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[2020] ZAWCHC 97
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Rapallo Body Corporate v Dhlamini NO and Others (12572/2019) [2020] ZAWCHC 97 (10 September 2020)
Republic of South Africa
IN THE HIGH COURT OF SOUTH AFRICA
WESTERN
CAPE DIVISION, CAPE TOWN
Case number: 12572/2019
(Including
related proceedings in case no. 9939/2020)
Before:
The Hon. Mr Justice Binns-Ward
Hearing:
8 September 2020
Judgment:
10 September 2020
In
the matter between:
THE
RAPALLO BODY
CORPORATE
Applicant
and
THABASILE
CYLVIA DHLAMINI
N.O.
First
Respondent
(In her
capacity as an adjudicator in terms of the
Community
Schemes Ombud Service Act 9 of 2011)
THE
COMMUNITY SCHEMES OMBUD, WESTERN CAPE
Second
Respondent
THE
TRUSTEES OF THE GAVIN COHEN FAMILY
TRUST
Third
Respondent
THE
TRUSTEES OF THE ROBERT COHEN FAMILY TRUST
Fourth
Respondent
JUDGMENT
(Delivered by email to the parties and release to SAFLII.)
BINNS-WARD
J:
[1]
The apartment building called Rapallo is a
familiar landmark on the Sea Point beachfront. It is a
sectional title scheme.
The Rapallo Body Corporate has applied
in these proceedings to have an order made against it by an
adjudicator, in terms of s 54
of the Community Schemes Ombud
Service Act 9 of 2011 (‘the CSOS Act’), set aside.
The adjudicator’s order
was made in favour of the third and
fourth respondents (‘the owners’), who are the registered
joint owners of one of
the sections in Rapallo. They had
applied, in terms of the CSOS Act, for an order of the sort
contemplated in s 39(1)(e)
of the Act directing the Body
Corporate to repay the sum of R130 884 that it had exacted from
them, purportedly in terms of
rule 7 of the applicant’s conduct
rules.
[2]
The applicant is an ‘association’
within the meaning of that word as defined in s 1 of the CSOS
Act. It brings
these proceedings by way of an appeal in terms
of s 57 of the said Act, which provides that an association that
is dissatisfied
by an adjudicator’s order may bring an appeal
to the High Court, but only on a question of law. The
adjudicator was
cited as the first respondent and the Community
Schemes Ombud Service, represented by the local ombud, as the second
respondent.
The first and second respondents abide the judgment
of the court.
[3]
Section 10 of the Sectional Titles Schemes
Management Act 8 of 2011 (‘the STSMA’) prescribes that
the body corporate
of a sectional title scheme must be regulated and
managed, subject to the provisions of the Act, by means of rules to
be comprised
of ‘management rules’ and ‘conduct
rules’, respectively. Rule 7.1 of the Rapallo conduct
rules determines
that no alterations, renovations of, or improvements
to, any apartment may be carried out ‘
except
in strict compliance with the ensuing provisions of
[that]
conduct rule
’.
Insofar as relevant, ‘the ensuing provisions’ provide
that any alterations or renovations undertaken
by section owners have
to be approved in advance by the trustees of the body corporate.
The trustees are empowered to engage
architects or professional
consultants to assist them in their assessment of any project
proposals that are submitted to them under
the rule. Any
expense incurred by the trustees in this regard is for the unit
owner’s account and the trustees are
empowered to charge a
scrutiny fee.
[4]
The trustees are empowered by conduct rule
7.2 to make any approval granted for any alterations, renovations or
improvements ‘
subject to any
reasonable conditions they may deem appropriate
’.
Should the trustees’ approval be forthcoming, the section owner
is required, in terms of rule 7.4, to
sign a written
acknowledgement and undertaking in favour of the Body Corporate in a
form approved by the trustees, in which the
owner acknowledges that
he or she is fully acquainted with rule 7 and any conditions imposed
by the trustees, and undertakes to
be bound by them.
[5]
Conduct
rule 7.4(d) provides as follows:
The owner must pay to the body corporate –
·
If not already
paid, the charges of the architect or consultant engaged by the
trustees in terms of 7.2 above,
·
a fair and
reasonable amount determined by the trustees as a charge by the body
corporate in connection with the acknowledgements
and undertakings
mentioned in 7.2 above, and
·
a deposit, the amount
of which shall be such as will have been determined by the trustees
to be applicable for the time being in
this respect, to be held by
the body corporate and applied, insofar as may be required, towards
the costs of making good any damage
to the common property or any
section caused by the implementation of the project or any related
activities and the costs of all
necessary cleaning up and rubble
removing removal resulting from the project or from such making good
- all of which costs
shall be the liability of the owner and which
deposit shall not limit such liability, provided that if there is an
eventual excess
of the amount of the deposit over the amount of the
liability, such excess shall be refunded to the owner.
[6]
Rule 7.4(e) provides:
The owner must give the supervisor at least 48 hours’
prior written notice of commencement of the work and in such notice
also state the intended completion date of the project.
[7]
Rule 7.5 is also relevant. It reads
as follows:
In addition to the payments provided for in 7.4 above
and elsewhere in this conduct rule, the owner shall compensate the
body corporate
for the general disruption, wear and tear caused by
the project by means of successive equal monthly payments to be made
throughout
the duration of the work on the due dates of the owner’s
monthly contributions to the body corporate’s levies fund.
The
amount of each such payment shall be a fair and reasonable sum
determined by the trustees as being generally applicable to
the
circumstances for the time being. The first payment shall be made in
the month in which the work commences and payment shall
continue
until the project is completed and all work (sic), workmen and
materials have left the site.
[8]
The owners of the apartment in question are
the trustees for the time being of two trusts. As required by
conduct rule 7.4(b),
their representative duly signed an undertaking
to be bound by rule 7 and the body corporate trustees’
determinations.
The signed documentation included a recordal,
s.v. ‘
Conditions of Approval of
Project
’, that the disruption fee
payable in terms of conduct rule 7.5 would be R3 300 per
calendar month.
[9]
Paragraph 2 of the ‘
Conditions
of Approval
’ read as follows:
The project must be completed in its entirety within ...
days (including weekends and public holidays) from the date of its
commencement
(“the Specified Period”). If it is
extended beyond the Specified Period, then without prejudice to any
other
right or remedy available to the Body Corporate, the Owner must
pay to the Body Corporate, in addition to the disruption fee for
the
period of the extension, a penalty of R500,00 for every working day
for which the project is so extended, and if it is extended
for more
than 25 working days beyond the Specified Period, such penalty shall
rise to R1000,00 per working day for such further
extended period.
These penalties are to be payable monthly in arrear simultaneously
with the corresponding disruption fees.
It will
be noted that the space in the typescript for the number of days in
the ‘Specified Period’ to be inserted was
left
uncompleted in the signed document. That did not mean, however,
that the document would not be susceptible to rectification
if the
period had in fact been specified. The owners contended that
because the period had not been specified in the document,
they could
not be liable to pay the penalties. It is evident, however,
from an annexure to the acknowledgement and undertaking
signed on
behalf of the owners that the estimated time for the completion of
the renovation works had been ‘
4-5 months
’ and
that the ‘
actual date commenced work
’ was
‘
2/4/17
’. There is an endorsement that the
‘
actual date stopped work (complete)
’ was
‘
2017/12/15
’. Whether the indicated dates
corresponded with the facts is not a matter for determination in this
appeal, confined
as it is to questions of law. The adjudicator
did not make any determination in this regard.
[10]
The owners also contended that the project
period had been extended because of delays occasioned by the
allegedly unreasonable demands
of the trustees. Those issues
(i.e whether there were delays and, if so, whether they were
occasioned by the unreasonable
demands of the trustees) are factual
questions, however, upon which the adjudicator did not make any
determination.
[11]
It is not evident to me how the issue
relating to the owners’ liability for the disruption penalties
related to the questions
of law that the applicant raised on appeal,
but I have touched on the matter because (without objection from
applicant’s
counsel) the owners’ counsel argued it in
these proceedings, and it would probably be helpful in the
circumstances for this
court to deal with the question to minimise
the prospect of the parties’ dispute giving rise to yet further
proceedings on
other questions in law in the future. It is
apposite in that regard also to consider the owners’ contention
that the
recovery of disruption penalties from them was subject to
conduct rule 10, which provides, amongst other matters, that the
trustees
may not claim or demand any penalty unless they have first
given the offending member written notice to cure the breach within a
period of 21 days, and the offending member has thereafter failed to
do so. (This was a matter raised in the Paddocks Attorneys’
opinion attached to the CSOS application, but it was not addressed in
the adjudicator’s decision.)
[12]
There is no merit in the owners’
contention. The penalties to which rule 10 pertains are
penalties that may imposed
‘
arising
from breaches of the rules
’.
The disruption penalties purport to be compensatory payments
stipulated by the trustees in terms of rule 7, which
has nothing to
do with breaches of the rules. Whether rule 7 permits of the
stipulation of disruption penalties, either as
a payment stipulated
in terms of rule 7.5, or by way of a condition of approval, is an
open question that was not argued before
me.
[13]
The owners were required to pay a deposit
of R50 000. The charges levied by the Body Corporate in
terms of rule 7 were
set out in a spreadsheet attached as annexure C2
to the owners’ answering affidavit, the content whereof was
admitted in
the Body Corporate’s reply:
1.
Scrutiny
fee:
R750
2.
Acknowledgment
and undertaking fee:
R500
3.
Building
disruption fees (charged on a per diem basis):
R26 550
4.
Project
extension penalties (15 days at R500 per day):
R7 500
5.
Project
extension penalties (49 days at R1000 per day):
R49 000
6.
Penalty
for ‘unlawful core
drilling’:
R12 711
7.
Penalty
for damage caused to unit 101:
R1 188
8.
Penalty
for damage caused to unit 301:
R699
9.
Building
renovation expense claim:
R9576
(I am
unable to reconcile the abovementioned figures with the amount of
R130 884 claimed by the owners in their application
under the
CSOS Act, and counsel were unable to assist me. It is not
necessary, however, to make any determination in these
proceedings of
the amount or as to the owners’ entitlement to payment of it,
as it is clear that the application will have
to be considered afresh
by the adjudicator.)
[14]
The adjudicator’s decision indicates
that she treated the application as being for the repayment of the
amounts charged by
the Body Corporate ‘
in
respect of disruption fees, extension penalties, drilling penalties
and damages to other units
’.
[1]
According to my calculation, the amount involved was R97 648.
In argument, however, the owner’s counsel,
who also represented
them before the adjudicator, suggested that the adjudicator’s
description of the ambit of the charges
in dispute had been
inaccurate, and that the dispute had concerned all the payments made
by the owners to the Body Corporate in
respect of the apartment
renovation project. The difficulty in this regard is that it is
not clear from the owners’
application in terms of s 38 of
the CSOS Act what amount was being claimed, and how it was
constituted. This was unsatisfactory.
[15]
Whilst an application in terms of the CSOS
Act is not required to conform with the formality of a pleaded case
before a court, it
is nevertheless evident from the provisions of the
Act that the nature and ambit of the relief claimed is meant to be
objectively
ascertainable with reasonable certainty from the content
of the application. There is nothing arcane about that
proposition.
The natural rules of justice require that a party
called upon to meet a claim should be informed with reasonable
certainty what
the claim is.
[16]
Section 38 of the Act requires that an
application in terms of the CSOS Act must be made in the prescribed
manner. The ‘
prescribed
manner
’ involves the completion
by an intending applicant of an ‘
application
for dispute resolution form
’.
The form contains a section entitled ‘
Details
of application/ Alleged breach
’,
in which an applicant is meant to summarise the nature of his or her
claim. The particular section of the form includes
a direction
to applicants as follows: ‘
Please
legibly set out all the facts which you consider to have bearing on
this application, including dates, places and persons
involved
’.
The owners completed this section of the form by stating ‘
Please
see confirmatory legal opinion of Paddocks Attorneys
[the owners’ attorneys]’. The attached opinion
covered a range of matters, but nowhere identified the amount
claimed
by the owners or set out how it was computed. Under the section
of the application form headed ‘
Relief
Sought
’, which was accompanied by
an explanatory note to applicants stating ‘
What
remedy are you requesting? How do you want the problem to be
solved?
’, the owners wrote
‘
Section 39(1)(e) Community
Schemes Ombud Service Act 9 of 2011 – Repayment of deposit and
refund of various other charges,
including fines, penalties, legal
fees and wasted costs
’.
[17]
Insofar as the claim was too vaguely stated
in the application form, the Ombud Service should have called for
clarification of the
application in terms of s 40(a).
Whether this was done or not, I am unable to say on the basis of the
information placed
before the court in this application. I have
discussed the matter at some length because it was not altogether
clear to me
how all of the questions of law that were the subject of
the appeal arose in the context of the owners’ application
under
the CSOS Act. While I could recognise that they arose
from the adjudicator’s decision, it was not clear to me how the
issues involved had been germane to the application that the
adjudicator had to decide. That was also an unsatisfactory
feature of the case.
[18]
The respondent’s counsel stressed
that the nature of the proceedings before an adjudicator is
inquisitorial in character.
He appeared to suggest that this
allowed for considerable latitude in the delineation of the ambit of
the application and
the nature of the relief. Whilst, it is
clearly correct that the proceedings before the adjudicator are
inquisitorial (the
Act speaks of the adjudicator’s task as
being ‘
to investigate
[the]
application
’
[2]
),
the ambit of the investigation must be defined by the application.
Any investigation that proceeds on a basis insufficiently
cognisant
of the requirement that there be reasonable clarity and certainty as
to the nature and ambit of the claim is liable to
give rise to
problems for all concerned.
[19]
Any notion that the relatively informal and
inquisitorial character of proceedings before an adjudicator
justifies the conduct of
such proceedings on the basis of anything
other than a sufficiently clearly stated claim is unfounded. It
is belied by the
provisions of the Act and the prescribed procedure,
which, in addition to the aspects that I have already touched on,
makes express
provision for the discretionary amendment of
applications. The fact that an application may be amended only
in the discretion
of the ombud, and then on such specified conditions
as the ombud may impose ‘
at any
time before the ombud refers the application to an adjudicator
’,
confirms the legislative intention that the battle lines between the
parties must be clearly drawn before the adjudicator’s
investigation commences.
[3]
I suggest that adjudicators should be conscientiously astute to this
before they embark upon any investigation. It
seems to me,
having regard to the provisions of Chapter 3 of the CSOS Act in
general, that the responsibility of ensuring that
an application
under the Act complies with the requirement that a claim must be
formulated with sufficient certainty lies primarily
on the ombud, for
the nature of and basis for the relief sought in the application is
not clear, further information should be
requested by the ombud in
terms of s 40. And if that does not cure the problem, or
an appropriate amendment is not sought
and granted in terms of s 45,
the application should be rejected by the ombud in terms of s 42.
[20]
The adjudicator’s decision suggests
that the owners had contended that the charges levied in terms of
conduct rule 7 in respect
of their building renovations could be
competently imposed only in terms of resolutions by the trustees that
had to be adopted
and recorded
as prescribed in terms of the management rules. In other words,
it would appear that according to the owners, each of the
imposts on
them in terms of rule 7 was required to have been determined by a
minuted trustees’ resolution. The adjudicator
upheld the
owners’ contentions in this regard, and inferred that the
required resolutions could not have been taken because,
despite
request by the owners (apparently in the course of the CSOS Act
proceedings, not in terms of rule 27(5) of the management
rules by
which they could have obtained direct personal access to the Body
Corporate’s records), the Body Corporate had failed
to produce
the minutes evidencing their adoption. The adjudicator
evidently declined to accept the oral evidence of the trustee
who
testified on behalf of the Body Corporate at the hearing that the
necessary decisions had indeed been made by the trustees.
She
would appear to have considered the existence of a minuted resolution
to have been a formal prerequisite for the decisions’
validity.
[21]
It is not clear to me on the material
before the court in these proceedings how this became an issue.
There was no suggestion
in the owners’ application in terms of
the CSOS Act that they had not applied to the trustees in terms of
rule 7 of the Body
Corporate’s conduct rules for permission to
undertake the renovation project. Nor was there any suggestion,
that I
have been able to identify, that they had proceeded with the
renovations other than on the understanding that they had obtained
the trustees’ approval as required in terms of the rule.
So quite how, and when, the allegation arose that the renovation
application had not been approved by the trustees is not clear.
[22]
The adjudicator also upheld a contention
that the undertaking signed by the owners’ representative, as
required in terms of
rule 7.4(b), was ineffectual because it
‘
contained further conditions in
addition to registered conduct rule 7
.’
One of the conditions that was relevant in this regard was that there
should be ‘
absolutely no core
drilling into concrete
’ unless
authorised by the trustees’, which permission could not be
unreasonably withheld. She reasoned in this
regard that ‘[t]
he
said document
[i.e. the undertaking]
is
clearly a supplementary document to the registered conduct rules and
I agree with
[the owners]
that
the said document to be binding must comply with the legislation
(sic)
condition governing the
establishment of rules at a scheme. Section 10 of the STSMA
[i.e. the Sectional Titles Scheme Management Act 8 of 2011]
prescribes the procedure for creating
rules at a scheme. Section 10
states that “(2) The rules must
provide for the regulation, management, administration, use and
(b)
Conduct rules, as prescribed, which rules may, subject to the
approval of the chief ombud, be substituted, added to, amended
or
repealed by the developer When submitting an application for the
opening of a sectional title register, an which rules may be
substituted, added to, amended or repealed by special resolution of
the body corporate , as prescribed: Provided that such conduct
rules
may not be irreconcilable with any prescribed management rule
contemplated in paragraph (a)
(3)
The management or conduct rules contemplated in subsection (2) must
be reasonable and apply equally to all owners of units”.
’
The
adjudicator also appears to have accepted a contention that the
acknowledgement and undertaking executed on behalf of the owners
had
been of no effect because it had not been countersigned by two
trustees. In this regard she was influenced by prescribed
management rule 10(1) which states, insofar as relevant, that no
document signed on behalf of the body corporate is valid and binding
unless it is signed on the authority of a trustee resolution by two
trustees or one trustee and managing agent.
[23]
In addition, the adjudicator upheld the
owners’ contention that the Body Corporate was not empowered to
recover from them
any amount in respect of damages incurred to other
units in the scheme in consequence of their building alterations.
In this
regard, the adjudicator appears to have been influenced by
the judgment of the appeal court in
Stad
Tshwane Metropolitaanse Munisipaliteit v Body Corporate Faeriedale
[2003] ZASCA 50
(22 May
2003); 2003 (6) SA 440
(SCA), in which it was
held that a body corporate that sought to claim compensation from the
local authority for the damage occasioned
to certain units by a
falling tree lacked legal standing, and that its cognisable claim was
restricted to compensation for damage
occasioned to the common
property. Nothing comparable to conduct rule 7 featured in the
Faeriedale
matter, and I think the judgment is therefore distinguishable.
It is not necessary for me to make any determination in this
regard,
however, because the applicant is not pursuing an appeal against this
part of the adjudicator’s decision, which appears
to affect
R1 887 of the owners’ claim.
[24]
The applicant contends in the founding
affidavit, which was made by its attorney of record, that the
adjudicator’s decision
was predicated on a number of errors of
law. It argues that the levying of the various charges by the
trustees was authorised
by the rules of conduct, and that no
empowering resolution was therefore required. It also contends
that the uncontroverted
evidence of the trustee who testified at the
hearing that the levies imposed had been decided upon by the trustees
was sufficient
proof that the necessary decisions had been taken, and
that the adjudicator erred in inferring that the body corporate’s
failure to produce the pertinent minutes related to such decisions
demonstrated that they had not been validly or effectively made.
The third point advanced in support of the body corporate’s
appeal was that the adjudicator had erred in law by holding that
the
undertaking signed on behalf of the owner had no binding effect
because the various conditions imposed on the owners by the
terms
thereof that were not merely reflective of the terms of rule 7
required to be expressly incorporated in the conduct rules
by special
resolution as provided for in s 10(2)(b) of the STSMA in respect
of additions or amendments to conduct rules, and
because it was not
countersigned by two trustees.
[25]
In my judgment, it is clear that the
adjudicator did make various material errors in law.
[26]
The adjudicator was misdirected in
apparently understanding that the effect of prescribed management
rule 27(2), which requires
a body corporate to maintain documentary
records concerning its administration, including minutes of general
and trustee meetings,
setting forth the following information-(i) the
date, time and place of the meeting; (ii) the names and role of the
persons present,
including details of the authorisation of proxies or
other representative; (iii) the text of all resolutions; and (iv) the
results
of the voting on all motions, implied that any resolution or
decision by the trustees that had not been minuted in the detail
prescribed
in the management rule was null and void or
ineffectual.
[4]
The record-keeping obligation imposed by the rule does not in any
manner derogate from the decision-making powers of the
trustees.
Any decisions or resolutions taken or adopted by the trustees are
effective if they are taken at a meeting of trustees,
duly convened
in compliance with prescribed management rule 11, and by a majority
vote, as provided in terms of management rule
14. Those are
primarily factual issues, which are susceptible to proof by any means
of relevant and admissible evidence,
including the pertinent
minutes. The effectiveness of such decisions is, however, not
dependent upon them being minuted.
[27]
The evident purpose of the obligation on a
body corporate to keep an up to date record of its trustees’
resolutions is to
promote openness, accountability and transparency
by requiring the maintenance of a record of information that should
be readily
available to members and registered mortgagees should they
wish to ascertain what the trustees have decided. It is also a
requirement that promotes good administration by providing for
certainty, thereby diminishing the scope for dispute. A minute
of a trustees’ resolution is a consequence of the resolution’s
adoption; not a prerequisite condition for its adoption.
The
absence of a minute is therefore, in itself, not dispositive of the
question whether a decision was taken.
[28]
It is clear then that the adjudicator
should have recognised that the acknowledgment and undertaking signed
by the owners in terms
of conduct rule 7.2 constituted an
acknowledgment and acceptance by them that the relevant
determinations required of the trustees
in terms of the rule had been
made. This is a factor that should have weighed heavily with
her in assessing the testimony
of the trustee who gave evidence at
the hearing to the effect that such decisions had been made by the
trustees. The acknowledgment
and undertaking by the owners
denoted an acceptance by them that the pertinent decisions had been
made by the trustees. I
have already explained that whilst a
minute of the decisions would serve as confirmation, prima facie,
that the decisions had been
made, the absence of a minute would not,
of itself, establish that the decisions had not been made.
[29]
In the face of the acknowledgment and
undertaking given by the owners, the adjudicator should have looked
to them to adduce cogent
evidence that the decisions that they had
acknowledged and accepted had been taken before they embarked on
their building operations
had actually
not
been taken and to show why they were
not contractually bound. An obvious question in this regard is
why the owners would have
proceeded with their renovation project if
they believed that the required approval, for which they had applied
in terms of rule
7, had not been given. If their case was that
the acknowledgment and undertaking had been executed as a result of a
material
misrepresentation, that should have been clearly stated in
their application.
[5]
[30]
The purpose of the requirement in rule 7.2
that a section-owner who obtains approval to undertake renovations,
alterations or improvements
has to sign an acknowledgement and
undertaking is plain. It is to avoid dispute, and to create a
contractual obligation on
the owner in favour of the Body Corporate.
The undertaking does not require the countersignature of two trustees
to be effective,
any more than would, say, an acknowledgment of debt
executed by an owner in favour of the Body Corporate. The
two-signature
rule is there to protect the Body Corporate against the
incurrence of liabilities on account of the unauthorised acts of a
trustee
acting alone. It is to protect the Body Corporate
against the risk of being bound by the acts of a single trustee on
the
basis of ostensible authority. The undertaking signed by
the owners obligated them,
not
the Body Corporate. This may be demonstrated by the fact that
the Body Corporate could waive the conditions of approval,
whilst the
owners cannot. By its opposition to the owners’
application in terms of the CSOS Act, the Body Corporate
showed its
intention to hold the owners to their undertaking. This has
been confirmed by the Body Corporate’s prosecution
of the
current appeal against the adjudicator’s decision.
[31]
The adjudicator was also fundamentally
misdirected in her characterisation of the conditions of approval
imposed by the trustees.
This was, of course, a question that
she could reach only on the assumption that the trustees had in fact
made the required decision
to approve the owners’ renovation
application and, in the context thereof, had imposed the conditions
that the owners sought
_
after the event
_
to avoid.
[32]
Accepting, ex hypothesi, that the trustees
did approve the owners’ application for permission to undertake
the renovations,
the conditions they imposed did not constitute
additions to or amendments of the conduct rules. The authority
of the trustees
to impose reasonable conditions is in point of fact
invested
in terms of the existing
rules
. Exercising the power
invested in them therefore did not require an amendment of, or
addition to, the rules. The power
is limited in that any
conditions imposed must be ‘reasonable’.
[33]
The reasonableness of the conditions
imposed by the trustees was put in issue in the opinion from Paddocks
Attorneys that was attached
to the owners application in terms of the
CSOS Act, but the respects in which it was alleged that they might
have been unreasonable
was not particularised. The adjudicator
did not make any finding that the conditions that were imposed were
unreasonable.
She dealt with the issue on the basis of what she
held to be the ineffectiveness of the conditions when they had not
been confirmed
by amendment to the conduct rules, not on the basis of
their content. As I have explained, the basis on which the
adjudicator
dealt with the issue was misdirected in law.
[34]
This is a convenient stage to refer to the
challenge raised by the owners to the authority of attorneys Slabbert
Venter Yanoutsos
to institute the current proceedings on behalf of
the Body Corporate. The manner in which such a challenge falls
to be made
is provided for in terms of rule 7 of the Uniform Rules of
Court; cf.
Ganes and Another v Telecom
Namibia Ltd
2004 (3) SA 615
(SCA) at
para 19.
[35]
In
response to a notice by the owners in terms of Uniform Rule 7,
Mr Anton Slabbert of the firm of attorneys in question, who
was
also the deponent to the applicant’s founding and replying
affidavits in the principal proceedings, made an affidavit
confirming
that his firm had been instructed to prosecute the Body Corporate’s
appeal. Mr Slabbert attached a
copy of the minutes of a
trustees’ meeting held on 15 July 2019 in support of his
averments. He averred that he had
confirmed with Mr Louw, whom
he said was the person whose signature appeared on the minute as the
chairperson of the trustees at
the time, that minutes in question had
in fact been signed by Louw. I am satisfied in the
circumstances that the institution
of these proceedings was duly
authorised.
[36]
The owners’ counsel argued that the
content of the minute did not constitute direct evidence of the
trustees’ resolution
and should be excluded on the grounds that
it was hearsay. Counsel may be correct that the minute
constituted hearsay evidence
of the facts therein recorded, but it
would be the height of technicality to exclude it on that ground.
The owners were persuaded
by the minute to accept that the
applicant’s attorneys were authorised to represent it in the
appeal. That being so,
it seems illogical for them to contend
that it has not been established that the attorney’s principals
did not decide on
the institution of the appeal proceedings.
Who else but the Body Corporate would have an interest in appealing
against the
adjudicator’s order? There appears to have
been some suggestion by the owners that one of the trustees, a
certain Mr Blacher,
may have been on a frolic of his own.
But there was no appearance by Mr Blacher. The applicant’s
counsel appeared
instructed by the aforementioned Mr Slabbert.
He made it clear that he did not appear for Mr Blacher.
[37]
As discussed above, the very purpose of the
requirement in terms of the prescribed management rules made by the
Minister in terms
of the CSOS Act that minutes be kept is to
facilitate certainty and avoid dispute. Inherent in that, in my
view, is an implied
intention that they should have prima facie
probative effect. To the extent necessary, however, and having
had holistic regard
to the factors in paragraphs (i) to (vii)
thereof, I hold that the minutes will be admitted as evidence of
their content in terms
of
s 3(1)(c)
of the
Law of Evidence
Amendment Act 45 of 1988
.
[38]
The owners had been in possession of the
copy of the minutes for nearly three weeks by the date of the
hearing. They would
have been entitled to obtain them much
earlier if they had exercised their rights under prescribed
management
rule 27(5).
Had it been their intention to suggest
that the minutes were inaccurate or a forgery, I would have expected
them to have
made the necessary investigations to be able to
factually sustain any such contentions. I would have thought
that if they
were genuinely concerned that the Body Corporate had not
authorised the appeal, exercising their right in terms of management
rule 27(5)
to inspect the trustees’ minutes would have been
their first resort, even before they delivered their answering
papers.
They have shown no reasonable cause to go behind the
minutes or question their accuracy, and without such cause, I do not
believe
that they were entitled to demand, as they did in a letter
addressed by their attorneys to the applicant’s attorneys, that
every trustee who is recorded as having been party to the minuted
decision should make an affidavit.
[39]
There was also nothing in the contention by
the owners’ counsel in his written argument that the
institution of the proceedings
required a decision by the Body
Corporate in general meeting.
Section 2(7)
of the STSMA
provides that a body corporate has perpetual succession and is
capable of suing and being sued in its own name in
respect of,
amongst other matters, any matter arising out of the exercise of any
of its powers or the performance or non-performance
of any of its
duties under that Act or any rule. To the extent necessary,
that power is further extended by s 57(1)
of the CSOS Act,
which, as mentioned at the outset of this judgment, gives a body
corporate the right to pursue an appeal against
an adjudicator’s
order. In terms of s 7 of the STSMA, the powers of a body
corporate must be exercised by the
trustees of the body corporate.
The owners have not identified any provisions of the Act, or the
pertinent rules, or any
restriction or prohibition imposed by a
general meeting of owners, that would serve to limit or exclude the
exercise by the trustees
of the Body Corporate’s power to
institute the proceedings. Management rule 9, to which the
owners’ counsel referred,
and which provides that the trustees
must exercise the powers and functions entrusted to them in terms of
s 7(1) of the STSMA
‘
in
accordance with resolutions taken at general meetings and at meetings
of the trustees
’, merely confirms
the effect of s 7. It does not add to or detract from the
empowering effect of s 7 or the
restriction thereon provided for
in that section. As it was, the institution of the current
proceedings was in accordance
with a resolution taken at a trustees’
meeting.
[40]
The trustees would, of course, be ill
advised to institute and prosecute litigation on the Body Corporate’s
behalf without
adequate provision for the cost thereof. Should
the Body Corporate suffer any loss in consequence of an ill-advised
decision,
the trustees might find themselves personally liable in
terms of s 8(3) of the STSMA. Such exposure to potential
personal
liability does not, however, detract from the trustees’
authority to institute proceedings in the Body Corporate’s
name. It would, of course, be open to the members in general
meeting to restrict or prohibit the exercise by the trustees
of the
Body Corporate’s power to litigate, but, as I have said, the
owners have not identified the existence of any such
restriction or
prohibition.
[41]
As the adjudicator’s misdirections on
the points of law discussed above directly informed her determination
of the owners’
application adversely to the Body Corporate, the
applicant’s statutory appeal falls to be upheld.
Upholding the appeal,
and setting aside the adjudicator’s order
will not, however, resolve the dispute between the parties, in
respect of which
there are a number of pertinent factual issues that
were not decided by the adjudicator. In the circumstances, the
owners’
CSOS Act application will have to be remitted to the
adjudicator for determination afresh with due regard to this court’s
judgment on the questions of law put up in the Body Corporate’s
appeal.
[42]
The ordinary rule in litigation is that
costs follow the result. The owners’ counsel submitted,
however, that it might
be unfair to apply the rule in the
circumstances of this case because the owners might yet prevail on
the merits of their application
before the adjudicator after it has
been remitted by this court. I am not persuaded by the
argument. The current proceedings
concerned an appeal
predicated on errors of law made by the adjudicator. The owners
opposed the application and sought to
defend the adjudicator’s
decision. If they wished to avoid exposure to an adverse costs
order, they would have been
well advised to abide the court’s
judgment subject only to their application in terms of the CSOS Act
being remitted to the
adjudicator should the questions of law raised
by the applicant be determined in its favour.
[43]
It is also necessary to briefly consider an
application brought by the owners under a separate case number (case
no. 9939/2020)
at the end of July 2020 in which the
aforementioned Mr Blacher, attorneys Slabbert Venter Yanoutsos Inc.
and Mr Anton Slabbert,
respectively, were cited as the first, second
and third respondents. In case no. 9939/2020, orders were
sought (i) that
the application be heard together with the
application in respect of the appeal in terms of s 57 of the
CSOS Act (referred
to as ‘the main application’),
(ii) that the first, second and third respondents be joined as
respondents in the
main application, (iii) that Mr Blacher be ordered
to pay the costs of the main application, (iv) in the alternative to
(iii),
that the second and third respondents be ordered to pay the
costs in the main application, and (v) that the costs of the
application
be costs in the main application. The two
applications were argued together without an order having been made
to formally
permit that. By the end of the argument it appeared
to be accepted that in the event of the court deciding, as has
happened,
that the main application was instituted by Slabbert Venter
Yanoutsos Inc. on behalf of the Body Corporate, the only material
question
for determination in case no. 9939/2020 would concern the
costs of the application.
[44]
It appears from the owners’ founding
affidavit in case no. 9939/2020 that the application was made
because of the failure
of the Body Corporate’s attorneys to
respond to a notice given by the owners in terms of rule 7 of the
Uniform Rules of Court
for Slabbert Venter Yanoutsos Inc. to satisfy
the court that they had been authorised by the Body Corporate to
institute the proceedings
in the main application. The rule 7
notice was given in September 2019. The owners inferred from
the failure of the
Body Corporate’s attorneys to respond to the
notice that the main proceedings had been instituted by Mr Blacher,
and not
the Body Corporate.
[45]
It was only after the application in case
no. 9939/2020 was instituted that the minutes of the trustees’
meeting of 15
July 2019 referred to in paragraph [35]
were
made available. Mr Slabbert has made an explanatory affidavit
in which he sets out the history which, by a concatenation
of
circumstances, led to the long delay in responding to the owners’
notice in terms of rule 7. There was nevertheless
no excuse for
the response not to have been provided promptly during September last
year.
[46]
Ordinarily, I would have considered that
the fault of the Body Corporate’s attorney in not furnishing a
timeous response to
the rule 7 would make it fair that the Body
Corporate bear the costs of the application in case no. 9939/2020.
There
are two factors, however, that persuaded me to reach a
different conclusion. Firstly, as discussed above, the owners
were
not content to accept the minutes of the trustees’ meeting
as sufficient evidence that the Body Corporate had indeed instituted
the main application. There is no reason to believe that they
would have reacted differently if the minutes had been provided
in a
timeously given response to their rule 7 notice. Secondly, the
owners resort to rule 7 in the peculiar circumstances,
where they had
a personal right of access to the records of the trustees’
meetings in terms of the Body Corporate’s
domestic rules, and
in a situation when as fellow members they would have had the ability
to speak to Mr Blacher’s fellow
trustees to confirm that the
statutory appeal was indeed being pursued by the Body Corporate, and
not by Blacher on a frolic of
his own, strikes me as having been
unreasonable.
[47]
In all of the circumstances I shall order
that no order will be made in case no. 9939/2020, with the
result that the parties
in that application will bear their own
costs.
[48]
An order is made in the following terms:
1.
The
applicant’s appeal in terms of s 57 of the Community
Schemes Ombud Service Act 9 of 2011 is upheld and the adjudication
order, dated 21 June 2019, made by the first respondent in Community
Schemes Ombud Service case no. CSOS199/WC/18 is set aside.
2.
The
application in case no. CSOS199/WC/18 is remitted to the first
respondent for determination afresh in the light of the judgment
of
this court in the statutory appeal.
3.
The
third and fourth respondents shall be liable jointly and severally,
the one paying the other being absolved, for the applicant’s
costs of suit in case no. 12572/2019.
4.
It
is determined that no order will be made in case no. 9939/2020.
A.G. BINNS-WARD
Judge
of the High Court
APPEARANCES
Applicant’s
counsel:
D. Baguley
Applicant’s
attorneys:
Slabbert Venter Yanoutsos Inc.
Wynberg
Norton Rose Fulbright
Cape Town
Third
and Fourth Respondents’ counsel:
J.P. Steenkamp
Third
and Fourth Respondents’ attorneys:
BBM Inc.
Cape Town
[1]
Para 14 of the decision.
[2]
Section 50 of the CSOS Act.
[3]
Section 45 of the CSOS Act.
[4]
The Prescribed Management Rules and the
Prescribed Conduct Rules are prescribed in terms of s 10(2) of
the Sectional Titles
Schemes Management Act 8 of 2011. The
rules are set forth in Annexures 1 and 2, respectively, to the
Sectional Titles Schemes
Management Regulations, 2016, GN R1231 of 7
October 2016.
[5]
Nothing to that effect was suggested in the
opinion from Paddocks Attorneys that was attached to the owners’
application
in terms of the CSOS Act.