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[2016] ZASCA 170
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Sable Hills Waterfront Estate CC v Sable Hills Waterfront Estate Home Owners Association NPC (199/2016) [2016] ZASCA 170 (24 November 2016)
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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 199/2016
In the matter between:
SABLE HILLS
WATERFRONT ESTATE
CC
APPELLANT
and
SABLE HILLS WATERFRONT
ESTATE HOME
OWNERS’
ASSOCIATION NPC
RESPONDENT
Neutral
citation:
Sable Hills
Waterfront Estate v Sable Hills Waterfront Estate Home Owners’
Association
(199/2016)
2016 ZASCA 170
(24 November 2016)
Coram:
WALLIS and PETSE JJA, DLODLO, MAKGOKA and
SCHIPPERS AJJA
Heard
:
14 November 2016
Delivered
:
24 November 2016
Summary:
Property development – obligation
of members of home owners’ association to pay levies –
clause in articles of
association providing that levies be
apportioned equally between owners of stands and units in estate –
whether a reference
to stands and units as reflected in the survey
diagram attached to the township plan or to stands and units as
registered in the
Deeds Registry – question of construction of
articles of association.
ORDER
On appeal from:
Gauteng Division, Pretoria of High
Court (Fabricius J at first instance):
The appeal is
dismissed with costs.
JUDGMENT
Wallis JA (Petse
JA and Dlodlo, Makgoka and Schippers AJJA concurring)
[1]
This is a dispute between the developer of
a residential estate called Sable Hills (the estate) and the estate’s
home owners’
association regarding the developer’s
liability to pay levies imposed on members of the home owners’
association by
its board of directors. The respondent, Sable Hills
Waterfront Estate Home Owners’ Association NPC (the
Association) sued
the developer, Sable Hills Waterfront Estate CC
(Sable Hills), in the Gauteng Division, Pretoria of the High Court to
recover levies
for the period from 1 March to 3 October 2012. The
parties agreed that the outcome of this litigation would serve to
determine
Sable Hills’ liability to pay levies for the period
after 3 October 2012. Fabricius J held that Sable Hills was liable to
pay the levies claimed by the Association. This appeal by Sable Hills
is with his leave.
[2]
The facts are pleasantly uncomplicated and
were set out in a special case. Sable Hills acquired the estate on 2
March 2006 in terms
of Certificate of Consolidated Title T022523/06,
issued in terms of s 40 of the Deeds Registries Act 47 of 1937
(the Act).
At that stage it had already been laid out as a township
in terms of a General Plan SG No 6889/2005 and on 15 March 2006 the
local
authority declared it an approved township. In accordance with
the provisions of s 46(1) of the Act the Registrar of Deeds
opened a separate register for the estate reflecting each of the
erven shown on the general plan. One sectional title unit had
been
transferred to a third party, so it must also be the case that a
sectional title register had been opened in terms of
s 12(1)
(b)
of the
Sectional Titles Act 95 of 1986
in respect of at least one erf. Between 1 March 2012 and 3 October
2012 certain erven and a sectional title unit in the estate
were
transferred by Sable Hills to third parties. Sable Hills remained the
owner of the remainder of what had become on consolidation
Portion
133 of the farm SABLE HILLS no 741, Registration Division J. R.,
Province of Gauteng (the remainder).
[3]
In 2012 the Board of Directors fixed the
levies for the estate in an amount of R1 750 per stand. Sable
Hills adopted the approach
that it was not obliged to pay any levies
at all, but, if it was, that the remainder of the consolidated
property constituted a
single stand for the purpose of charging
levies. The Association took the view that Sable Hills was obliged to
pay a separate levy
in respect of each erf or stand reflected on the
general plan and forming part of the remainder. These divergent
contentions were
debated by way of a special case before Fabricius J.
In this court Sable Hills accepts that it is liable to pay levies on
a single erf constituted by the remainder, but disputes its liability
to pay a separate levy in respect of each erf or stand shown
on the
general plan and falling within the remainder.
[4]
The liability of members of the Association
to pay levies arises under its articles of association. The following
clauses are of
particular relevance to this issue. Clause 5.1
provides that the income of the Association ‘consists mainly of
the compulsory
monthly levies payable by members’. The members
of the Association are identified in clause 4.1, which provides that
the
members consist of the developer – a term defined in clause
1 to mean Sable Hills – and all other persons, including
legal
entities, who are registered owners of residential property in the
estate. Clause 5.2.1 provides that:
‘
The
Directors will from time to time determine the levies payable as
provided for in 5.1. All levy payments will be apportioned
equally
between the owners of Property (ie between stands and units in the
estate) …’
The expression ‘Property’
is defined in clause 1.6 as meaning ‘erven in the Township and
units in the schemes’.
Finally, Clause 5.3 provides that:
‘
The
Directors may enter into an agreement to exempt or partially exempt
the Developer from the payment of levies in respect of any
property
owned by him and not yet developed/alienated by him.’
[5]
Sable Hills contends that it owns a single
stand in the estate, being the remainder after transfer to individual
owners of individual
erven. It argues that the remainder is the only
erf recognised as a separate property for the purposes of the Act and
therefore
the reference in clause 5.2.1 to a stand must be understood
as referring to the single erf that it owns. While that erf is shown
on the general plan as having been sub-divided into smaller erven for
the purposes of the proposed development, these smaller erven
do not
as yet have any separate existence
[1]
and until they do they should not be taken into account for the
purpose of assessing their liability to pay levies. The Association,
for its part, says that the clauses in the articles do not refer to
pieces of land as reflected separately in the Deeds Registry,
but to
the pieces of land shown on the general plan of the township, which
for the purposes of determining the obligation to pay
levies are to
be treated separately.
[6]
It is correct that it is only when a
sub-division of the remainder is transferred to someone other than
the developer that the sub-division
has an existence separate from
the remainder, but that does not in my view dictate the answer to the
problem of identifying the
stands and units referred to in clause
5.2.1. The answer lies in the proper interpretation of that clause in
accordance with the
established rules for the construction of
documents.
[2]
I start, as one must, with the language of the relevant provisions.
[7]
The articles do not contain definitions of
the expressions ‘erven’, ‘stands’ or units’
appearing in
the provisions quoted in [4]. When the township was
proclaimed the proclamation occurred in terms of the General Plan
approved
by the Surveyor-General and showing the division of the
township into erven. When opening the township register the
Registrar
of Deeds did so in accordance with that general plan, as
required by s 46(1) of the Act, which imposes the duty to open a
separate register ‘if land has been sub-divided into lots or
erven shown on a general plan’. The stark difference between
the parties is whether the reference to ‘stands’ in
article 5.2.1 is a reference to erven enjoying separate title in
the
Deeds Registry, or erven as reflected on the general plan and in the
township register. As regards ‘units’ the
articles
contemplate that sectional title schemes known as Sable Hills 3 and
Sable Hills 4 would be established as part of the
overall
development. Logically therefore the references to ‘units’
refers to units in these sectional title schemes.
[8]
Linguistically clause 5.2.1 is open to both
possible constructions. One looks therefore for indications in the
articles as a whole
that point in favour of one or the other. One
that strikes one immediately is that in clause 5.2.1 the word
‘stands’
is used and not ‘erven’. The word
appears to have come into South African legal parlance via the Gold
Laws, where it
had particular relevance to rights to prospect for and
mine gold, but it has a broad popular meaning
[3]
and is capable of referring to any defined piece of land, whether or
not having a separate legal existence in the Deeds Registry.
In the
context of township development one frequently sees advertisements
for the sale of stands in a township and, given the manner
in which
township land is registered in the Deeds Registry, that is usually a
reference to the properties reflected on the general
plan of the
township, not to existing separate erven.
[9]
It is true that in many contexts the words
‘erf’ and ‘stand’ may be virtually
synonymous,
[4]
but whether they are to be treated as such depends on the context.
Here the word ‘stands’ is used to explain or clarify
the
meaning of ‘erven’ where it appears in the definition of
‘Property’ in clause 1.6 of the articles.
That follows
from the fact that, after saying that levies are to be apportioned
between owners of Property, the clause goes on
in parentheses to say
‘ie between stands and units in the estate’. If the
strict meaning of erven as legally separate
properties were intended,
there would have been no need for further definition. Accordingly, I
think that the use of ‘stands’
is directed at indicating
a broader meaning, that erven are those shown on the general plan
notwithstanding that they do not yet
have a separate existence.
[10]
A second pointer in the language of clause
5.2.1 is to be found in the words ‘in the estate’ in that
explanatory phrase.
Clearly that comprehends the whole of the estate.
The units in the estate must be the units identified in the sectional
title register
or registers existing in respect of identifiable
pieces of land in the estate. That is so whether they are owned by
the developer
or by a third party. So, if the developer is also the
developer of the sectional title schemes, in which at least one unit
has
been sold, it will be the owner of the other units in that scheme
and liable to pay levies in respect of them on the plain language
of
clause 5.2.1. If the reference to units refers to what is
reflected in the sectional title register or registers, there
seems
to be no reason why the reference to stands should not be a reference
to the stands in the township register. After all the
development of
the township provides the context for the existence of the articles
and therefore their interpretation.
[11]
These pointers in favour of the
Association’s construction of clause 5.2.1 are strongly
reinforced by reference to clause
5.3 of the articles. This provides
for the directors to conclude an agreement with the developer for the
total or partial exemption
of the latter from the obligation to pay
‘levies in respect of any property owned by him and not yet
developed/alienated
by him’. If Sable Hills’ contentions
were correct it would only be liable to pay one levy in respect of
one property
owned by it, namely, the remainder. But the use of the
plural ‘levies’ and the reference to ‘any property’
suggests that the developer, in its capacity as such, will be the
owner of more than one property and incur liability to pay more
than
one levy. That will only be the case if the stands shown on the
general plan are the basis for apportioning the levies among
owners.
[12]
The grounds upon which such an agreement
may be concluded are also instructive. It is only permissible in
relation to any property
that has not yet been developed or alienated
by the developer. But in the course of developing a township the
developer may develop
or build upon some stands as shown on the
general plan and leave others to lie fallow until a later stage of
the development.
If the developer is only liable for one levy
in relation to the remainder, and not individual levies in respect of
the stands on
the general plan, any development undertaken on any
part of the remainder would exclude the application of clause 5.3.
Indeed it
would become largely academic unless the developer
abandoned the township.
[13]
The clause is, however, easy to apply if
one is dealing with the apportionment of levies to owners on the
basis that they own the
land on which individual stands are laid out
in the general plan and each stand is separate for the purpose of
charging the levy.
A developer who was intent on developing say 30
out of 300 stands could legitimately say that the expenses falling to
be discharged
from the levies paid by owners were largely incurred in
respect of those stands and the other stands already in separate
ownership,
and that it would be fair therefore to exclude the payment
of levies in respect of the 270 stands not yet developed.
[14] Turning from
linguistic analysis to the purpose of this provision, levies are to
be raised by the Association to discharge
the expenses incurred by it
in respect of the management of the township. The levies are to be
applied to the furtherance of the
main objective of the Association.
According to the Memorandum of Association, that is the maintenance,
upkeep and development
of the services and facilities of the estate.
This objective enures to the benefit of all members of the
Association, both Sable
Hills as the developer and the individual
owners of stands or units. It is for that reason that the obligation
to pay levies is
to be apportioned equally among the owners on the
basis of their ownership of the stands shown on the general plan.
In the
ordinary course equal apportionment of levies among all owners
on the basis shown on the general plan is a fair result.
[15] I appreciate
that the benefit derived by owners of individual erven in the estate
from the expenditure by the Association,
may be proportionally
greater than that derived by Sable Hills. That is particularly so
where the township is still in the process
of development and many of
the stands constituting the remainder are as yet undeveloped. Thus a
security presence at the entrance
to the estate may provide greater
benefits to individual owners than to the developer who may have few
security concerns in relation
to undeveloped land. The provision of
landscaping and garden services is likely to be disproportionately
directed at existing residential
development rather than still vacant
sites. Although they will be of some benefit to the developer in that
they may be attractive
to prospective purchasers of stands in the
township, the direct benefit is more likely to accrue to other
owners.
[16] All of this,
however, merely shows why clause 5.3 is part of the articles. It is
intended to enable the developer and the Association
to arrive at a
situation where the apportionment of levies is fair to all owners of
residential stands or units. The fact
that the other stands
that are to be developed as commercial properties, private open space
or special use as a clubhouse, gymnasium,
restaurant or boathouse,
are excluded for levy purposes, reinforces the Association’s
contentions.
[17] In the heads of
argument and the judgment of the court below there was considerable
debate concerning the judgment in
Heritage
Hill
.
[5]
It is unnecessary to deal with that judgment save to note that the
articles of association of the home owners’ association
in that
case were substantially different from those in the present case. For
example the word ‘owner’ was defined
as meaning the
registered owner and clause 2 provided that any word or expression
not otherwise defined would bear the meaning
given to that word in
the
Deeds Registries Act. That
dictated the extensive references to
the Act in the judgments and was perceived to require consideration
of the rating cases.
[6]
[18] The different
context of the present case obviates the need to analyse those
judgments or the judgments in the rating cases.
As far as
Heritage
Hill
is concerned the articles being
considered were different from those in this case. As far as the
rating cases are concerned the
wording of the relevant ordinances
made it clear that they were dealing with registered ownership in the
Deeds Registry and the
context is so remote from the present case as
to provide, on its own, grounds for distinguishing the two
situations. It is seldom
that a judgment interpreting an ordinary
word in one context is of assistance in illustrating its meaning in a
wholly different
context. As Fagan CJ said in the
Consolidated
Diamonds
case:
[7]
‘
When
we find in a judgment statements which attach meanings to particular
words or phrases, we must remember that the Judge
is dealing
with those words or phrases in the context in which they occur and
with reference to the subject matter to which they
relate. Beyond
that, a statement as to the meaning of a word or phrase would merely
be
obiter
dictum
.
I should be loth to read a Judge's elucidation of a word with no
specialised legal meaning as intending to lay down as a
matter
of law what that word means independently of the context in which he
is dealing with it, for defining the meaning of words
as such is not
a Judge's function, but that of a philologist.’
[19] In the result
the appeal must fail. It is dismissed with costs.
M J D WALLIS
JUDGE OF
APPEAL
Appearances
For appellant: W J
Vermeulen SC (Heads of argument prepared by A B Rossouw SC and
M
Riley)
Instructed by:
Van Zyl Le Roux Inc, Pretoria;
McIntryre & Van der Post, Bloemfontein
For respondent: A F
Arnoldi SC (Heads of argument prepared by S D Wagener SC)
Instructed by:
Kotzé & Roux Attorneys, Pretoria;
Honey Attorneys, Bloemfontein.
[1]
Tshwane City v Uniqon Wonings (Pty) Ltd
[2015] ZASCA 162
;
2016 (2) SA 247
(SCA) para 10.
[2]
Natal Joint Municipal Pension Fund v Endumeni Municipality
[2012]
ZASCA 13
;
2012 (4) SA 593
(SCA) para 18.
[3]
Greathead v Transvaal Government and Randfontein Estate and Gold
Mining Co. Ltd
1910 TS 276
at 301;
Levy v Phillips
1915
AD 139
at 143.
[4]
Hull v Rand Township’s Registrar
1913 WLD 221
at 227
and see the definition of ‘erf’ in s 102 of the Act
as including ‘an erf, lot, plot or stand’.
[5]
Heritage Hill Home Owners’ Association v Heritage Hill
Devco (Pty) Ltd
2013 (3) SA 447
(GNP) and on appeal
Heritage
Hill Devco (Pty) Ltd v Heritage Hill Home Owners’ Association
2016 (2) SA 387
(GP).
[6]
Discussed fully in paras 9 to 11 of
Tshwane City v Uniqon
Wonings
, fn 1, supra.
[7]
Consolidated Diamond Mines of South West Africa Ltd v
Administrator, SWA & another
1958 (4) SA 572
(A) at 599C-E.