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[2021] ZAWCHC 259
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Body Corporate of Nautica v Mispha CC (16990/2010) [2021] ZAWCHC 259; [2022] 1 All SA 399 (WCC) (7 December 2021)

IN THE HIGH COURT
OF SOUTH AFRICA
(WESTERN CAPE
DIVISION, CAPE TOWN)
Case No:
16990/2010
In
the matter between:
THE
BODY CORPORATE OF NAUTICA
Plaintiff
and
MISPHA
CC
Defendant
(Registration
number: 1994/034490/23)
JUDGMENT
DELIVERED ELECTRONICALLY: TUESDAY, 7 DECEMBER 2021
NZIWENI AJ
Background
[1]
This trial concerns litigation by the Plaintiff, a sectional title
scheme known as Nautica.
The Nautica scheme, consists of
various units, some of the units have balconies and others do not
have.   The Nautica sectional
title scheme (the Nautica
scheme) is situated at 1 Bakke Street, Mossel Bay, Western Cape.
[2]
The Defendant is an owner of units 205 and 330 at the Nautica
scheme.  Unit 205
is a residential unit with a balcony and 330
is a garage unit.  Upon registration of the participation quota
of unit 205, with
the deeds registry, the balcony of unit 205 was
already included in its participation quota.
[3]
In terms of South African law, the participation quota allotted to a
unit in a scheme,
plays a very pivotal role in determining amongst
others, the owner’s value when voting at the general meeting and
the contribution
or liability of each owner towards the incurred
expenses of the scheme.   Critically, participation quota
enables the scheme
to be able to apportion or determine the owner’s
indebtedness to the scheme.
[4]
It is common cause between the parties that the Defendant has not
paid some levies.
The Defendant denies that it was obliged to
make payments as demanded by Plaintiff.
[5]
The Plaintiff brought these proceedings against the Defendant
for the payment of
an amount of R1 826 366, 86 (one million eight
hundred and twenty-six thousand three hundred and sixty-six rand and
eighty-six cents).
The Plaintiff’s case is that the Defendant
failed to pay levies for the period of March 2008 up to May 2021.
The Plaintiff’s
claim from the Defendant is for the payment for
outstanding levies due for the stated periods.  However, the
amount demanded
by the Plaintiff does not only consists of due
levies.  It includes amounts charged for the consumption of
electricity and the
interest charged on arrear levies.
[6]
The Defendant in its plea also
tendered in terms of rule 34 a payment in the sum of R75 126, 47
(Seventy-Five Thousand One Hundred
and Twenty-Six Rand and
Forty-Seven Cents).
[7]
In the opening remarks of the Plaintiff, it was contended that the
dispute between the
parties spans for a period of 13 years.
[8]
Given the defences raised, I deem it convenient to sketch the outline
of what happened
on and after 17 May 2008 (17 May resolution).
[9]
It is common cause that a resolution, which changed owners’
participating quotas,
was taken at the Annual General Meeting, on 17
May 2008.  The
units that
were going to be impacted by the 17 May resolution, were units 101 to
105 and 401 to 405.   This is so because
those units have
balconies, and the balconies did not form part of their respective
participation quotas.
[10]
The taking of 17 May resolution was done
without obtaining the affected owners written consents to the
changes.  Pursuant to
the taking of the resolution, on the 21
June 2008, the trustees, during a meeting of Nautica scheme decided
to revoke the 17 May
resolution.
[11]
This was so because, they were of the view that, change was contrary
to the provisions of section 31
(4) of the Sectional Title Act 95 of
1986 (‘the Act’).
[12]
Subsequent to this, on 21 March 2009, a new decision to replace the
17 May resolution was taken by the
trustees.  The new decision
taken by the trustees did not have an impact on the participating
quota
of
the
owners of
Units 101 to 105, as
well as Units 401 and 408
.
[13]
Against this backdrop the following emerges:
[14]
In the first place, the only witness for the Plaintiff conceded that
the resolution taken at the Annual
General Meeting of the 17 May 2008
was unlawful; because the Annual General Meeting was not sufficiently
empowered to take it.
It is argued on behalf of the Plaintiff
that the resolution of 17 May 2008 was a nullity from the onset,
because its implementation
would constitute a contravention of
section 31 (4) of the Act.  The argument goes that, the effect
of this is that the declaration
is a nullity; as such, it does not
even need to be set aside.
Pleadings
[15]
It is necessary to set out herein some of the averments made in the
parties’ pleadings.  The
Plaintiff
avers the following in the amended particulars of claim:
“
7.
Rule 31 (1) stipulates that the liability of owners to make
contributions, and the proportions in which owners shall make
contributions
for purposes of Section 37 (1) of the Act, shall within
the effect from the date upon which Plaintiff comes into being, be
borne
by owners in accordance with a determination made in terms of
Section 32 (4) of the Act, in the absence of such determination in
accordance with participation quotas attaching to their respective
sections.
8. Since Plaintiff
made no determination in terms of Section 32 (4) of the Act, the
participation quotas are applied to determine
proportions of levies
in the relevant scheme.
9. Within 14 days
after each annual general meeting the trustees advised each owner in
writing of the amount payable by it in respect
of the estimate
referred to in Rule 31 (2), whereupon such amount becomes payable in
instalments, as determined by the trustees.
10 . . .
11. The trustees
shall be entitled to charge interest of arrear amounts at such rate
as they may from time to time determined (Rule
31 (6).”
[16]
Resisting the claim, in its plea the Defendant
does
not deny non-payment, but denies that it was obliged to make payments
as demanded by Plaintiff.  The Defendant, furthermore,
denies
that a trust meeting was
convened on the 15 May 2009.  Finally, the Defendant pleaded
that
even if the Court finds
that
a
decision was taken on 15 May 2009 or the 13 April 2012; the trustees
were not authorised in terms of any empowering statutory provision(s)
or otherwise, to resolve as pleaded.
[17]
In its plea, the Defendant avers facts which are aligned with its
contention that:
“
In the premise,
the defendant admits the liability to make payment of levies, in line
with the adjusted percentage participation quota,
as calculated by
the plaintiff, in sum of R75,126.47, as well as interest thereon a
tempore morae at 15.5% per annum. . .”
[18]
The Defendant further denies
that any decision was taken on 15 May 2009, or any other date in
2009, that compound interest at the
rate of 3 % per annum would be
added on all arrear levies.
Evidence
[19]
In this trial, the only witness who gave testimony is Ronel Swanepoel
who gave evidence in support of
the claim of the Plaintiff.
[20]
Ronel Swanepoel
,
testified that she works for the
appointed
managing agent on behalf of Nautica Body Corporate.
Before they underwent a name change, they were known as
Wisian
Properties.  Currently, they are known as the New Trend Real
Estate.  The developer appointed them as managing agent.
Hence, they have been involved with the Plaintiff since the
beginning.  They did introduce themselves to the Defendant as
the
appointed managing agent of the Plaintiff.
[21]
On 15 September 2007, the first Annual General Meeting was held to
establish the body corporate.
The Defendants was in attendance
of that meeting.  At that particular meeting, an opening budget
for the Nautica scheme was
presented, which all the owners approved.
[22]
As the managing agent of the Plaintiff, they are very familiar with
the Defendant.
Given the fact that they are the
managing agent of the Plaintiff, they interacted with the Defendant.
They used to attend queries
received from the Defendant through
emails and they would invoice and handle the normal day-to-day
administration of the body corporate
with the owners.
[23]
In light of the fact that they are the managing agent, they are
familiar
with
how section title scheme works.  According to Ms Swanepoel,
owners are generally liable to pay for the levies.
Levies
are determined by using a participation quota
recorded
on the sectional title scheme itself.
[24]
It was her testimony that the participation quota in respect of unit
205 is 2.7819.  On the other
hand, the participation quota in
respect of unit 330 is 0.4088.
[25]
Regarding unit 205 the area is 245 square metres and the total levy
amount is R2 201.95. In respect of
the garage, unit 330, it is 36
square metres and the levy amount is R206.34.
[26]
She testified that a Liesel Otten on behalf of the Defendant, sent
them an email  dated 13 November
2007, complaining that the
levies for unit 205 were extremely high and she enquired as to how
they got to that amount.  She
responded to the email by
informing her that it was because of the size of unit 205, which,
according to the sectional title plan,
is 245 square metres. They
also forwarded her the summary of the budget and the participation
quota which was approved.
[27]
Another Annual General Meeting was held on 17 May 2008 and the
Defendant was not represented at that
meeting.  According to
her, the minutes of May 2008 meeting reflect that one Edwin
Grobbelaar, who was the developer, informed
the trustees that unit
205’s participation quota was already calculated inclusive of the
balconies.
The
developer gave a report that units 101 to 105 and 401 to 408, deck
areas, were not included in the participation quota and those
deck
areas were registered as exclusive use areas. It was also indicated
that because those units had exclusive use of deck areas,
which were
not included in their participation quota, the owners did not
contribute to the levy fund.
[28]
During
the meeting of 17 May 2018,
it
was resolved that units 101 to 105 and 401 to 408 will contribute to
the levy fund and that the same rate will be paid.   Swanepoel
testified that, because the balcony of unit 205 was already included
in its participating quota, the Defendant was not affected by
the
fixed amount that the trustees determined in respect of the
balconies.
[29]
It was further resolved that to appoint a land surveyor and attorney
to recalculate the participation
quota for Nautica scheme and then to
be registered in the deeds office, would be a costly exercise.
It was then resolved that
the body corporate should decide on a
formula which will include the deck areas, according to their square
meterage, in the participation
quota.
This meant that the
participation quotas of units 101to 105 and 401 to 408, would change
to accommodate these decks.  It was
accepted that a formula
would be used to calculate each unit’s participation quota.
The participation quota was going to
be changed by hand on an Excel
spreadsheet.  It was her testimony that it was resolved during
the meeting that the approved
option was to be implemented as from
the 1 June 2008.
[30]
As the managing agent, they advised the trustees that the law does
not allow changing of the owner’s
participating quota without the
written consent of each owner affected by such decision.  Pursuant
to the advice provided, on
21 June 2008, the trustees held another
meeting.  In that meeting, the trustees made a decision not to
proceed with the resolution
of 17 May.
[31]
Given that it was going to be a difficult task to obtain each owners’
written consent.
In the
implementation of the new decision of the 21 June 2008, the trustees
decided that in the alternative to the resolution
of 17 May, they
would implement a fixed fee for each deck, per the size of the deck
and will calculate or decide on a fixed fee per
exclusive use area.
Therefore, the participation quotas of the affected owners
remained unaffected by the new decision.
[32]
Consequently, the owners of the units were then charged separately
for the participation quota and if
the owner has a deck area, then
there was an extra charge added for the deck.  An extra fee of
R200.00 was charged for bigger
decks and R150, 00 for smaller decks.
[33]
As managing agent, they sent letters to the Defendant, confirming the
levies due and payable.   According
to her, the trustees’
minutes of the meeting held on 21 June 2008, reflects that the
trustees fixed interest rate for levies in
arrear at prime plus 3
percent.   This happened until the advent of the new law in
October 2016.  On 22 May 2010,
the trustees passed a resolution
that interest on overdue levy account will be charged at a rate of
prime plus 3 percent per annum.
On 3
October 2020, the trustees resolved that the owner shall be liable at
a rate of 2 percent per month on arrear levies.
[34]
On 21 March 2009, Annual General Meeting was held and the Defendant
was not represented.  The Annual
General Meeting confirmed the
decision of the trustees meeting to invoice deck area for unit 101 to
105, and 401, to 408.
At the same Annual
General meeting, it was also resolved to reduce the levy for garages
from 60 percent to 30 percent.    The
Defendant was
sent a letter dated 3 April 2009, containing levies for the 2009
budget and informing the owner what will be invoiced.
[35]
It is her testimony that the reduction of the garage levy caused a
significant shortfall on their budget.
In light of the fact
that a body corporate is a non-profit fund and for each item, they
budget for has a direct expense.  The
managing agent had to pay
everything each month.
[36]
Due to the shortfall, there was less budget as they did not get 100
percent of the budget.  They
had to find money elsewhere to make
up for the shortfall.  It was then decided that the shortfall
was going be distributed to
all units and stores according to their
registered participating quota.  The shortfall was then
calculated to all the units
in the Nautica scheme.
Nevertheless, the participation quota remained the same.  Each
unit had to pay 1.4 percent
extra to cover the shortfall in the
budget.
[37]
A letter was sent to the Defendant, confirming that the levies for
unit 205 were approved at the Annual
General Meeting and that levies
in arrears will be interest prime plus three percent.
[38]
The total arrear amount outstanding for the levies and electricity is
R775 689.98 excluding interest
and legal fees.  The levy that is
calculated is on the participation quota as registered at the deeds
office.
Each
item or outstanding amount had its own interest charged separately.
The total interest owing came to an amount of one million
one hundred
and twelve thousand six hundred and eighty-seven rand and thirty-five
cents (R1 112 687,35).   The interest
due and payable
far exceeds the levies that
the Plaintiff claim to be due and payable. They then stopped charging
interest at an amount equal to the
amount outstanding for the capital
amount.  Therefore, the interest owing is R775 689.98, it equals
to the total amount because
it exceeded the levies payable.
Thus, the total amount outstanding then is R1 551 379.96.  Interest
was calculated using
compound interest.  The trustees were
entitled to charge compound interest.
[39]
Since 2007, in 13 years the Defendant has only made six payments.
That is a synopsis of Swanepoel’s
testimony.
Evaluation
[40]
It follows then that few facts in this matter are common cause. To
place the strenuously debated issues
in context, it is convenient to
consider first and set out in some detail the common cause issues in
this matter.
I now turn to consider
the common cause issues.
(a)
Common cause issues or issues which are not seriously disputed
[41]
It is common cause in this matter that:
(a)
The Defendant is
the member of the Nautica scheme, as he owns two units.
(b)
The Defendant as
member
of the Nautica scheme is liable to contribute towards the running
costs of the body corporate.
(c)
The Defendant did not
pay its levies contributions, for quite a while.
(d)
When the Annual General
Meeting resolved on the 17 May 2008 to change the participating quota
of the owners with decks or balconies;
not all the affected members
gave their written consents.
(e)
At the time when the
resolution of the 17 May 2008, was taken the Defendant’s
participating quota was already inclusive of the balcony
in unit 205.
(f)
The resolution of 17
May was only in respect of the balconies of units 101 to 105, as well
as 401 and 408; did not affect the Defendant.
(g)
On 21 June 2008, during
the trustees meeting, it was resolved that the Nautica scheme would
not go ahead with the resolution of the
Annual General Meeting of the
17 May 2008.
(h)
Interests accrues when
the unpaid levies fall due.
(i)
The Nautica scheme is
entitled to claim interest incurred on outstanding balances.
(j)
The interest will
only accrue until it equals the amount of
the outstanding capital debt.
(k)
Since the time the
Defendant has been a member of the Nautica scheme in 2007, the
Defendant has only made six payments towards its
levies.
(b) Issues
[42]
I think, the real question or issue at root here is not whether
the trustees could retract the resolution
taken on the 17 May 2008
but whether the Plaintiff succeeded in proving the amounts, including
the interest they claim are owed by
the Defendant.  It would
seem, however, that in order to be able to make a finding on the real
question, one has to traverse
the other issues raised by the
Defendant.  Therefore, the other issues for consideration are
whether:
(a)
The Plaintiff has the necessary
locus
standi
to institute the current proceedings.
(b)
The validity of the trustees resolution to
retract an initial resolution taken at an Annual General Meeting on
17 May 2008, to change
participating quotas
to
include the balconies of certain units and then recalculate the
levies
?
(c)
Was the decision of the 21 June 2008, to revoke
the decision of the 17 May 2008, a nullity?
(d)
On what basis was the rate of interest claimed,
determined?
(c)
The resolution of 17 May 2008
[43]
As far as the debt owed is concerned, the Plaintiff bears the onus to
prove that it is entitled to the
disputed amount.  As stated
before, it is not in dispute that the Defendant failed perpetually to
pay its levy instalments on
the due date.
[44]
Before proceeding any further, it is significant at the outset to be
cognisant of the fact that, while
the Defendant admits non-payment,
it however denies that it was obliged to make payments as demanded by
Plaintiff.  Put differently,
the Defendant does not deny that it
owes money to the Nautica scheme, but, attacks the claim of the
Plaintiff on the basis that the
manner in which the Plaintiff arrived
at the amounts claimed was not in terms of the law.  In essence,
the Defendant disputes
that the Plaintiff is entitled to the monies,
which are being claimed from it.
[45]
It is the Defendant’s strenuous contention that the trustees of the
Nautica scheme did not have powers
to revoke a resolution taken at an
Annual General Meeting, of 17 May 2008.  Mr. PJ Greyling further
contended on behalf of the
Defendant that the initial decision taken
at the Annual General Meeting on 17 May 2008, still stands.
[46]
Counsel on behalf of the Plaintiff, chiefly submitted that the
defences raised by the Defendant are baseless.
[47]
On the other hand it is argued
on behalf of the Defendant that the members at an Annual General
Meeting directed the trustees to alter
the participation quota to
include the balconies of certain units and then recalculate the
levies due in terms of an altered participation
quota.  So the
argument continues, if the Plaintiff wanted to present evidence to
alter that position and say that the decision
was retracted at a
later Annual General Meeting, the Plaintiff had to present clear
evidence to that effect.
[48]
It is further contended on behalf of the Defendant that the only
evidence presented by the Plaintiff
is that of Ms Swanepoel; who
merely testified that the managing agent advised the trustees that
the decision taken at the Annual
General Meeting was legally wrong,
and they did not specifically advise the trustees how they should
correct the wrong decision.
[49]
In particular,
Mr
Greyling
pointed out that
the
trustees simply went out of their own volition and just retracted the
decision.  It is vehemently, contended on behalf of
the
Defendant that the board of trustees could not do that; as they were
supposed to have gone back to the members, who are actually
directing
the trustees.   Hence, it is persistently contended on
behalf of the Defendant that the decision which was retracted
by the
trustees still stands and is still in effect.
[50]
However, the real difficulty with the argument proffered on behalf of
the Defendant is that it chiefly
focusses on the fact that a
resolution which was initially taken at the Annual General Meeting
was simply retracted solely on advice
by the managing agent to
retract it.   I simply cannot fathom why the failure to pay
the claimed amount significantly hinges
on the 17 May resolution.
[51]
The reason for this difficulty is that, it must be borne in mind
that, when regard is had to the testimony
led or the evidence before
this Court; it becomes quite clear that, there can be no question
that the resolution of 17 May, was even
going to affect the
Defendant; regardless, whether it was retracted or not.  This is
so because of the important fact that,
he was not part and parcel of
the members or owners who were going to be affected by the of 17 May
resolution.
[52]
Swanepoel’s evidence, which was hardly disavowed by the Defendant,
was specific that the Defendant
was not going to be affected by the
changes, which were envisaged by the resolution of 17 May.   It
is particularly significant
that this evidence by Swanepoel,
was
not disputed or challenged by the Defendant during cross
examination.  It is settled that unchallenged evidence stands.
[53]
Accordingly, by corollary the Defendant has simply taken upon itself
an issue, which did not even have
an impact on the calculation of its
own levies.  Yet it is using the very same issue to avoid paying
the amount claimed.
[54]
The evidence in this matter is clear that the calculations for the
outstanding levies of unit 205 were
in accordance with its
participating quota.
[55]
Yet, quite strangely, the overarching theme in the argument of the
Defendant is that because of the retraction
of the resolution of 17
May, the claim for the outstanding levies is tainted.  Even more
surprising is that this aspect of retraction
of the resolution of 17
May; has been argued and used as if it is the silver bullet solution
in the Defendant’s case, to respond
and circumvent the claim of the
Plaintiff.
[56]
The real difficulty for the Defendant is that, when it comes to his
indebtedness to the Nautica scheme,
it does not matter for the
purposes of this case; whether the retraction of the 17 May
resolution was illegal or not, as the resolution
of 17 May had
absolutely nothing to do with units 205 and 330.
[57]
This is so because, the Defendant’s balcony was already included in
its participating quota even before
the resolution of 17 May 2008 was
taken.  I pause to mention that, there is even evidence to the
effect that, before the resolution
of 17 May, was even taken; the
Defendant had already lodged a complaint that he was paying higher
levies compared to other owners
with balconies.  I even highly
suspect that the complaint by the Defendant is linked to the fact
that his balcony, unlike others,
was included in his participation
quota.  Hence, the resolution was taken to include others’
balconies in their participation
quotas.
[58]
What is particularly significant in this matter is that at the end of
the trial, there was absolutely
no evidence that suggested or
demonstrated or warranted a finding that the retraction of the
resolution of 17 May 2008, affected
the calculation of the levies
payable by the Defendant.  In any event, though the resolution
of 17 May was retracted the trustees
devised alternative way to
charge the owners of the affected units, for the balconies.  On
those bases therefore, it cannot
be said that the Defendant was left
at a disadvantage by the retraction of the resolution.
[59]
One thing, which is abundantly clear in this case is that the
Defendant elected not to lead any evidence.
To
better understand that the defence of the Defendant does not hold
water; it is important to appreciate that it is not the
contention of
the Defendant that the retraction of the resolution of 17 May had any
impact on its levies.   In this matter,
it is significant
that it must be borne in mind that the Plaintiff's claim simply arose
factually from a failure to pay overdue
levies.  The
Defendant does not dispute this.  In the context of this case,
as to why the Defendant believed that he was
justified in withholding
the payment for his levies, is simply incomprehensible.
[60]
In the argument preferred on behalf of the Defendant, there is an
immediate apparent anomaly about it,
which strikes this court as
contradictory.   What the argument of the Defendant
completely ignores is that; as far as this
case is concerned it would
rather be a preposterous notion to suggest that the outstanding
claimed amounts were influenced by the
retraction of 17 May
resolution.  The argument in the circumstances of this case
would rather be bizarre and defy all logic.
Little wonder this
argument, was never raised by the Defendant.
[61]
In my view, there can be no gainsaying that the Defendant counsel’s
attempt of poking holes at the
version of the Plaintiff has clearly
demonstrated that the Defendant is really grasping at straws.  The
argument used to avoid
payment of the outstanding levies in my view
turned out to be nothing more than a mirage.  There is a glaring
leap of logic
in this argument.  It just beggars belief as to
why use the argument in the first place.  To attack the
retraction of a
resolution, which had absolutely, nothing to do with
the levies payable by the Defendant, is rather an odd way for trying
to escape
payment of levies.
[62]
Certainly, the Defendant may not seek refuge or escape its
indebtedness behind its own preferred construction
of events.
[63]
In all the circumstances, therefore, I hold the view that the
resolution of the 17 May 2008 is neither
here nor there as far as the
outstanding levies which are claimed by the Plaintiff are concerned.
Besides, the resolution was
indeed null and void.
Hence, it was not necessary for the trustees to embark on lengthy
process of referring the
issue of revocation to the general meeting
of owners.  Additionally, in the context of this case, it cannot
be convincingly
argued that a resolution that was withdrawn by the
trustees because it was null and void
ab initio
was an
administrative act.
[64]
Consequently, it is thus not necessary to traverse the aspect whether
the trustees had the authority
to retract the resolution of 17 May.
(d)
Locus standi
[65]
In the matter of
Spilhaus Property Holdings (Pty) Limited and
Others v MTN and Another
[2019] ZACC 16
the following is stated
at paragraph 35:
“
[35] That section
36(6) read with section 37(1) of the Act empowers a body corporate to
enforce laws and other rules . . .”
[66]
In the
Spilhaus
matter, supra, in footnote 14 the court
explained that:
“
Section 41 of the
Act has been repealed by the Sectional Title Schemes Management Act 8
of 2011 (STSM). The STSM came into effect
on 7 October 2016 which is
after the High Court proceedings had commenced. Section 9 of the STSM
has a similar wording to section
41 of the Act. Section 36(6) of the
Act has been repealed by the STSM. Section 2(7) of the STSM is
identical to section 36(6) of
the Act.”
[67]
In the matter of
Eagles Landing Body Corporate v Molewa NO and
Others
2003 (1) SA 412
on page 427 at para 47, the following is
stated:
“
I accept that the
applicant, being a creature of statute, must find its powers within
statutory provisions. . .
A body corporate
established in terms of STA is a legal person. It is therefore a
person as envisaged in the opening words of s 32(1)
of NEMA; the
section therefore thereby adds to, and enlarges, the locus
standi
in iudicio
of bodies corporate provided for
in s 36(6) of STA.”
[68]
The Plaintiff in the amended particulars of claim has been described
as the Body Corporate of Nautica,
performing functions in accordance
with the Management Rule contained in Annexure 8 of the Act.
[69]
It is not disputed in this matter that the Plaintiff, the body
corporate of Nautica, was duly incorporated
in terms of section
36
of
the
Act.
[70]
Likewise, it is not in dispute that the two units of the Defendant
forms part of the building or buildings
comprised in a scheme in
terms of the Act.
[71]
It was contended on behalf of the Defendant that t
here
is no single fact before this court indicating that the party
described as the body corporate of Nautica is in fact a body
corporate
in terms of the Act.  In the context of this matter it
is really hard to understand the reasoning behind this contention.
[72]
Ms Swanepoel testified that
her agency is
the
appointed managing agent
on behalf of Nautica body corporate.    That as the
managing agent, the developer appointed
them and they have been
involved with the Plaintiff since the beginning.  They did
introduce themselves to the Defendant as
the appointed managing agent
of the Plaintiff.  This evidence was never disputed or
challenged when Ms Swanepoel testified.
It is further not
disputed that the Defendant made some payments to the Plaintiff in
the past.
[73]
Once again, it just beggars belief that the argument of
locus
standi
is raised in the context of this case.  A point
missed by the counsel of the Defendant is that the Plaintiff in the
amended
particulars of claim relies mainly on the provisions of the
Act.  The Plaintiff in paragraphs five and six of the amended
particulars
of claim pertinently mentions the statutory provisions
upon which it derives the power to institute proceedings.
[74]
On the other hand, there is absolutely nothing to support the
contention that the Plaintiff does not
have
locus
standi
to prosecute
these proceedings.
It is again
difficult to see on what basis the Defendant denies this.
[75]
Section 36 of the Act provided for the formation of a body corporate
for a sectional title scheme.  It
is settled that a body
corporate is a legal person with concomitant rights and obligations.
See
Stad Tshwane v Body Corporate Feariedale
2003 (6) SA 440
SCA on page 445 at para 9 B.
[76]
Section 2 (7) of the Sectional Title Schemes Management Act, 8 of
2011 confers standing upon the body
corporate to sue.
Similarly, section 36(6) of the Act stated that the body corporate is
capable of suing and of being
sued in its corporate name.  This
is exactly what is happening in this matter.  The body corporate
is suing in its corporate
name.  Again, the defence contention
of lack of
locus standi
is another highly technical point
without any merit in it.
[77]
There is overwhelming evidence in this matter to show that the
Plaintiff has the necessary legal standing
to institute the action
for monies owed to it by the Defendant.  Therefore, insofar as
the
locus standi
objection is concerned, it cannot be
sustained.
[78]
I am thus satisfied that the Plaintiff succeeded in proving that the
Defendant owes the claimed amounts
for the outstanding levies. This
brings me to the interest claimed.
(e) Interest on
arrears
[79]
The Plaintiff, over and above the owed debt on arrear levies, it is
also entitled to the interest borne
by the debt.  In the amended
particulars of claim the Plaintiff is also claiming
mora
interest.  The trustees of a body corporate are entitled in
terms of the law to charge interest on arrear amounts at such rate
as
they may from time to time determine.
[80]
Interest charges on arrear amounts are by no stretch of imagination
meant to be penalties against the
defaulter. They are there to
mitigate the inevitable depreciation or decline in value of the
currency, which is ordinarily occasioned
by inflation.  The
interest charged on those arrear amounts is thus, intended to protect
the equity of the original debt amount.
In the case of
Davehill
(Pty) LTD Community Development Board
1988 (1) SA 290
, on page
297 G-H, the Court succinctly states:
“
The liability to
pay interest arises from considerations of equity, and was designed
to compensate a person . . .  for his loss
and fruits of his
property . . . up until the time the compensation was made . . .”
[81]
Our courts have stated in the past that interest and compound
interests are the lifeblood of finance
in modern times.
[82]
Manifestly, there is a dispute between the parties as to the
calculation of interests.  The parties
are not in agreement
regarding the quantum of the interest charged in respect of the
outstanding levies.   The Defendant
considered the amount
claimed by the Plaintiff as being inflated.  It is argued on
behalf of the Defendant that the Plaintiff
charged compound interest,
instead of simple interest.
(a)
Dates from when the statutory interest is
payable or starts running
[83]
It is certainly readily apparent from Exhibits “C” that in
this matter there is accumulation
of arrears that spans for
several years. The period of the arrears ranges from of 25 March 2008
until September 2021.   Throughout
all the months covered
by this period, the Defendant never made payments.
(b)
Rate at which interests is to be
calculated and the period of calculation (applicable interest rate
and period of application).
[84]
Ms Swanepoel’s testimony reveals that they used pastel programme to
calculate the interest payable.
It was further her testimony
during cross-examination that the pastel programme also charged the
Defendant with compound interest
on all the arrears.
[85]
The central question which aptly arises in this matter is whether the
Plaintiff is entitled to the interest
amount which it claimed.
When I determine this question a conspectus of all the evidence is
required.  Of importance,
I need to look at the evidence of Ms
Swanepoel together with the documentary evidence, which was presented
by the Plaintiff.
[86]
On a proper conspectus, it is evident that the trustees did determine
the interest rate applicable to
arrear levies.  By all accounts,
the evidence also establishes that compound interest was added to the
simple interest.
Equally
important or true is that the conspectus of evidence further reveals
that the trustees determined interest rates applicable
for relevant
periods as follows:
PERIOD
INTEREST RATE
2007
Prime Plus Three
Percent
2008
Prime Plus Three
Percent
2009
Prime Plus Three
Percent
2010
Prime Plus Three
Percent
2012
Prime Plus Three
Percent
2019
Two percent per
month
2020
Two percent per
month
01 May 2021- 30
April 2022
Two Percent per
month
(c)
No determined interest rate
[87]
On the other hand, having had regard to the trustees
resolution and minutes, I could not find any evidence to attest to
the fact the trustees in fact determined the applicable interest
at a
stipulated annual rate during the periods of 2013 to 2018.
[88]
In the case of
Mitchell v Beheerliggaam RNS Mansions
(34386/08) [2010] ZAGPPHC 44;
2010 (5) SA 75
(GNP) (4 June 2010), the
following was stated at paragraph 14:
“
It
will be noted immediately that rule 31(5) draws a distinction between
"arrear levies" on the one hand, and "any
other arrear
amounts due and owing" on the other; and that rule 31(6)
entitles the trustees to charge interest on arrear amounts
and not
only on arrear levies. The term "arrear" bears its ordinary
meaning of "outstanding" or being that which
remains
unpaid. "Arrear amounts" is thus a broader category of
unpaid debts than "arrear levies" and would thus
include
unpaid interest on levies. Accordingly, rule 31(6), on a literal
interpretation, permits the trustees to charge
interest
(mora
interest)
on unpaid interest charged on arrear levies, in other words -
compound interest. The Act, therefore, specifically provides
for the
payment of such interest. Considering also the fiduciary duties of
the trustees to act in the interest and for the benefit
of the body
corporate (section 40(2)) and not to negligently cause it loss
(section 40(3)(a)), were the trustees not to charge defaulting
members compound interest (which they would be able to earn on money
invested in a commercial bank), they would possibly fall short
of
their duties.”
[89]
In my view, the fact that
there is no evidence in the Plaintiff’s case to indicate that the
trustees determined the rate payable
for interest on overdue levies,
during the period of 2011 up until 2018
;
does not necessarily mean that the Plaintiff foregoes the interest
that would have been incurred for those periods.
After
all, the Plaintiff is entitled to the payment of interest at an
applicable rate for the applicable period.
[90]
Put otherwise, absence of stipulated interest rate to levies in
arrears does not necessarily imply that
the Plaintiff is not entitled
to interest rate for those periods.    The question,
which then begs, is, in terms of
what rate are the undetermined
interest payable and whether compound interest can be added?
[91]
The trustees have a statutory duty to determine from time to time
what interest rate will be applied.
Regulation 31(6) of
Annexure 8 of the Regulations GNR 664/1988 in terms of the Sectional
Title Act 95 of 1986 stipulates:
“
The trustees
shall be entitled to charge interest on arrear amounts at such rate
as they may from time to time.”
[92]
Similarly, Rule 21 (3) (c), contained of Annexure 1 to the
Regulations to Sectional Management Act, reads
as follows:
“
The
body corporate may, on the authority of a written trustee
resolution charge interest on any overdue amount payable by
a
member to the body corporate; provided that the interest rate must
not exceed the maximum rate of interest payable per annum under
the
National Credit Act (2005) Act No 34 of 2005), compounded monthly in
arrears.”
[93]
In my mind, the term from “time to time” in rule 31 (6) connotes
something, which does not occur
regularly.  The rule does not
state that the interest rate must be determined annually or for the
year ahead.
[94]
The fact that there are periods during which the trustees did not
change the rate, is not an
insuperable
obstacle.  Particularly, if regard is had to the provisions of
rule 31 (1) (6) of the Act and the
Mitchell
case,
supra
.
[95]
Given the fact that the applicable rate of
interest before 2011, was last determined by the trustees  in
2010; it then follows
that the applicable rate for those periods
without stipulated rate; is the rate which was determined by the
trustees a year ahead
of 2011, which is 2010.
[96]
Additionally, sight should not be lost of the fact that the Defendant
is obligated by law to pay interest
on levies which are in arrears or
overdue debt.  In the
Davehill
matter, supra, on page 297
at paragraph H-I, it is stated that the statutory interests runs from
day to day on the outstanding portion
of the amount of compensation
payable, and ceases the moment compensation is paid in full.
[97]
First and foremost,
Swanepoel testified
that all the interest rate was charged on simple interest and
compound interest was added as the trustees had
the authority to do
so.  I have no reason to reject her testimony in this regard.
The case law entirely confirms
that the Plaintiff was entitled
to levy compound interest on arrears.  Consequently, I do not
have a problem with the manner
in which the Plaintiff calculated the
interest.
(d)
Mora / post judgment interest
[98]
Lastly, the Plaintiff is also praying for
mora
interest.
Insofar as the lifting of
in duplum rule
post judgment is
concerned, it is now trite that the
in duplum
rule
is
suspended post judgment.  However, the converse is true when it
comes to the applicability of the in
duplum rule
during the
course or pendency of litigation.  See
Paulsen and another v
Slip Knot Investment 777 (Pty) Limited
[2015] ZACC 5.
Dealing with the
in duplum rule
post judgment, the
Constitutional Court in the
Paulsen
case, at paragraphs 96 and
100, perfectly encapsulates the application of
in duplum rule
post judgment, when it opined:
“
[96]
It is settled law that the
in
duplum rule
permits
interest to run anew from the date that the judgment debt is due and
payable. . .
[100]
With regard to the first two questions, the order of the Supreme
Court of Appeal provided that the interest runs
on – and is limited
to an amount equal to – the whole of the judgment debt, including
the portion which consists of previously
accrued interest.  The
parties do not dispute these aspects of the Supreme Court of Appeal’s
order, therefore this Court will
not disturb them.”
[99]
From the foregoing, it is thus apparent that the
Plaintiff
is also entitled to the
mora
interests
applicable to the amount of R 1 826 366.86.
Costs
[100]
It has been staunchly maintained on behalf of the Plaintiff, that
considering the conduct of the Defendant; particularly
the fact that
he was a habitual defaulter, a punitive cost order is warranted. I am
not persuaded that a punitive cost order would
be appropriate.
[101]
Accordingly, I make the following order:
The
Defendant shall pay:
(a)
the sum of R 1 826
366.86;
(b)
Interest on the
aforesaid sum at the rate of 9.5 % per annum from the date of this
judgment, 07 December 2021, to date of payment,
limited to R 1 826
366.86
(c)
Costs of suit.
CN NZIWENI
Acting Judge of
the High Court