 37.3 was, to
paraphrase review grounds in sec 6 of PAJA, not rationally
connected
to the purpose for which it was taken or the information before the
Body Corporate, was unreasonable, unlawful or was
taken because
irrelevant considerations were taken into account or vice versa. The
applicant’s case that the decision taken
was procedurally
unfair in that it was not heard prior to the decision being taken, is
likewise established.
The
scope of the Trustees resolution
[42]
As
far as the scope of the restriction embodied in the resolution is
concerned, there are clear indications that the Trustees acted
arbitrarily or exceeded their powers by purporting to ban the
applicant from any dealings with the sale, leasing or management
of
property within the scheme. Conduct rule 37.3 limited the body
corporate’s powers to restricting a letting agency in the
field
of short term holiday letting in circumstances where it considered
such an agency was not ‘
reputable
for such purpose’
.
[43]
In
its initial emails to the owner and the applicant written on behalf
of the first respondent, the second respondent, although
referring to
rule 37.3, advised that its principal had resolved to restrict the
applicant ‘
from
operating within the Legacy’
.
In keeping with this broad proscription, the owner was urged in the
same notification to ‘
find
a reputable letting agency to manage’
the long term rental of his unit. When the Chairman of the Body
Corporate responded to the letter of demand from the applicant’s
attorney he referred to the applicant being barred from operating at
the scheme with no qualification that this restriction was
limited to
short term holiday letting. Similarly, all the internal
correspondence between the Trustees prior to the resolution
being
taken refers to the restriction on the applicant as being unqualified
in its scope.
[44]
In
its opposing affidavit the first respondent asserted that the
resolution extended only as far as short term holiday letting and
that the applicant had deliberately misconstrued the scope of the
resolution in making its case. However, this appears to have
been a
late change of tack on the first respondent’s part since when
the Chairman of the Body Corporate formally responded
to the letter
of demand from the applicant’s attorney, he unequivocally
stated that it had been resolved that the applicant
‘
may
not operate at the Legacy’
.
[45]
Just
as telling is the body corporate’s internal documentation prior
to the decision being taken. First respondent’s
deponent and
Trustee asked ‘
Is
there a scope to potentially prohibit BAE Estates
(the
applicant)
from
operating within the Legacy?’
.
Another Trustee responded ‘
Agreed.
Ban them!’
to
an email from the second respondent citing conduct rule 37.3 which
referred to banning the applicant from operating within the
Legacy
but again with no qualification that this would apply only to short
term holiday letting.
[46]
In
my view the conclusion is inescapable that the first respondent acted
beyond its powers or arbitrarily in purporting to ban the
applicant
entirely from all or any dealings with property or owners in the
scheme. On this ground alone the applicant was entitled
to launch
proceedings to have the decision taken by the first respondent
trimmed to one which was within its powers as stipulated
in conduct
rule 37.3.
Conclusion
[47]
In
the circumstances I am satisfied that the applicant has succeeded in
establishing that the decision which it challenges amounts
to
administrative action and in establishing at least three of the
review grounds upon which it relies, both substantive and procedural
and which are set out in paragraph 13.1 – 13.3. These grounds
are amongst those listed in sec 6 of PAJA (sections 6(2)(a)(i),
(c),
(e)(vi) and (h)) or are substantially similar to other listed grounds
(sections 6(2)(e)(iii)). In the circumstances it is
unnecessary to
consider whether the remaining ground relied upon by the applicant,
namely, that the first respondent acted with
an ulterior motive, has
been established.
[48]
In
the circumstances the application must succeed and the following
order is made:
1.
The
resolution passed by the first respondent, which was published to the
applicant on 21 May 2019 and which prohibits the applicant
from
conducting business in the sectional title scheme known as the
Legacy, situated at 145 Main Road, Green Point, Cape Town,
Western
Cape is reviewed and set aside;
2.
The
first respondent is ordered to pay the costs of the application.
____________________
BOZALEK
J
For the Appellant
: Adv K Felix
As Instructed
C&A Friedlander Inc
For the 1
st
Respondent
:
Adv F
Landman
As
Instructed
: Marlon
Shevelew & Associates Inc