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[2021] ZAWCHC 109
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Heathrow Property Holdings No 33 CC and Others v Manhattan Place Body Corporate and Others (7235/2017) [2021] ZAWCHC 109; [2021] 3 All SA 527 (WCC); 2022 (1) SA 211 (WCC) (1 June 2021)
IN
THE HIGH COURT OF SOUTH AFRCA
[WESTERN
CAPE DIVISION, CAPE TOWN]
[REPORTABLE]
Case
no: 7235/2017
In
the matter between:
HEATHROW
PROPERTY HOLDINGS NO 3 CC
First
Applicant
LA
PARADIS LOFTS CC
Second
Applicant
ALISON
LYNN WRIGHT
Third
Applicant
WOLF-DIETER
SCHEUBE
Fourth
Applicant
and
MANHATTAN
PLACE BODY CORPORATE
First
Respondent
JAMES
GARTH
TUPPER
Second Respondent
RAYMOND
GNESIN
Third
Respondent
LARA
GNESIN
Fourth Respondent
CINDO
ONIA
Fifth
Respondent
REINER
HAVENGA
Sixth Respondent
Heard
on: 19 April 2021
JUDGMENT
DELIVERED (VIA EMAIL) ON 1 JUNE 2021
SHER,
J:
1.
I
have before me an application which was launched as a matter of
urgency in October last year, in which certain declaratory relief
is
principally sought in relation to the application of a conduct rule
which was adopted by a body corporate in a sectional title
scheme,
and the installation by it of a biometric security/access control
system. It raises important questions about the jurisdiction
which
has been afforded to courts and adjudicators in terms of the
Community Schemes Ombud Services Act
[1]
(‘the CSOS Act’), which is one of two statutes
[2]
which were introduced in 2011 in relation to sectional title schemes,
following a major legislative overhaul of the regulatory
scheme which
had been introduced some 25 years earlier by means of the
Sectional
Titles Act 95 of 1986
.
The facts
2.
The applicants are the
owners of 3 loft apartments in Manhattan Place, a 10 storey mixed-use
sectional title scheme which was established
in January 1998 and
which is housed in a building located at the junction of Buitengracht
and Bree Streets in the centre of Cape
Town.
3.
The scheme’s
sectional title plan provides for a hotel which is operated from the
2
nd
floor (which houses the reception, bar and restaurant), the 5
th
floor (conference centre, restaurant and administrative offices) and
the 6
th
to 8
th
floors (hotel suites), office and commercial units (on the 3
rd
and 4
th
floors) and 37 residential units in the form of loft apartments (on
the 9
th
and 10
th
floors). Some 80% of the total units in the scheme are owned by a
trust. The hotel is accessed via an entrance on Bree Street and
the
owners of the commercial and loft units access their properties via
an entrance in Buitengracht Street. Ten of the loft units
are in a
rental pool which is run by the hotel.
4.
The units which are
owned by the applicants are not included in this arrangement. They
were purchased in terms of deeds of sale
which expressly acknowledged
that whilst certain residential units would be sold subject to the
condition that the purchasers thereof
would offer them for use to the
hotel in terms of a rental pool agreement that they would be required
to enter into, the remaining
sections in the residential, office and
commercial areas were to be ‘exclusively’ used by the
purchasers thereof as
residential apartments, offices or commercial
enterprises. Owners of such non-rental pool residential units were
however entitled
to enter into individual rentals with the hotel on
an
ad hoc
basis.
5.
Thus, as the
respondents being the body corporate and its trustees point out, in
the main the scheme envisaged that residential
loft units would
predominantly not be subjected to short-term rental use by outside
parties, and would primarily be occupied and
used by their purchasers
or their long-term tenants.
6.
Short-term rental use
was primarily intended to occur in respect of the 10 hotel suite
units which fell into the rental pool agreement
and which constitute
roughly 25% of the total number of residential units, and such
occasional use as might occur by the hotel
on an
ad
hoc
basis, from
time to time, in respect of the remaining units.
7.
On
8 December 2003 the body corporate adopted a conduct rule,
rule 12
,
as part of its management and conduct rules,
[3]
which provides that an owner of a section who leases it out or in any
other manner surrenders possession of it to a 3rd party is
required
to provide particulars thereof to the trustees or managing agents. In
addition, the rule provides that a section may not
be leased, nor may
possession of it otherwise be surrendered, for a period of less than
6 months, without the prior written consent
of the trustees, which
consent shall not be unreasonably withheld. Thus, the introduction of
the rule sought to acknowledge the
right which owners had to let
their units, but sought to regulate the terms thereof in respect of
short-term rentals for periods
of less than 6 months.
8.
According to the
respondents the rule was adopted with a view to addressing security
issues pursuant to an increase in short-term
rentals of residential
units which began to occur outside of the rental pool agreement, and
associated problems which were experienced
with such rentals.
9.
In
2017 a number of dissatisfied non-rental pool owners of loft units
(which did not include the applicants) challenged the ambit
and
application of the rule by referring a dispute in this regard to the
statutory Ombud, which is provided for by the CSOS Act.
The
complainants sought to set aside the rule on the basis that it was
unreasonable, and they also sought a determination setting
aside
certain penalties which were levied by the trustees as fines (in
terms of a related rule which had been adopted),
[4]
in instances where rule 12 had not been complied with.
10.
On 29 March 2018 the
adjudicator held in favour of the applicants in respect of the
imposition of the penalties, but against them
in respect of the
principal relief which was sought in respect of rule 12. He pointed
out with reference to a number of reported
decisions that inasmuch as
the purpose of conduct rules in a sectional title scheme, which are
agreed upon and adopted by a majority
of members, is to regulate and
promote appropriate neighbourly interaction amongst residents, courts
or entities which are required
to adjudicate upon their validity
should be wary of rewriting them at the instance of a minority who
adopt the position that they
are unfair and not in their interest.
11.
The
adjudicator held
[5]
that when
determining whether a conduct rule was reasonable one must consider
whether it is a necessary and sensible rule which
is aimed at
advancing the interests of a sectional title community by preserving
the quality of life of residents in the scheme
concerned and the
value of their investments therein.
12.
Having regard for the
evidence which was put before him by the owners and the trustees and
bearing in mind the unique mixed-use
structure in terms of which the
scheme operated, and the fact that the applicants had purchased their
units well-knowing of the
intended limitations on their rental use,
he held that the provisions of rule 12 were reasonable, as the rule
served a legitimate
purpose and was not unfair or arbitrary.
13.
As I have already
pointed out, the applicants in this matter purchased their units on
the basis that their right to let them on
a short-term basis was
limited. This much is evident both from the terms of the deeds of
sale which they entered into and the manner
in which the sectional
title scheme operates in terms of the sectional title plan and the
rental pool agreement. Notwithstanding
this, since their acquisition
the units which are owned by 1
st
and 2
nd
applicants (which are close corporations which are in the business of
short-term holiday accommodation), have been let on a short-term
basis ie for less than 6 months at a time, and often for a few nights
only. Similarly, it appears that the unit which is jointly
owned by
3
rd
and 4
th
applicants, who currently reside in Spain, was acquired and is used
for the purpose of generating short-term rental income.
14.
The applicants consider
the provisions of rule 12 and its implementation to be unfair and an
unjustified fetter of their rights
of use of their units. They
complain that they are being discriminated against unfairly vis-à-vis
the owners of other residential
units, which fall within the hotel
rental pool agreement, and who are thus not subject to it.
15.
Prior to launching this
application 1
st
and 2
nd
applicants sought to free themselves from the strictures of rule 12
by launching an audacious application in the Cape Town Magistrate’s
Court in July 2019 in terms of which they sought an order for the
removal of the current trustees and the appointment in their
place of
an administrator to the body corporate. It is apparent from the
judgment of the magistrate whereby the application was
dismissed with
costs on 13 December 2019 that, just as in this matter, it was
similarly based on a contention that the rule was
applied unfairly by
the trustees and was unreasonable. Not surprisingly, given that
trustees can only be replaced in the event
of maladministration, the
application failed. No appeal was lodged against the magistrate’s
ruling.
16.
At a meeting which was
held on 11 November 2019 the trustees resolved to upgrade the
existing tag-based security/access control
system which regulated
access to the commercial and residential units and which had been in
place for some 22 years, with a biometric
fingerprint-based one, as a
result of security issues. In this regard it appears that there had
allegedly been a number of instances
where outsiders had been able to
obtain unauthorized access to the building and a murder had occurred
in one of the units.
17.
On 2 March 2020, 3
rd
applicant lodged a complaint with the Ombud in regard to the
introduction of the biometric security/access control system, on the
basis that inasmuch as it was not a necessary but a luxurious
improvement the trustees required the unanimous consent of all the
owners in the scheme and were not entitled to adopt a resolution to
install the new system by way of a simple majority.
18.
However, on 19 October
2020, whilst the complaint was still awaiting conciliation, and some
10 days after this application had been
launched, she withdrew it. No
explanation was provided for why she did so and why she did not allow
the Ombud to rule on it. Clearly,
by lodging the complaint with the
Ombud the applicant was
prima
facie
of the view
that it had the necessary jurisdiction and authority to pronounce on
it.
An evaluation
19.
There are a number of
reasons why the application must fail. In the first place, in my view
it constitutes an egregious abuse of
the process of this Court. In
the second place, I am of the view that an application such as this
is one that should be dealt with
in terms of the dispute resolution
procedures which have been established by the CSOS Act, and not by a
Court.
(i)
Abuse of process: lack of urgency and standing
20.
In this regard the
first difficulty which I have is that the application was brought as
a matter of urgency, in circumstances which
were clearly not urgent.
In terms of the rules of court an applicant is required in an
application which is brought as a matter
of urgency to pertinently
and expressly set out the grounds which justify it not following the
ordinary rules and process, and
to provide adequate and cogent
reasons for why it cannot be expected to await a hearing in due
course.
21.
In their founding
affidavit the applicants averred that ever since November 2017 (some
3 years before the application was launched),
the body corporate has
been implementing the rule in a manner which amounts to a blanket
prohibition on short-term letting in respect
of residential units
which do not fall within the rental pool. They referred in this
regard to a dispute which arose between the
owner of apartment 1007,
one Alon Sachs, who is not a party to the application, after
his request for permission to let his
unit via Air BnB was turned
down by the trustees in December 2017, and the subsequent referral of
a similar dispute to the Ombud
by a group of owners in which they
challenged rule 12 on the basis that it was unreasonable, which
culminated in the award by the
adjudicator in March 2018, and similar
alleged refusals which occurred in respect of other owners of loft
apartments in June 2018,
when they requested permission to
short-let.
22.
The applicants pointed
out that on 19 February 2020 the managing agents addressed a letter
to the owners of units in the scheme
in which they indicated that
although applications for short-term lets for a period of less than 6
months would continue to be
considered by the trustees, as from 25
February 2020 applications for daily lets would not be considered, as
these had allegedly
resulted in a breach of access control measures
with an increased security risk and an increased administrative
burden and complaints.
(I mention, in passing, that it appears that
over the last 4 years numerous complaints in respect of noise and
other disturbances
were received by the body corporate in regard to a
number of units that were being short-let, including unit 1001 in
particular,
which is owned by 2
nd
applicant).
23.
The managing agents
accordingly directed that applications for short-term lets were to be
submitted to the trustees at least 30
days in advance. The applicants
have not given any explanation for why, having received the letter
from the managing agents in
February 2020, they did not approach the
Court until October 2020, some 8 months later, and then did so on an
urgent basis.
24.
As has previously been
pointed out, the applicants state that they have been consistently
letting out their units on a short-term
basis for a number of years
and
in
their founding affidavit they have not referred to a single instance
where any of them have unjustifiably been refused permission
to let
their units on a short-term basis since February 2020.
25.
All that the applicants
put forward in relation to urgency was that with the easing of the
COVID-19 lockdown regulations in October
2020 the matter took on a
‘degree of urgency’ as the summer season was approaching
and they wanted to ‘obtain
clarity’ in respect of the
relief they sought, as soon as possible, so that they could generate
income again from short-term
rentals. They contended that it was in
the interests of the economy and the country as a whole that they
should be able to become
economically active and commercially viable
again, as soon as possible. However, they acknowledged that their
ability to capitalize
on the forthcoming summer season was in any
event going to be constrained by the fact that there was unlikely to
be any significant
level of international tourism to Cape Town for
the forseeable future, while the pandemic was raging.
26.
The respondents point
out, as a further indication of the applicants’ abuse of the
process, that the additional relief which
the applicants seek viz an
order declaring that the replacement by the trustees of the former
electronic tag-based security/access
control system with a biometric
one, was an unnecessary improvement which was allegedly effected
without the requisite authority
and that it should consequently be
removed and the old one restored in its place, is relief which could
and should properly have
been sought already at the end of 2019,
considering that the resolution which authorized the acquisition of a
new system was adopted
by the trustees on 11 November of that year
and the new system was installed shortly thereafter. Although the
applicants sent the
respondents a letter in December 2019 demanding
that the new security access/control system should be removed,
failing which they
threatened to approach the High Court, they did
not so, and have similarly not given any explanation for this, nor
have they even
attempted to provide an explanation for why they
approached this court for relief in this regard on an urgent basis a
year later.
27.
In the circumstances no
basis existed for the applicants to bypass the ordinary rules and
processes of this court and to force the
application before the court
as a matter of urgency. Ordinarily, these circumstances would at the
very least have resulted in the
application being struck from the
roll with a punitive order for costs, as a mark of the court’s
displeasure. The application
was however not thrown out for lack of
urgency when it first came before the duty judge, who adjured the
parties to talk to one
another and subsequently granted an interim
Order by agreement, which afforded the applicants some interim relief
pending the outcome
of the application. Thus, the applicants contend
that in the circumstances the application must be heard as any point
that might
have been taken in regard to lack of urgency is moot.
28.
Even if this is so, and
as I have previously pointed out, in their papers the applicants did
not set out any instances where they
were unjustifiably refused
permission to let their units on a short-term basis since February
2020. Consequently, in my view they
had no standing to bring an
application in this regard, even on the usual basis, let alone on an
urgent basis, and for this further
reason alone the application is an
abuse and cannot be entertained. In essence, what the applicants have
sought to do is to obtain
a ruling in advance from the Court, which
could be used against any possible future refusal of a request by
them to let their apartments
on a short-term basis. In my view,
inasmuch as the grant of a declarator is a matter which falls within
the discretion of this
Court, these circumstances compel the refusal
thereof. Courts are not to be used for the purpose of obtaining
advance relief which
is not required by a party at the time, in
circumstances where their rights have not been affected and no proper
case has been
made out of any imminent threat of harm to or breach of
their rights, were such relief not to be granted.
(i)
Bypassing the dispute resolution mechanisms in the CSOS Act
29.
But even if one were to
hold that the applicants were entitled to approach the court for
relief as parties whose rights could potentially
be affected by the
respondents’ conduct in relation to rule 12, and whose rights
were indeed affected by the installation
of the new biometric
security access control system, the further issue which I have with
the application is that it effectively
seeks to bypass the dispute
resolution mechanisms which have been established by the CSOS Act.
30.
In this regard the
respondents correctly contend that the issues which the applicants
seek to have determined by this court fall
squarely within the
express jurisdiction of the CSOS. They point out that an adjudicator
has wide powers in terms of ss 39(3)(c)
and (d) of the Act to declare
a ‘governance provision’ which regulates a scheme i.e a
rule such as rule 12, to be invalid
or unreasonable, and to issue an
order directing the scheme to substitute it with an appropriate,
alternative provision.
31.
As
the definition of what constitutes a ‘governance provision’
[6]
includes not only a
sectional title scheme’s constitution and its rules and
regulations, but any ’terms, conditions
or other provisions’
(sic) which serve to control the ‘administration or
occupation’, not only of a scheme’s
common areas but its
‘private’ areas as well, the additional limitations
which were placed on the short-term
letting of residential units by
the trustees in their letter to the owners in February 2020, would
arguably also be subject to
adjudication in terms of the Act.
32.
Similarly, an
adjudicator has the power in terms of ss 39 (4)(c), (d) and (e) of
the Act to issue an order declaring that any resolution
which was
passed by the trustees (such as that which is challenged in this
matter in relation to the adoption of a new security
access control
system as well as any resolution which was passed in relation to the
implementation and application of rule 12)
is void or invalid, and
that it unreasonably interferes with the rights of individual owners
within a scheme.
33.
The applicants concede
that the relief which they seek in relation to the biometric security
access control system is relief which
could be obtained from an
adjudicator in terms of these provisions of the Act. They
contend however that the general declaratory
relief which is sought
in relation to the interpretation and application of rule 12 by the
body corporate does not fall within
the statutory powers which are
afforded to an adjudicator in terms of s 39, and only this court is
empowered to grant it.
34.
In
the alternative, they contend that inasmuch as the declaratory relief
which could be granted in terms of ss 39(3) and (4) could
be obtained
either from a CSOS adjudicator or this Court in the exercise of its
concurrent jurisdiction, they were at liberty either
to approach the
Ombud or to approach the Court for it, and the Court cannot refuse to
entertain the application by declining to
exercise its jurisdiction.
Relying on comments which were made in this regard by Binns-Ward J in
Coral
Island
[7]
they contend that all that the Court can and should do, in the event
that it is of the view that the application should more properly
have
been brought before the Ombud, is to make an appropriate Order in
relation to the costs of the application ie an Order either
disallowing them their costs in the event that they are successful or
mulcting them in some way in regard thereto.
35.
This
Court has previously pointed out
[8]
that the object of the CSOS Act is to provide a mechanism for the
expeditious, informal and cost-effective resolution of disputes
between owners of units in a sectional title scheme and its
administrators via an Ombud, who has been given wide inquisitorial
powers whereby such disputes can be resolved as informally and
cheaply as possible by means of qualified conciliators and
adjudicators,
without the need for legal representation, save in
certain limited circumstances.
36.
In
Coral
Island
[9]
Binns-Ward J warned that the
compelling constitutional and social policy considerations which
informed the introduction of the
Act, including the promotion of
quick and affordable access to justice to those who live in sectional
title schemes who are not
easily able to afford to litigate in the
courts, and the social utility to be achieved by the provision of a
relatively cheap and
informal dispute resolution mechanism, were
liable to be undermined if courts were to indiscriminately entertain
matters that should
rather be dealt with in terms of the processes
which have been established by the Act. However, and with reference
to the decision
in
Standard
Credit,
[10]
he expressed the view
en
passant
that insofar as judges and magistrates may not have the power to
refuse to hear such matters, they should use their judicial
discretion
in respect of costs to discourage any inappropriate resort
to the courts in relation to cases that should more appropriately
have
been taken to the Community Scheme Ombud Service.
37.
These
remarks must be seen in the context of the facts in
Coral
Island
,
where somewhat unusually, it was the body corporate which proceeded
to Court, not the owner of a unit in the sectional title scheme
concerned. It sought an order declaring that the owner had made
certain unauthorised plumbing alterations to piping from a geyser
which had been installed in her garage, and was utilizing the garage
for a purpose other than that for which it was designated
in terms of
the sectional plan,
[11]
and
should consequently be directed to replace the piping with the same
kind of piping as that which had been used throughout the
scheme.
Shortly before the matter was to be heard the respondent made an
offer of settlement, which was accepted, in which she
conceded that
the applicant was entitled to the relief which was sought, save for
costs. In this regard she maintained that costs
should not be awarded
against her because the body corporate should have sought to resolve
the dispute in terms of the procedures
provided for in the CSOS Act
and not by way of an application to court. The Court agreed that it
had been inappropriate for the
matter to have been brought before it
rather than before the Community Schemes Ombud but in the light of
the settlement which had
been arrived at it granted the relief
sought, and ordered that each party should bear their own costs.
38.
In the circumstances,
the issue of whether or not the Court was entitled, as a matter of
law, to decline to hear the matter was
not one which pertinently
arose for decision and the comments which were made in this regard
were
obiter,
and the reference to the decision in
Standard
Credit
should be
seen in that light.
39.
Standard Credit
is
one of a number of a long line of cases which have wrestled with the
perennial question of whether a High Court is entitled to
refuse to
exercise its concurrent jurisdiction, in matters where the
Magistrate’s Court would ordinarily have jurisdiction.
Most, if
not all, of these cases concerned monetary claims in instances where
loans were advanced in terms of credit agreements.
40.
In
Standard
Credit
the
plaintiff had opted to proceed in the High Court because it contended
that the magistrate’s court’s rolls were congested
and it
was more convenient and expeditious for it to do so there. The High
Court held that inasmuch as it had concurrent statutory
jurisdiction
with the Magistrate’s Court over all persons residing, and all
causes of action arising, within its area of
jurisdiction, as
dominis
litis
the plaintiff had a choice to proceed in either forum, and the High
Court was therefore bound to hear all matters that were properly
before it in instances where the plaintiff had elected to proceed in
the High Court not for any improper purpose or motive. However,
on
the strength of the dictum of Schreiner J in
Goldberg
[12]
it held that in order to discourage litigants from suing out of the
High Court instead of the Magistrate’s Court, where that
would
have been the more appropriate forum, an appropriate costs order
should be made against them i.e they should be disallowed
their costs
or should be ordered to pay any additional costs which may have been
incurred by reason of the matter having been brought
in the High
Court.
41.
Importantly
however, it also reaffirmed the long-standing principle enunciated in
Goldberg
[13]
that in the exercise of its inherent power to regulate its own
proceedings the High Court may decline to hear a matter which
constitutes
an abuse of process, which would include instances where
the High Court’s process has been used for a purpose for which
it
was not intended or designed, to the potential prejudice of the
other party.
[14]
42.
In
2009, some 22 years after the decision in
Standard
Credit,
the
issue came up before the same division of the High Court again, in
ABSA
Bank Ltd v Myburgh.
[15]
It held that issuing process out of the High Court in respect of a
debt which could be recovered in the Magistrate’s Court
went
against the purpose of the National Credit Act
[16]
and any consent which was obtained from a debtor to have such a
matter heard in the High Court was illegal. Although the decision
was
subsequently overruled by a full bench in
Mateman,
[17]
a year later a single judge of the same division expressed the view
in
Maleke
[18]
that unless ‘difficult’
principles of law or fact required that a matter which fell within
the jurisdiction of the
Magistrate’s Court should be heard in
the High Court, it had an unfettered discretion to decline to hear
it.
43.
In
2018, another full bench of the selfsame division held in
Thobejane
[19]
that it would indeed
constitute an abuse of the process of the High Court to allow matters
which could be decided in the Magistrate’s
Court to be heard in
the High Court, simply because it had concurrent jurisdiction, unless
the Court granted leave to do so, and
only using costs orders to
discourage this practice would not promote or give due cognizance to
the constitutional imperative of
affording access to justice to
impecunious litigants. It was of the view that the notion that a
plaintiff was
dominus
litis
and could therefore choose which of two available forums best suited
it, was outdated, and did not have regard for the deep-seated
inequalities in our society.
[20]
44.
In
the most recent decision in point, a full bench of the Eastern Cape
division held in
Gqirana
[21]
that
Thobejane
went too far and that in circumstances where there was a concurrency
of jurisdiction the High Court was not entitled to refuse
to hear a
matter which was properly before it and which could have been heard
in the Magistrate’s Court, unless there was
an abuse of
process, which was something which had to be determined on a
case-by-case basis, and not on the basis of a banket rule
to this
effect. In doing so it followed the line adopted in
Standard
Credit
,
which was referred to by the Constitutional Court in 2013 in
Agriwire
.
[22]
45.
However,
that said, it also held that given that the NCA was an Act which was
intended to render assistance and protection to persons
who were
financially disadvantaged (to this end the jurisdiction of the
Magistrates’ Court had been extended to all matters
arising
from credit agreements, irrespective of the monetary value of the
claim concerned), and in order to promote access to justice
in terms
of s 34 of the Constitution, the Magistrate’s Court was to be
the court of ‘first adjudication’ in respect
of all NCA
matters, unless there were ‘unusual or extraordinary’
factual or legal issues involved in a particular matter
which in the
opinion of the High Court warranted it being heard by it. In this
regard it held
[23]
that
‘insufficiency’ (presumably this was a typographical
error and should read ‘inefficiency’), and delays
in the
processes of the Magistrate’s Court would not constitute such
circumstances.
46.
In
the absence of a definitive ruling from the Supreme Court of Appeal
or the Constitutional Court,
[24]
the final word on the issue of the ambit and limits of concurrent
jurisdictions has yet to be spoken.
47.
To my mind however, I
am not bound to the jurisprudence which has emanated from the cases
to which I have referred in this regard
and they are distinguishable
because the jurisdiction of this Court is in substantial respects not
concurrent with that which is
afforded to adjudicators in terms of
the CSOS Act, and in many instances an adjudicator has powers in
terms of the Act which this
Court does not have, or which exceed
those which it has.
48.
Thus,
in terms of ss 39(1)-(7) of the Act an adjudicator has a number of
express statutory powers in respect of financial, ‘behavioural’,
governance, management, regulatory and other issues pertaining to a
sectional title scheme, which a Court does not. In this regard,
and
by way of example, in respect of financial issues an adjudicator has
the power to make orders (i) requiring a scheme to take
out insurance
or to increase the amount thereof
[25]
or (ii) to take action under an insurance policy to recover an
amount,
[26]
(iii) or to
declare that a contribution which was levied on owners is
‘unreasonable’ and that it be adjusted to a ‘reasonable’
amount,
[27]
and may even grant
an order (iv) requiring a tenant to pay over the rental which is
payable under a lease agreement to the body
corporate and not to his
landlord, until an amount which is due by the landlord to the body
corporate has been settled.
[28]
49.
Similarly,
in regard to governance issues an adjudicator has the power to make
orders not only declaring a governance
provision to be invalid
or ‘unreasonable’, but directing a scheme to amend or
substitute it with another provision.
[29]
And in regard to a resolution which has been passed an adjudicator
has the power not only to declare that it is void for wont of
compliance with the formal requirements necessary, but may also do so
on the grounds that it ‘unreasonably interferes’
with the rights of an owner or occupier, or a group of owners or
occupiers,
[30]
and may even
make an order declaring that because a resolution was not passed as a
result of ‘unreasonable’ opposition
to it, it should be
given effect to as if it had been passed, either in its original
proposed form, or as varied by the adjudicator.
[31]
50.
An
adjudicator not only has the power to direct a body corporate to have
certain repairs and maintenance carried out,
[32]
but may make an order requiring it to carry out certain specified
works to or on the common areas for the ‘use, convenience
or
safety’ of owners or occupiers,
[33]
or may make an order declaring that a body corporate’s decision
to reject certain proposed improvements or alterations to
common
areas was ‘unreasonable’, and may direct it to agree
thereto.
[34]
In similar
vein an adjudicator may make an order declaring that a body corporate
has ‘unreasonably’ refused to
grant exclusive use rights
to an owner or occupier over a certain part of a common area and may
direct it to do so, on terms that
may require periodic payments to be
made to the body corporate.
51.
Finally,
the Act provides
[35]
that any
order which an adjudicator makes may contain such ancillary and
‘ensuing’ (sic) provisions as the adjudicator
considers
to be necessary or appropriate, and may provide that it has the
effect of ‘any type of resolution or decision’
(sic)
provided for in the scheme governance documentation.
52.
As
is thus apparent, the statutory powers which an adjudicator has in
terms of the Act are extremely wide and go beyond the powers
which a
court has in relation to neighbourly disputes and associations in
terms of common law, not only insofar as their reach
is concerned,
but also in relation to their ambit. In numerous instances an
adjudicator has an equity ie fairness-based power,
not only to decide
what is ‘reasonable’ in relation to the conduct of, or
the decisions which have been taken by an
association such as a body
corporate of a sectional title scheme,
[36]
but also to direct what should ‘reasonably’ be done in
place thereof. A High Court does not have such powers.
53.
It
is confined to reviewing the legality or rationality of the conduct
of a decision-making body and not the fairness thereof, and
when
doing so it generally does not have the power to substitute its own
decision as to what would be fair or reasonable, in place
of the
body. The best it can do ordinarily, unless it is clear that no other
decision can be made on the issue and the relief which
is sought must
inevitably follows as a matter of law or logic, is to set aside the
decision or conduct concerned and refer the
matter back to the body
for decision anew. As far as the High Court’s appellate
jurisdiction in respect of the decisions
of adjudicators is
concerned, in terms of s 57(1) of the Act this is limited to
questions of law only.
[37]
54.
The difference between
the powers which an adjudicator has vis-à-vis those which a
Court has, is starkly illustrated by the
relief which the applicants
seek in the notice of motion, whereby they ask for an order declaring
that the trustees’ application
of rule 12 is ‘prejudicial’
and ‘unfair’ and that the body corporate should be
ordered to consider all
applications for short-term rentals within 5
business days from receipt thereof. Whilst these are orders which an
adjudicator can
make in terms of the Act, when counsel for the
applicants was asked on what basis the Court was entitled to make an
Order based
on fairness and on what basis the Court was empowered to
stipulate a period of time for the consideration of applications for
short-term
lets by the body corporate of the Manhattan Place
sectional title scheme, thereby effectively rewriting one of its
conduct rules,
he was constrained to concede that it did not have
such powers, either statutorily or at common law. That is why
adjudicators are
best placed to decide on the reasonableness or
otherwise of conduct rules and resolutions, and to propose the
necessary remedial
measures in respect of those which they take issue
with.
55.
Even
at a purely procedural level it is apparent that an adjudicator has
powers in terms of the Act which a court of law does not
have
statutorily or in terms of the rules of court. Thus, when considering
an application an adjudicator may require the applicant
or the
managing agent or any other relevant person (even persons who may not
be parties to the application) to provide information
or
documentation and affidavits or statements, and may require such
person(s) to attend at his office for an interview.
[38]
Furthermore, in the process of obtaining evidence necessary for a
determination an adjudicator is not bound to apply the exclusionary
rules of evidence which are applicable in civil courts.
[39]
56.
To
my mind, considering the sections referred to in the context of the
CSOS Act as a whole and adopting a purposive and sensible
interpretation thereto ie one which has regard for the language of
the provisions concerned, the context in which they are to be
found,
and the apparent purpose to which they are directed
[40]
it is apparent that the legislature intended that the primary forum
for adjudication of disputes in terms of the Act is to be the
Ombud
service and the adjudicators appointed by it,
[41]
who are required to have suitable qualifications and the necessary
experience (not only in relation to the adjudication of disputes,
but
also in relation to community scheme governance).
[42]
The High Court is intended to be a secondary, supervisory forum
which is to exercise review and appellate jurisdiction (i.e
oversight
over the discharge by the Ombud and its adjudicators of their duties
and powers), and not an adjudicatory jurisdiction.
57.
In
the second place, a further reason why it would in my view be
inappropriate to consider the jurisprudence pertaining to concurrent
jurisdictions as being necessarily applicable in matters such as
these is that the SCA and the Constitutional Court have repeatedly
confirmed
[43]
that where
specialist administrative or adjudicatory bodies or structures which
are not courts proper have been established by
statute for the
expeditious, informal and cost-effective resolution of particular
disputes which involve the application of specialized
or technical
knowledge or experience, they are the forums which are required to
deal with such disputes in the first instance,
even though a court
may also have jurisdiction to do so.
58.
Not
only does a court have institutional limitations in such matters
[44]
but at a policy level it has been held that it should defer to the
decisions of such specialized bodies and take care not to usurp
their
powers and functions.
[45]
59.
In
my view, to allow litigants to proceed directly to a court instead of
to the primary adjudicative forum which has been established
by the
CSOS Act, would undermine
[46]
the administrative and quasi-judicial processes which have been
provided for and result in ‘forum-shopping’
[47]
by better resourced litigants.
60.
It may also in certain
instances allow litigants to bypass restrictions or requirements
which have been set out in the Act. In this
regard for example, s 41
stipulates that an application for an order declaring that a decision
which was taken by an association
is void, must be made to the Ombud
no later than 60 days after the decision was taken, subject to the
power of the Ombud to condone
any late filing on good cause shown. If
litigants are allowed to approach the High Court directly to set
aside such decisions,
they would bypass this restriction contrary to
the intention of the legislature, and would be able to challenge
decisions which
have been made by a body corporate years earlier, as
the applicants have attempted to do in this matter. To my mind that
would
defeat the legislative intention of having disputes in relation
to decisions which have been taken by a body corporate of a sectional
title scheme, dealt with expeditiously. Similarly, allowing litigants
to bypass the mechanisms provided for in the Act for the
resolution
of disputes would allow them to avoid the conciliation process
provided for by it, thereby defeating the legislative
purpose of
having community scheme disputes resolved, if at all possible, by way
of an informal, expeditious and cheap mechanism,
instead of via the
courts.
Conclusion
61.
In
the result, I am of the view that where disputes pertaining to
community schemes such as sectional title schemes fall within
the
ambit and purview of the CSOS Act, they are in the first instance to
be referred to the Ombud for resolution in accordance
with the
conciliative and adjudicatory processes established by the Act, and a
court is not only entitled to decline to entertain
such matters as a
forum of first instance, but may in fact be obliged to do so, save in
exceptional circumstances. Such matters
will not be matters which are
properly before the High Court, and on the strength of the principle
which was endorsed in
Standard
Credit
(and a number of courts thereafter, including the Constitutional
Court in
Agri
Wire)
,
it is accordingly entitled to decline to hear them, even if no abuse
of process is involved. In this regard, as far as the High
Court is
concerned the processes which have been provided for the resolution
of disputes in terms of the CSOS Act are in my view
tantamount to
‘internal remedies’ (to borrow a term from the Promotion
of Administrative Justice Act
[48]
),
which must ordinarily first be exhausted before the High Court may be
approached for relief.
62.
What
will constitute exceptional circumstances entitling a litigant to
approach the High Court directly will have to be determined
on a
case-by-case basis.
[49]
63.
In
each instance a litigant will have to make out good cause for why a
dispute which can and should be heard by an adjudicator in
terms of
the Act should nonetheless be heard by the Court instead. In this
regard, in my view convenience will not constitute an
exceptional
circumstance and as was held in
Gqirana
[50]
neither, ordinarily, will
an alleged inefficiency or delay in the conciliative or adjudicatory
processes or mechanisms which have
been provided for by the CSOS.
[51]
64.
Of course, where for
example the constitutionality or legal validity or status of a
particular statutory power or a provision in
the Act is challenged or
is in issue, a litigant would obviously be entitled to approach the
Court for the appropriate relief (as
a forum of first instance or as
an appellate tribunal, as the case may be). So too, in certain
instances it is conceivable that
the High Court may be approached in
the first instance, as a review court.
65.
The applicants submit
that were I to decline to entertain the application I should transfer
it to the Ombud for adjudication in
the exercise of the Court’s
inherent and constitutional power to regulate its process, and in
such an event I should not
mulct the applicants and should direct
that the costs should be costs in the cause.
66.
In my view, given that
this is not only a matter which should not have been brought before
this Court and should have been taken
to the Ombud, but is also one
which constitutes an abuse of process (for the reasons outlined in
paras 20-28 above), the appropriate
order to make is one striking the
matter from the roll, with costs, on the scale as between attorney
and client.
M
SHER
Judge
of the High Court
Attendances
:
Applicants’
counsel: S Fergus
Applicants’
attorneys: Pike Law, Constantia
Respondents’
counsel: S Olivier SC
Respondents’
attorneys: Werksmans, Cape Town
[1]
Act 9 of 2011.
[2]
The other being the Sectional Titles Schemes Management Act 8 of
2011.
[3]
In
terms of the Sectional Titles Schemes Management Act
8 of 2011.
[4]
Conduct
Rule 13.
[5]
With
reference to the commentary by Paddock in his Manual on the
Sectional Titles Act (8
th
edition).
[6]
In
terms of s 1 of the CSOS Act.
[7]
Coral Island Body
Corporate v Hoge
2019
(5) SA 158 (WCC).
[8]
Trustees, Avenues Body
Corporate v Shmaryahu
2018 (4) SA 566
(WCC);
Coral
Island
n7 paras 8 and
9.
[9]
Id,
para
10.
[10]
Standard Credit
Corporation Ltd v Bester & Ors
1987 (1) SA 812
(W), endorsed by this Court in
Marth
N.O v Van Collier
[1996] 3 All SA 506 (C).
[11]
Contrary
to the provisions of s 13(1)(g) of the Sectional Title Schemes
Management Act.
[12]
Goldberg v Goldberg
1938 WLD 83
at 85-86.
[13]
Id
.
[14]
At 820B.
[15]
2009 (3) SA 340
(TPD).
[16]
Act 34 of 2005.
[17]
Nedbank v Mateman &
Ano
2008 (4) SA 340
(TPD).
[18]
Firstrand Bank Ltd v
Maleke & 3 Similar Cases
2010 (1) SA 143 (GSJ).
[19]
Nedbank Ltd v
Thobejane & 12 Similar Matters
[2018] 4 All SA 694
(GP);
2019 (1) SA 594
(GP), paras 76 and 81.
[20]
Id
,
para 79.
[21]
Nedbank Ltd v Gqirana
2019 (6) SA 139
(ECG) paras 74 -75.
[22]
In
Agri Wire (Pty)
Ltd & Ano v Commissioner, Competition Commission & Ors
2013
(5) SA 484
(SCA) para 19, the SCA confirmed that a court is
not entitled generally in the exercise of its jurisdiction to
decline
to hear cases which have been properly brought before it,
whilst at the same time also acknowledging that where the
legislature
has created specialist structures to resolve particular
disputes effectively and speedily it would be 'best' to use those
structures
and a court might in such circumstances be entitled to
decline to exercise its jurisdiction. In
Agri
Wire
the question was
whether the Competition Tribunal had exclusive jurisdiction to hear
appeals or reviews in respect of decisions
of the Competition
Commissioner. The SCA found that, on a proper interpretation of ss
27(1)(c) and 62 of the Competition Act,
it had concurrent
jurisdiction to hear such matters.
[23]
Gqirana
n 21 p
ara 75.7.
[24]
According to counsel the decisions in
Thobejane
and
Gqirana
are on appeal to the SCA.
[25]
S
39(1)(a).
[26]
S
39(1)(b).
[27]
S
39(1)(c).
[28]
S
39(1)(f).
[29]
Ss 39(3)(a)-(d)(iv).
[30]
S 39(4)(e).
[31]
S 39(4)(d).
[32]
S 39(6)(a)-(b).
[33]
S 39(6)(c)(i).
[34]
S 39(6)(d)(i).
[35]
Ss 54(3) and 54(5).
[36]
In terms of s 1 of the Act an ‘association’ means any
structure which is responsible for the administration of a
community
scheme.
[37]
In
Shmaryahu
n
8 paras 25-26 this division held (per Binns-Ward J, Langa AJ
concurring) , with reference to the different types of appeals
listed in
Tikly &
Ors v
Johannes
N.O & Ors
1963
(20 SA 588
(T) at 590-591 that the relief available in terms of s 57
was closely analogous to that which could be sought on review i.e a
consideration of whether or not an adjudicator had exercised
his powers and discretion ‘honestly and properly’
and
not whether the decision under appeal was right or wrong. In
Stenersen &
Tulleken Administration CC v Linton Park Body Corporate & Ano
2020 (1) SA 651
(GJ) a full bench of the Gauteng division disagreed
with this categorisation, and held that an appeal in terms of s 57
is a true
appeal, in the strict sense (ie the second category of
appeal referred to in
Tikly
),
and involves a consideration of whether the adjudicator’s
decision was right or wrong, on the material before him.
[38]
S 51(1)(a)(i)-(iii).
[39]
S 50(c).
[40]
Natal Joint Municipal
Pension Fund v Endumeni Municipality
2012 (4) SA 593
(SCA) para 18.
[41]
In
terms of s 21(2)(b).
[42]
Ss 21(2)(b)(i)-(ii).
[43]
Vide
Hoffman v South
African Airways
2001
(1) SA 1
(CC) para 20,
Bato
Star Fishing (Pty) Ltd v Minister of Environmental Affairs & Ors
[2004] ZACC 15
;
2004 (4) SA 490
(CC)
para 45;
Gauteng
Gambling Board v Silverstar Developments Ltd
2005 (4) SA 67
(SCA) para 29;
Gcaba
v Minister for Safety & Security
2010 (1) SA 238
(CC) para 56; Competition Commission of SA v Telkom
SA Ltd & Ano
[2010] 2 All SA 423
(SCA) para 56;
Koyabe
v Minister for Home Affairs
2010 (4) SA 327
(CC) paras 36-38;
Agri
Wire
n 21.
[44]
Gauteng Gambling Board
n 43 para 29.
[45]
Bato Star
n 43 paras 45 and 48.
[46]
Koyabe
n 43.
[47]
Vide
Chirwa v Transnet
Ltd & Ors
2008
(4) SA 367 (CC).
[48]
S
7(2)(a) and (c) of Act 3 of 2000 provides that save in exceptional
circumstances no court shall review an administrative action
unless
any internal remedy provided for in any other law has first been
exhausted.
[49]
Koyabe
n 43 para 39.
[50]
Note
21 para 75.7.
[51]
I
n
Koyabe
n 43 para 39 the Constitutional Court held that where an internal
remedy would be ineffective or futile (because, for example,
of the
adoption of a rigid policy position by the forum required to
adjudicate a dispute), a court might permit a litigant to
approach
it directly.