THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case no: 759/2022
In the matter between:
HENQUE 1838 CC APPELLANT
and
MAXPROP HOLDINGS (PTY) LTD FIRST RESPONDENT
THE BODY CORPORATE OF KIRTLINGTON PARK SECOND RESPONDENT
THE BODY CORPORATE OF KIRTLINGTON GREEN THIRD RESPONDENT
THE BODY CORPORATE OF KIRTLINGTON PARK 2 FOURTH RESPONDENT
THE BODY CORPORATE OF KIRTLINGTON PARK 3 FIFTH RESPONDENT
KIRTLINGTON PARK HOME OWNERS ASSOCIATION SIXTH RESPONDENT
LINDSAY SHAUN TRAGOTT VORWERG SEVENTH RESPONDENT
ENID HELENA AYLWARD N O EIGHTH RESPONDENT
ADELE JONES N O NINTH RESPONDENT
NEVILLE AYLWARD N O TENTH RESPONDENT
RENEE KENWOOD N O ELEVENTH RESPONDENT
MARCO RUI ALVES TWELFTH RESPONDENT
KEVIN ARTHUR WRIGHT THIRTEENTH RESPONDENT
ALYSON JANE WRIGHT FOURTEENTH RESPONDENT
GARY MICHAEL WEBSTER FIFTEENTH RESPONDENT
ALISON VICKI WEBSTER SIXTEENTH RESPONDENT
2
ROBERT ANTHONY OSTLER SEVENTEENTH RESPONDENT
Neutral citation: Henque 1838 CC v Maxprop Holdings (Pty) Ltd and Others
(759/2022) [2023] ZASCA 131 (12 October 2023)
Coram: PONNAN, MEYER, GOOSEN and MOLEFE JJA and MALI AJA
Heard: 11 September 2023
Delivered: This judgment was handed down electronically by circulation to the
parties’ representative via email, publication on the Supreme Court of Appeal website
and release to SAFLII. The date and time of hand-down is deemed to be 11:00 am on
12 October 2023.
Summary: Sectional Title Schemes Management Act 8 of 2011 – s 9 read with s
2(7) – locus standi of sectional title owner to litigate in own name for repayment to the
body corporate of funds allegedly unlawfully paid from the body corporate’s bank
account.
3
ORDER
On appeal from: KwaZulu-Natal Local Division of the High C ourt, Durban (Moodley
J, sitting as court of first instance):
The appeal is dismissed with costs , including those of two counsel whe re so
employed.
JUDGMENT
Meyer JA (Ponnan, Goosen and Molefe JJA and Mali AJA concurring):
[1] At issue in this appeal is the standing of a sectional title owner to litigate in its
own name for the repayment to the body corporate of funds that were allegedly paid
unlawfully from the body corporate’s bank account to the recipient thereof. On 7 July
2022, the KwaZulu-Natal Local Division of the High Court , Durban (the high court) ,
presided over by Moodley J, dismissed, with costs, the application of the appellant ,
Henque 1838 CC (Henque), for lack of standing . The appeal is with the leave of the
high court.
[2] Kirtlington Park is a residential estate in Hillcrest, Kwazulu-Natal (the estate).
It comprises four sectional title development schemes. Each scheme is controlled by
a body corporate. The four schemes and bodies corporate are the second respondent,
Kirtlington Park (KP1) , the fourth respondent, Kirtlington Park 2 (KP2) , the fifth
respondent, Kirtlington Park 3 (KP3), and the third respondent, Kirtlington Green (KG).
KP1 consists of 27.7692 hectares of land with 42 homes , KP2 consists of 22.8033
hectares with 39 homes , KP3 consists of 18,0925 hectares with 31 homes, and KG
consists of 1.4502 hectares with 8 homes. Each residence is a sectional title unit. The
common property of KP1 includes a dam, a communal bin area, expansive paddocks,
and roads that lead to KP2, KP3 and KG and t hat of KP2, stables for horses , a
clubhouse, tennis courts, paddocks , and roads leading from KP1 across KP2 to
portions of KP3 and KG. Included in KP3’s common property are roads, paddocks,
4
and a portion of a dam. These facilities were intended for and have historically been
utilised by all estate residents , despite the fact that they form part of the exclusive
common property of the respective sectional title development schemes, which are
owned in undivided shares by the sectional title unit owners in e ach scheme (the
shared facilities). The estate is surrounded by a wall that is electrified and monitored
by surveillance cameras. Residents of KG can only access their homes through the
main entrance gate and across the KP1 and KP2 roads. The common property of KG
does not include any shared facilities.
[3] According to the original developer , sale agreements and the management
rules of each body corporate, the four bodies corporate were supposed to be united
by a single Home Owners Association to operate as ‘Associated Developments’ ,
following the formation of the four bodies corporate, when the sectional title registers
were opened between 2001 and 2003. However, for unknown reasons, the developer
did not register this single association. Consequently, since their inception in 2001, the
four bod ies corporate have collaborated informally to manage and administer the
shared facilities that are accessible to all estate residents.
[4] To formalise the informal cooperation, the four bodies corporate formed the
sixth respondent, the Kirtlington Park Home Owners Association (KPHOA) in 2008,
initially named the Kirtlington Park Association. It is a voluntary association that
facilitates the joint administration and management by the four associated bodies
corporate of the shared facilities, including: security (the largest expense); road
maintenance; gardening services; access control; biometrics; refuge storage and
collection; sporting facilities; maintenance of the electrified and security monitored
boundary wall; employment of an estate manager and administrative ass istant; and
payment of the management fee (the shared expenses). In terms of its constitution,
each member of the associated bodies corporate within the estate became a member
of the KPHOA. From 2008 until December 2017, the first respondent, Maxprop
Holdings (Pty) Ltd (Maxprop), managed each a ssociated body corporate and the
KPHOA.
[5] At a meeting held on 27 July 2016, the members of each associated body
corporate adopted amendments to their management rules, including provisions
5
requiring all KPHOA members, regardless of individual participation quota, to pay
equal contributions to defray shared expenses. The KPHOA members also approved
a budget that required each member to contribute R4 500 per month. In addition to
the monthly levies paid by members to defray their own body corporate's internal
expenses, such as landscaping, accounting, etc., all members pay these contributions.
Each body corporate maintains its own bank account and a ccounting records. The
contributions collected to defray shared expenses are transferred from each body
corporate's bank account to KP1's for the benefit of the KPHOA. The shared expenses
have always been paid from KP1's bank account, then recovered from the KPHOA
members' contributions. Financial statements are prepared for each body corporate .
Additionally, a set of consolidated financial statements known as the ‘Body Corporate
of Kirtlington Consolidated Accounts’ is prepared, even though no such body corporate
has ever existed. As a tool for management, they are merely the consolidated financial
statements of the associated bodies corporate. Except for Henque, all other estate
owners supported the KPHOA and had no objections to contributing to the upkeep of
the shared facilities available to all estate residents for their enjoyment and safety.
[6] Henque acquired KG unit 4 on 15 April 2015. Since then, its sole member, Ms
Jean Gillespie Thomson (Ms Thomson), has lived there. On 19 April 2017, the then-
chairperson, Ms Adele Jones (Ms Jones), appointed her as a trustee of KG to meet
the required minim um number of trustees. Ms Thomson was dissatisfied with the
administration and management of the shared facilities in three significant ways: First,
that the KPHOA unlawfully assumed, and the individual bodies corporate unlawfully
assigned to it, all their functions and powers. She argued that this assignment of
functions was unlawful because regulation 30(2) of the Sectional Title Schemes
Management Act 8 of 2011 (the Act) only permits assignment if this condition was
recorded when the body corporate was i nitially registered, which was not the case in
this instance. Second, that the compulsory membership of all estate owners in the
KPHOA was unlawful because, according to her, compulsory membership could only
be imposed if a condition to this effect was inc luded in the schedule referred to in s
11(3)(b) of the Act at the time the scheme was registered. Third, she argued that the
imposition of equal levies regardless of individual participation quotas was unlawful
because the modification of the calculation of levies from the prescribed rules (based
6
on individual participation quotas) was not conducted in accordance with the
requirements of s 32(4) of the Act.
[7] On 28 February 2017, Henque, in an application in which KG and KPHOA were
cited as the respondents, obtained an order by default from the high court (Steyn J),
which declared that: Henque was not to be a member of the KPHOA and therefore not
required to comply with its directives, rules, or guidelines ; KG was not permitted to
assign its functions and powers to the KPHOA; and KG's management rules that
enabled the imposition of equal levies regardless of participation quotas to be unlawful
and void. In addition, the order required the substitution of two of KG's management
rules with rules from schedule 8 of the Sectional Titles Act 95 of 1986, which permitted
KG to amend its management rules without KPHOA ’s approval or veto, and required
KG to allocate expenses proportionally to floor square meterage (the first order).
[8] Ms Thomson insisted that the first order was not properly implemented. So,
Henque brought a second application in the high court. This time, the respondents
were KG and two of its three trustees, Ms Jones and Mr Arthur Limbouris (Mr
Limbouris). As a result of this application, these two trustees resigned, leaving Ms
Thomson as the sole trustee, a circumstance that persists to t his day. On 14 March
2018, Henque obtained an order (per Maharaj J), which had the practical effect of
preventing KG from contributing to the shared expenses. The appointment of Mr
Limbouris as trustee of KG was also declared invalid and set aside. After July 2017,
KG made no payments to the other three associated body corporates, KP1, KP2, and
KP3, for the shared expenses, and Mr Limbouris had already resigned as a trustee,
rendering the relief granted moot.
[9] KG, according to all eight of its members, has become dysfunctional. Since Ms
Thomson became a trustee, the body corporate has not held an annual general
meeting. In these circumstances, none of the other seven KG members are willing to
become trustees. KG has stopped contributing formally and proportionally after July
2017. All KG members, except for Henque, wish to maintain their voluntary
membership in the KPHOA and continue contributing to the shared expenses. They
recognise the injustice and unfairness of this situation, in which KG members use the
shared facilities without paying for them. According to them, Henque's conduct has
7
impeded any meaningful communication with the other three associated bodies
corporate to determine an equitable contribution to the estate's common expenses.
Consequently, each has agreed, in their individual capacities, to pay R2 200.00 per
month towards the shared expenses incurred by the other three associate d bodies
corporate until an agreement is reached between KG and those bodies corporate
regarding the administration and management of the shared facilities.
[10] This appeal stems from a third application launched by Henque in the high court
on 2 July 2018. Initially Maxprop, KP1 and KG , were cited as the respondents. KP2,
KP3, the KPHOA, and the remaining seven KG property owners were subsequently
added as respondents. The remaining KG members are respondents numbered seven
through to seventeen. Henque demanded repayment to KG of funds allegedly
misappropriated by Maxprop from KG's bank account and transferred to KP1's bank
account for the benefit of the KPHOA (the main relief). It also sought various ancillary
orders (the ancillary relief), which is not necessary to detail because if the main relief
could not succeed, the ancillary relief had to suffer a similar fate. The application was
resisted by Maxprop, KP1, KP2, KP3, the KPHOA and all the KG owners and
members.
[11] According to Ms Thomson, she discovered that unlawful appropriations had
been made from KG's bank account, and that its draft financial statements for the fiscal
year ending 30 June 2017 had been drafted on the strength of these transaction s.
Maxprop and KP1 denied that unlawful transfers were made from KG's bank account
to KP1's and that its financial statements for that fiscal year contain incorrect entries,
as claimed by Ms Thomson. Maxprop stated that all payments it had made were in
accordance with KG' s former trustees' instructions or were made in the ordinary
course of KG's management.
[12] The high court mero motu separated the challenge to Henque’s standing from
the other issues in the application. A body corporate is constituted by law, and it is
charged with responsibility for the enforcement of the rules and the control,
administration, and management of the co mmon property for the benefit of the
8
owners.1 It has perpetual succession and is capable of suing and of being sued in its
corporate name in respect of the matter listed in s 2(7) of the Act. They are:
‘(a) any contract entered into by the body corporate;
(b) any damage to the common property;
(c) any matter in connection with the land or building for which the body corporate is liable or
for which the owners are jointly liable;
(d) any matter arising out of the exercise of any of its powers or the performance or non -
performance of any of its duties under this Act or any rule; and
(e) any claim against the developer in respect of the scheme if so determined by special
resolution.’
[13] The powers referred to in s 2(7) (b), and in some circumstances s 2(7) (c), as
well as s 2(7)(e), give the body corporate an entitlement it would otherwise not have
had. The owners of the sectional title units own the common property in undivided
shares. But the body corporate is statutorily enjoined to control, adminis ter, and
manage the common property f or the benefit of the owners. There is also no
contractual nexus between the developer and the body corporate that would otherwise
have given the body corporate standing in respect of the claims referred to in s
2(7)(e).2
[14] Section 93 provides ‘a comprehensive statutory right to an owner of a sectional
title unit aggrieved at the failure of the body corporate to act in respect of a matter
1 Sections 2(1) and 2(5).
2 Oribel Properties 13 (Pty) Ltd and Another v Blue Dot Properties 271 (Pty) Ltd and Others [2010]
ZASCA 78; [2010] 4 All SA 282 (SCA) para 24 (Oribel).
3 Section 9 reads:
(1) An owner may initiate proceedings on behalf of the body corporate in the manner prescribed in this
section—
(a) when such owner is of the opinion that he or she and the body corporate have suffered damages
or loss or have been deprived of any benefit in respect of a matter mentioned in section 2(7),
and the body corporate has not instituted proceedings for the reco very of such damages, loss
or benefit; or
(b) when the body corporate does not take steps against an owner who does not comply with the
rules.
(2) (a) Any such owner must serve a written notice on the body corporate calling on the body corporate
to institute such proceedings within one month from the date of service of the notice and stating
that if the body corporate fails to do so, an application to the Court under paragraph (b) will be
made.
(b) If the body corporate fails to institute the proceedings within the period referred to in paragraph
(a), the owner may make application to the Court for an order appointing a curator ad litem for
9
mentioned in s [2(7)]’. 4 The sectional title owner then has the right to initiate
proceedings, provided such an owner is of the opinion that he or she and the body
corporate have suffered damages or loss or have been deprived of any benefit in
respect of a matter listed in s 2(7) , and the body corporate has not instituted
proceedings for the recovery of such damages, loss or benefits. In such a case, the
affected owner must serve written notice on the body corporate requesting that it
initiates proceedings within one month, failing which the owner may apply to the court
for an order appointing a curator ad litem for the body corporate for the purposes of
initiating and conducting proceedings on behalf of the body corporate. Section 9,
however, is not intended to detract from the powers enjoyed by the sectional title owner
to institute proceedings in his or her own name where his or her rights, whether
ownership in his or her unit or otherwise, are infringed.5
[15] The jurisdictional facts that an owner must establish in order to entitle the owner
to apply for the appointment of a curator are: (a) the owner must hold an opinion; (b)
the opinion must be either (i) that the owner and the body corporate have suffered
the body corporate for the purpose of instituting and conducting proceedings on behalf of the
body corporate.
(3) The Court may on such application, if it is satisfied—
(a) that the body corporate has not instituted such proceedings;
(b) that there are prima facie grounds for such proceedings; and
(c) that an investigation into such grounds and into the desirability of the institution of such
proceedings is justified,
appoint a provisional curator ad litem and direct him or her to conduct an investigation into the
matter and to report to the Court on the return day of the provisional order.
(4) The Court may on the return day discharge the provisional order referred to in subsection (3), or
confirm the appointment of the curator ad litem for the body corporate, and issue such directions
as it may cons ider necessary to the institution of proceedings in the name of the body corporate
and the conduct of such proceedings on behalf of the body corporate by the curator ad litem.
(5) A provisional curator ad litem appointed by the Court under subsection (3) or a curator ad litem
whose appointment is confirmed by the Court under subsection (4), has such powers as may be
prescribed, in addition to the powers expressly granted by the Court in connection with the
investigation, proceedings and enforcement of a judgment.
(6) If the disclosure of any information about the affairs of a body corporate to a provisional curator ad
litem or a curator ad litem would in the opinion of the body corporate be harmful to the interests of
the body corporate, the Court may on a n application for relief by that body corporate, and if it is
satisfied that the said information is not relevant to the investigation, grant such relief.
(7) The Court may, if it appears that there is reason to believe that an applicant in respect of an
application under subsection (2) will be unable to pay the costs of the respondent body corporate if
successful in its opposition, require sufficient security to be given for those costs and the costs of the
provisional curator ad litem before a provisional order is made.’
4 Cassim and Another v Voyager Property Management (Pty) Ltd and Others; Cassim and Another v St
Moritz Body Corporate (Pty) Ltd and Others [2011] ZASCA 143; 2011 (6) SA 544 (SCA); [2011] 4 All
SA 587 (SCA) para 16 (Cassim).
5 Oribel para 24.
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damages or loss or (ii) that the owner and the body corporate have been deprived of
a benefit in respect of a matter mentioned in s 2(7); and (c) the body corporate has
not instituted proceedings for recovery. The adverse events forming the subject of the
second requirement ‘must be suffered not only by the applicant for the appointment of
a curator but by the body corporate as well’. As Schutz JA put it in Wimbledon Lodge,
the third requirement is a ‘necessary counterpart to the sections of the Act divesting
individual owners of control and vesting it in the body corporate. If the body corporate
is seen not to do its duty, then an individual’s power may, to an extent, be restored.’ 6
In Cassim,7 Ponnan JA explained that what Schutz JA intended to convey with this
statement in Wimbledon Lodge was this:
‘… an individual’s powers may to the extent provided for in s [9] be restored. Indeed, as Schutz
JA pointed out (para 18), that accords with the general principle at common law that where a
wrong is done to it, only the company (in this case the body corporate) and not the individual
members may take proceedings against the wrongdoers (Foss v Harbottle (1843) 2 Hare 461
(67 ER 189)).’
[16] The function or purpose of s 9, according to Ponnan JA (Cassim), is this:8
‘The substance of the matter according to Schutz JA (Wimbledon Lodge para 21) is that the
“body corporate is little more than the aggregation of all the individual owners. Their good is
its good. Their ill is its ill. The body corporate is not an island, whatever the law of persons
may say.” Section [9] is an important component of that structural scheme. On the one hand
it filters out unmeritorious claims by overzealous individuals. On the other it ensures that
individuals complaining should have the advantage of the information and the funds of their
corporation in pursuing legitimate claims.’
[17] On the facts here present, s 9, read with s 2(7), encompasses within its scope
the main claims sounding in money in respect of which Henque came to be non-suited
by the high court. Nevertheless, argues Henque, KG is dysfunctional, and it could,
therefore, hardly have been expected of it to call upon that body corporate to institute
proceedings. But, as was observed by Ponnan JA (Cassim)9,
6 Wimbledon Lodge (Pty) Ltd v Gore NO and Others (39/2002) [2003] ZASCA 33; [2003] 2 All SA 179
(SCA) paras 13-14 and 20 (Wimbledon Lodge).
7 Cassim para 15.
8 Cassim para 17.
9 Cassim paras 13-14.
11
‘. . . it appears to me that the section finds application precisely when there is disharmony and
disunity in the body corporate. The more dysfunctional the body corporate, the greater, I dare
say, the need for a curator. On the view that I take of the matter, the argument advanced by
and on behalf of the appellants misconstrues the s ection. The section does not require an
owner to cause the body corporate to act in a particular way if the latter is unwilling to do so.
All that is envisaged is for an owner to effect service of a notice on the body corporate calling
upon it within the stated period to institute the contemplated proceedings. Should it fail to do
so the envisaged remedy available to the owner is not to compel compliance with the notice
but rather to approach the court for the appointment of a curator ad litem for the purposes of
instituting and conducting the proceedings on behalf of the body corporate.’
[18] In argument before us, and also before the high court, Henque attempted to
avoid the inevitable by steering away from its pleaded case in contending that it
instituted the proceedings as an own interest litigant , rendering s 9 of no application.
It relied on Spilhaus Property Holdings (Pty) Ltd and Others v MTN and Another ,10 in
which judgment the Constitutional Court held that the purpose of s 9 is to protect the
body corporate from unmeritorious legal proceedings by owners and not to determine
the legal standing of individual owners.11 But, there the claim did not arise from s 2(7).
Instead, the applicants in that matter sought to enforce a zoning scheme that was
passed in their interests as owners of properties where that scheme applied.12
[19] On the facts here present, Henque did not establish its own direct and
substantial interest in the relief claimed. The genesis of those claims is s 2(7), and not
the common law. They were not for payment to Henque itself, or for the correction of
its own financial statements . Quite the opposite, the claims asserted by it were for
repayment to KG, the correction of KG’s financial statements, and declarators relating
to KG’s liabilities and funds. This is a clear indicator that those are claims in the hands
of KG alone. The alleged loss was suffered directly by KG.
[20] The nature of the rights and claims asserted by Henque derive from s 2(7) of
the Act . A sectional title owner , such as Henque, is enjoined to follow the steps
10 Spilhaus Property Holdings (Pty) Ltd and Others v MTN and Another [2019] ZACC 16; 2019 (6) BCLR
772 (CC); 2019 (4) SA 406 (CC) (Spilhaus).
11 Ibid paras 32-33.
12 Ibid para 34.
12
prescribed by s 9 if it wishes to assert a right and claim in terms of s 2(7). Henque did
not do so. It follows that the conclusion of the high court cannot be faulted and in the
result the appeal must fail.
[21] In the result the following order is made:
The appeal is dismissed with costs , including those of two counsel where s o
employed.
________________________
P A MEYER
JUDGE OF APPEAL
13
Appearances
For appellant: A M Annandale SC with S Hoar
Instructed by: Warrick De Wet Redman Attorneys ,
Umhlanga Rocks,
Honey Attorneys, Bloemfontein
For second, fourth, fifth
and sixth respondents: W N Shapiro SC
Instructed by: Cox Yeats Attorneys, Umhlanga
Rocks,
Symington & De Kok, Bloemfontein