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[2021] ZAWCHC 132
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Prag N.O and Another v Trustees for the time being of the Mitchell's Plain Industrial Enterprises Sectional Title Scheme Body Corporate and Others (A260/2020) [2021] ZAWCHC 132; 2021 (5) SA 623 (WCC) (16 July 2021)
IN
THE HIGH COURT OF SOUTH AFRCA
[WESTERN
CAPE DIVISION, CAPE TOWN]
[REPORTABLE]
Case
no: A 260/2020
In
the matter between:
HARJEVAN
PRAG N.O
First
Appellant
KALAVATHI
HARVEJAN PRAG
N.O
Second Appellant
(in
their capacities as Trustees for the time being
of
the Harprag Trust IT 269/1982
)
and
THE
TRUSTEES FOR THE TIME BEING OF THE
MITCHELL’S
PLAIN INDUSTRIAL ENTERPRISES
SECTIONAL
TITLE SCHEME BODY CORPORATE
First
Respondent
THE
COMMUNITY SCHEMES OMBUD SERVICE
Second Respondent
ASHLEY
SEARLE N.O
Third
Respondent
Heard
on: 14 May 2021
JUDGMENT
DELIVERED (VIA EMAIL) ON 16 JULY 2021
SHER,
J (SALDANHA J concurring):
1.
This
is a statutory appeal
[1]
in
terms of the Community Schemes Ombud Services Act
[2]
(the
‘CSOS Act’) against the decision of an adjudicator,
whereby he dismissed an application by the Harprag Trust for
an order
that the body corporate of the
Mitchell’s
Plain Industrial Enterprises sectional title scheme
should
pay to it the sum of R 455 757.65, in lieu of damages which were
allegedly sustained by the Trust pursuant to a fire which
occurred in
a sectional title unit which it owns, together with a further claim
for payment of the sum of R 22 942.50 for lost
rental which it
allegedly suffered as a result of the fire.
2.
The adjudicator
dismissed the application in
limine
on the grounds that the relief which was sought fell outside of his
statutory jurisdiction.
The factual
background
3.
The appellants are the
trustees of the Harprag Trust, which owns unit 6 in the scheme i.e an
individual section demarcated as such
on the sectional plan, together
with an undivided
pro
rata
share in the
common property. As such, the Trust is a member of the scheme’s
body corporate and was previously represented
thereon by the first
appellant, as a trustee.
4.
On 18 July 2019 a fire
broke out in the section (which was being utilized by a tenant for
commercial purposes at the time), which
resulted in its total
destruction. The Trust submitted a claim for the repairs of the
damage which had been sustained to the scheme’s
insurers, but
it was repudiated.
5.
The insurers had
settled a previous claim which had been submitted by the Trust
pursuant to a fire which had occurred in the section
2 years earlier,
in July 2017.
6.
In September 2017 the
insurers advised the body corporate that pending the filing of valid
electrical and fire equipment certificates
of compliance by all the
owners of units in the scheme, insurance cover for damage
caused by fire would be suspended.
7.
On 21 November 2017 the
scheme’s managing agents requested the Trust to provide the
required certificates of compliance by
no later than the end of the
month and warned that in the event of a failure to do so any future
claim in respect of fire damage
might be declined. In the absence of
any response, on 12 April 2018 a further request for the certificates
to be submitted was
sent to the Trust, which was also not acceded to.
8.
Pursuant to an
inspection which was conducted by fire protection experts, early in
April 2019 the managing agents provided the body
corporate with a
quote in the amount of R 128 337.834 for work which needed to be done
in order to render the scheme compliant,
in accordance with fire
regulations. However, the trustees of the body corporate declined to
give their approval thereto and were
still reluctant to do so even
after the second fire on 18 July 2019, and the Trust only filed an
electrical certificate of compliance
in respect of its unit in August
2019.
An assessment
9.
This
Court has previously pointed out
[3]
that the object of the CSOS Act is to provide a mechanism for the
informal, expeditious and cost-effective resolution of disputes
between owners of units in a sectional title scheme and its
administrators via an Ombud, who is given wide powers to resolve such
disputes by way of qualified conciliators and adjudicators. In this
regard an adjudicator has express statutory powers
[4]
to make a number of far-ranging orders in respect of financial,
‘behavioural’, governance, management, regulatory and
other issues pertaining to a sectional title scheme.
10.
In
their application to the Ombud the appellants did not identify which
provisions of the CSOS Act they sought to rely on for the
relief
which they sought. They attached a letter from their attorneys dated
16 September 2019 in which it was alleged that the
damages which the
Trust had sustained in the fire were attributable to a failure by the
body corporate to ensure that at all material
times the buildings in
the scheme were insured for their replacement value, in breach of its
statutory duty in terms of ss 3(1)(h)
and (k) of a related Act, the
Sectional Titles Schemes Management Act
[5]
(the ‘STSMA’).
11.
In
terms of the STSMA
[6]
the body corporate of a sectional title scheme is responsible for the
control, administration and management of the common property
of the
scheme i.e the land on which the scheme is located together with such
parts of the buildings in the scheme which are not
included in
individual sections, for the benefit of all owners.
12.
To
this end
[7]
the body corporate
must establish and maintain an administrative and reserve fund which
is reasonably sufficient to cover the estimated
annual running and
future operational costs of the repair, maintenance, management and
administration of the common property and
for the payment of rates
and taxes and municipal charges, as well as for the payment of
insurance premiums relating to buildings
and land; and for this
purpose it must raise the necessary amounts required by levying
contributions on owners in proportion to
their participation quota in
the scheme. In terms of the Act
[8]
the body corporate has an obligation to maintain and keep all common
property and plant, machinery, fixtures and fittings which
are used
in connection with it, in a state of good and serviceable repair.
13.
Similarly, there are a
number of other provisions in the STSMA which make it abundantly
clear that a body corporate’s duty
in relation to the sectional
title scheme it administers primarily relates to the scheme’s
common property i.e to the common
interests of members of the scheme
and not to the interests of an individual member. In this regard s
13(1)(c) of the STSMA provides
that an owner must repair and maintain
its own section, and this obligation does not fall on the body
corporate. Consequently,
as an individual section belongs to an
individual owner they would ordinarily be responsible for its upkeep
and for any loss which
may be suffered in relation thereto.
14.
Thus,
whilst a body corporate has a statutory duty to insure all buildings
that belong to the scheme i.e. all structures of a permanent
nature
which are erected therein and which are shown on a sectional plan of
the scheme
[9]
(which will
necessarily include those sections which are individually owned as
well as those parts of the building(s) which are
owned by all members
of the scheme in common undivided shares as common property), in my
view it was not intended that an individual
owner would have a right
to sue it for any damages which may have been sustained in respect of
the owner’s individual section
only.
[10]
15.
In
my view, the obligation in terms of ss 3(1)(h) and (k) of the STSMA
to insure the buildings in a sectional title scheme and to
keep them
insured for their replacement value against fire and such other risks
as may eventuate and to pay the insurance premiums
owing in respect
of such insurance, is one aimed at protecting the common interests of
owners in the scheme and not the personal
interests of an individual
owner, such as the Trust, and considering the various sections I have
referred to in the context of
both the STSMA and the CSOS Acts 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
[11]
a breach of these provisions was not intended to afford the owner of
an individual section a right to sue a body corporate for
damages
which may have been sustained in respect of that section only, where
only the individual interests and rights of the owner
have been
affected and not the common ie communal interests of owners of
sections or units in the scheme.
[12]
To allow otherwise would shift an individual owner’s obligation
to safeguard and protect its rights and interests in the
section it
owns and the risk of damage thereto, to other members of the scheme,
at their cost.
16.
As
was pointed out in
Shmarayahu,
[13]
the orders which can be made by an adjudicator in respect of the
different categories which are provided for in s 39 of the Act
are
primarily directed at, and pertain to, matters which bear on the
sectional title community concerned as a whole i.e on members
of the
sectional title scheme itself, and not on individual members. Such
orders will generally only be incidental to the personal
interests or
rights of individual members.
17.
As a result, in
Shmarayahu
it was held, on appeal, that a claim by a former member of a
sectional title scheme for an
ex
post facto
adjustment and refund of excess levy contributions which had
previously been paid over, in accordance with a recalculated
participation
quota, was a financial claim which was wholly personal
to the member and not to the sectional title community he had
belonged to,
and in the circumstances it concerned a dispute which
was personal to him and not one between members of the sectional
title scheme
and the administrators thereof, as was envisaged by the
Act. Consequently, the dispute did not fall within the ambit of the
Act
and was not subject to resolution by the Ombud, and the
adjudicator did not have any jurisdiction to entertain it. The
determination
which the adjudicator arrived at and the order which he
made were therefore set aside.
18.
In
my view, the same holds good for the dispute in this matter, not only
in respect of the principal claim for reimbursement of
the sum of R
455 757.65, but also in respect of the claim for lost rental
[14]
which appellant’s counsel conceded was not one which could
competently be brought in terms of the Act.
19.
This claim was also one
for damages which were personal to the Trust as the individual owner
of a section in the scheme and did
not pertain to the scheme itself,
and in my view on the strength of the decision in
Shmarayahu
it also did not fall within the ambit, and could not be claimed by
way of, s 39(1)(e), as the appellants contended before the
adjudicator.
20.
I hasten to point out
that this does not mean that in appropriate circumstances the owner
of an individual section (or of a unit
ie a section together with its
pro rata
undivided share in the common property), in a sectional title scheme
will not have a right to sue a body corporate for damages,
provided a
case for this is made out.
21.
Perhaps because of
these difficulties, in their submissions to the adjudicator the
appellants sought, in the alternative, to locate
their claim as one
which fell within the ambit of s 39(6)(a) of the Act. The section
provides that an adjudicator may make an order
requiring a body
corporate to have repair or maintenance work carried out, not only in
respect of common areas but also in regard
to ‘private’
areas, which include sections which are individually owned.
22.
However, as the
adjudicator pointed out the obvious difficulty with this contention
is not only that the work which was necessary
to reinstate unit 6 to
its former condition had involved a complete rebuild rather than mere
repairs, but it had also already been
carried out by the time the
matter was adjudicated upon. Thus, in the circumstances what the
Trust in fact sought to recover was
a reimbursement of the expenses
it had incurred and not an order for repairs to be carried out, and
as the adjudicator correctly
pointed such an order was not one which
could competently be made in terms of this provision of the
Act.
23.
In
a last attempt to bring the claim within the ambit of the CSOS Act,
the appellants sought on appeal to rely on the provisions
of s
39(6)(b)(ii), which allow an adjudicator to make an order that an
applicant be paid an amount as determined, in lieu of reimbursement
for repairs which have been carried out to private or common areas.
It is notable that the provision in question grants an adjudicator
the power to make such an order against the ‘relevant person’,
in contrast to the other subsections, which expressly
provide for
orders to be made against an ‘association’ i.e the
structure which is responsible for the administration
of a sectional
title scheme, such as a body corporate.
[15]
But, given that an association is included in the definition of a
person, the provision would not necessarily appear to be a bar
to an
order being made against a body corporate in appropriate
circumstances.
24.
However, and leaving
aside the issue of whether the provision can find application where
what is claimed amounts to the costs of
a complete rebuild of a
section rather than of repairs to it, even though such an order might
notionally be possible there are
in my view a number of fundamental
hurdles which face the Trust and which militate against it being
granted in this matter.
25.
In the first place, and
as I have previously pointed out, as a matter of law the Trust as the
owner of section 6 is responsible
for maintaining it, and guarding it
against the risk of harm, and it would ordinarily have to bear the
consequences of any failure
on its part to do so and any loss which
may be sustained as a result of damage, unless it was insured. And in
this regard the reason
why the section was not insured was that the
Trust failed to provide valid and up to date certificates of
compliance to the body
corporate, so that it could discharge its
statutory duty. In such circumstances it could hardly be fair or
correct for an order
to issue effectively directing the body
corporate to bear the loss which came about as a result of the
Trust’s own remissness.
To make such an order would be to shift
the responsibility for, and the cost of the loss pertaining to an
individually owned section,
to the other owners of sections in the
scheme. This would not only go against a long-standing principle of
the common law of ownership
but would encourage delinquency on the
part of individual owners in a sectional title scheme, who could look
to other members of
the scheme for recompense in the event of any
loss they suffered in respect of their individually owned sections,
due to their
own neglect or failures.
26.
In
second place, and as previously pointed out, in the affidavit
[16]
which he filed in support of the appeal
[17]
first appellant alleged that the basis for the Trust’s claim
was that the body corporate had negligently failed to comply
with its
statutory ‘duty of care’ to ensure that the buildings in
the scheme were properly insured, which resulted
in damages being
suffered by the Trust. It is trite that in referring to a ‘duty
of care’ the appellant was using terminology
which is more
appropriately used in English tort cases, where wrongfulness and
culpa
ie fault are conflated. In our law we speak of a legal duty, which
pertains to wrongfulness, and which is determined by the expectations
and norms of the community’s
boni
mores,
to
which a further ingredient of
culpa
in the form of negligence is added, before liability will ensue. Be
that as it may, in argument before us appellant’s counsel
conceded that, framed as it was, the appellants’ claim
essentially constituted a delictual claim for damages.
27.
In
my view it was never intended that such a claim could be adjudicated
upon by the Ombud in terms of the CSOS Act, which is aimed
[18]
at resolving disputes in regard to the administration of a community
scheme between persons (which by definition
[19]
include not only individual members of a scheme but also any
association ie any structure which is responsible for its
administration),
who have a material interest therein.
[20]
28.
If
one considers the terms of the CSOS Act as a whole, and the kinds of
matters in respect of which an adjudicator can make orders
in terms
of s 39 of the Act, they either concern regulatory/governance issues
[21]
pertaining to the
administration of a sectional title scheme, or behavioural issues
[22]
pertaining to the conduct
of members of the scheme
inter
se
(which commonly would cover so-called nuisance or neighbour
disputes). It was clearly not intended that the Ombud would have the
power to adjudicate on delictual claims for damages, which involve
weighty considerations pertaining to wrongfulness (which depend
on
prevailing societal norms and public policy) and fault, and the
quantification and determination of the quantum of any damages
which
may have been sustained pursuant thereto, which are matters which are
best left for judicial officers and Courts.
29.
In addition, to allow
the Trust to proceed in terms of s 39(6)(b)(ii) would allow it to
claim delictual damages without showing
any fault on the part of the
body corporate, in circumstances where it was the one at fault, and
where it was responsible for being
unable to claim any compensation
by way of an indemnification in terms of the scheme’s insurance
policy. Had this been a
delictual claim which required determination
in a Court it would have been defeated on these grounds i.e on the
basis that it had
not been shown that the body corporate had been at
fault and that its conduct, as opposed to that of the Trust, had
caused the
loss which had been suffered. This too could never have
been intended by the law-maker, and to allow a claim in such
circumstances
would subvert the basis and principles of delictual
claims for damages.
Conclusion
30.
In the circumstances
the adjudicator was correct in holding that he did not have
jurisdiction to entertain the dispute, and the
appeal must fail.
31.
As far as costs are
concerned second and third respondents (the Ombud and the
adjudicator) filed a notice to abide when the appeal
was lodged, and
the body corporate (first respondent) indicated that it was opposing
it.
32.
Shortly before the
matter was due to be heard in February, it belatedly sought a
postponement so that it could file an affidavit
in answer to that
which had been filed by the appellants in support of the appeal. The
basis for its application was that an answering
affidavit could not
be filed as the chairman and then only trustee of the body corporate
had resigned, and a replacement had only
been appointed late in
January 2021, at which time it was resolved that a special levy
needed to be imposed in order to raise the
necessary funds for the
body corporate’s legal fees. After hearing argument, the
postponement was granted and it was directed
that the body corporate
was to be liable for the wasted costs which were occasioned thereby.
33.
On 10 May 2021, after
it had filed its answering affidavit, the body corporate filed a
notice to abide, as the appellants had indicated
that in the event of
the appeal succeeding and the adjudicator’s order being set
aside they would move for an Order that
the matter be remitted to the
adjudicator for reconsideration, and would not seek an Order granting
them the substantive relief
which they had sought.
34.
In the circumstances it
would in my view be fair and proper to direct that there should be no
order as to costs.
35.
In the result I would
simply make an Order dismissing the appeal.
M
SHER
Judge
of the High Court
I agree, and it is
so ordered.
VC
SALDANHA
Judge
of the High Court
Appearances
:
Appellants’
counsel: J Bence
Appellants’
attorneys: PPM Attorneys Inc, Bellville
[1]
In terms of s 57 of the Act, which provides that an appeal only lies
to this Court in respect of a question of law and not in
regard to
factual issues. In
Trustees,
Avenues Body Corporate v Shmaryahu
2018 (4) SA 566
(WCC) at paras [25]-[26] this division held (per
Binns-Ward J, Langa AJ concurring) , with reference to the various
types of
appeals (as listed in
Tikly
& Ors v
Johannes
N.O & Ors
1963
(20 SA 588
(T) at 590-591) that the relief which is available in
terms of s 57 is analogous to that which can be sought on review and
therefore
involves a consideration of whether or not a CSOS
adjudicator exercised his powers and discretion ‘honestly and
properly’
and not whether the decision he arrived at was right
or wrong. However, in
Stenersen
& Tulleken Administration CC v Linton Park Body Corporate &
Ano
2020 (1) SA 651
(GJ) a full bench of the Gauteng division disagreed 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
viz one limited to a
determination on the record on appeal and not a re-hearing afresh),
and as such it involves a consideration
of whether the adjudicator’s
decision was right or wrong, on the material which was before
him.
[2]
Act 9
of 2011.
[3]
Trustees, Avenues Body
Corporate v Shmaryahu
2018 (4) SA 566
(WCC) para [2];
Coral
Island Body Corporate v Hoge
2019
(5) SA 158
(WCC) paras [9] and [10].
[4]
In
terms of ss 39(1)-(7) of the Act.
[5]
Act 8 of 2011.
[6]
Sections
2 (5), 3 (1)(t) read together with the definition of common property
in s 1.
[7]
Sections 3(1)(a)(i)-(iii) and 3(1)(b).
[8]
Sections
3(1)(l) and (q).
[9]
As per the definition of a ‘building’ in s 1.
[10]
This is not a case where an individual owner’s interests or
rights in a share of the common property, such as an exclusive
use
right to a parking bay or garage for example, have been affected.
Were it to have been so, and damages had been sustained
to the bay
or garage as a result of a failure on the part of the body corporate
to have insured the land and buildings which
comprise the scheme,
the individual owner would arguably have been entitled to lodge a
dispute again the body corporate for resolution
in terms of the CSOS
Act.
[11]
Natal Joint Municipal
Pension Fund v Endumeni Municipality
2012 (4) SA 593
(SCA) para [18].
[12]
In
this regard
vide
the comment made at n 10.
[13]
Note
3, at paras [18] and [19].
[14]
In
respect of this claim the appellants sought to rely on the terms of
s 39(1)(e), which provides that in respect of financial
issues an
adjudicator may make an order for the payment, or repayment, of a
‘contribution’ (i.e an amount which has
been levied on
owners by the body corporate), or any ‘other’ amount.
[15]
in
terms of s 1 an ‘association’ means any structure which
is responsible for the administration of a community scheme.
[16]
Paras
[18] and [23.9].
[17]
In
accordance with the decision in
Shmarayah
u
n 3 at paras [25]-[26] the appeal was lodged in the form of a notice
of motion with a supporting affidavit, and not by way of
a notice of
appeal.
[18]
As per s 2(c) of the CSOS Act, read together with the definition of
a ‘dispute’ in s 1.
[19]
Vide
the definition of ‘dispute’, ‘person’ and
‘association’ in s 1 of the Act.
[20]
S 38(1).
[21]
As per
ss 39 (1)(a)-(f), (3)(a)-(d), (4)(a)-(e), (5)(a)-(b) and (6)(a)-(g).
[22]
S
39(2)(a)-(d).